Unless analyzing tax policy is part of your day job, you likely avoid thinking about what ultimately can be a polarizing topic. But with the deadline for filing our income tax returns around the corner, were all forced to at least temporarily think about taxes. The deadline after all is a sharp reminder of how much income tax we paid throughout the year.
British Columbia is officially in election mode and the parties are rolling out their campaign promises. When it comes to the tax promises of the two mainstream parties, British Columbians are confronted with a choice, as it were, between higher taxes or even higher taxes. So pick your poison.
To see how they stack up, lets look at each plan for the most important types of taxes. Its not a pretty picture.
The recent death of Margaret Thatcher provoked a plethora of analysis and emotion about the late British prime minister. That was predictable given how the much-needed reforms of the British economy upset the turgid status quo; that was bound to produce admirers and critics.
Last weeks provincial budget was a heap of bad news for New Brunswickers. First they learned that they will continue to be burdened by a government with shaky finances driven by annual deficits and mushrooming debt. Topping that off, Progressive Conservative Finance Minister Blaine Higgs proposed a series of highly damaging tax increases as a way out of New Brunswicks deep fiscal hole. Unfortunately, these tax hikes will cast a dark cloud over New Brunswicks economic prospects and likely bring little revenue in return.
With economic growth slowing and a goal of balancing the budget by 2015, Finance Minister Jim Flaherty will have little fiscal room for major new initiatives in Thursday's federal budget. The risk is that the Conservatives continue with their fondness for new and/or expanded tax credits which have been sprinkled through federal budgets over much of the past five or six years (i.e Working Income Tax Credit, and tax credits for family caregivers, children's arts and fitness, and volunteer firefighters to name but a few).
There might be a thousand reasons why people hate sales taxes. Here are three: First, theyre visible; second, in Alberta, where no provincial sales tax exists, there is justifiable pride that people have escaped at least one tax applied elsewhere in Canada; third, many Albertans rightly fear that if a government introduced a new tax, it would be just another way to separate taxpayers from their money and to spend more and inefficiently so.
Whenever Canadians cross the border, it is inevitable they will find cheaper goods in the United States. Whether milk, books, electronic goods or vehicles, it seems bargains abound south of the 49th parallel.
The Canadian Senate has just done a bang-up job of adding hard data to anecdotal observations on this issue. In a recent report, the Standing Senate Committee on National Finance found several reasons for higher Canadian prices, including higher regulations in Canada and higher taxes. (The latter explains the difference in gasoline and diesel prices at the pump, for example.)
The last time Alberta was in a fiscal mess due to low energy revenues and over-the-top government spending, some politicians and pundits said what Albertans really needed was higher taxes. That was back in the late 1980s and early 1990s. Those voices were wrong then and they are wrong now.
For one thing, any fantasy that a tax hike will solve Albertas fiscal woes is the preserve of people who dream in tax-happy Technicolor.
Sure, tax reform is desirable. A provincial sales tax would be smart economic policy since sales taxes are some of the least harmful imposts.
The uncertainty that continues to impede the U.S. recovery coupled with political gridlock in Washington poses significant economic threats to not only the United States but also countries like Canada that trade with the U.S. However, imbedded within the many layers of risks lies a significant, long-term opportunity for Canada.