http://www.canada.com/windsorstar/news/editorial/story.html?id=f5b7a1c8-a8d8-48e4-b9e2-e4e9b9663339
Ch 4
Cut Meaningful Taxes!
The article above was found in an Ontario newspaper last July. It is a response to the government’s much-heralded GST cut... from 7% to 6%. According to it, the average household would save about $300 a year because of this decrease in Goods and Services Tax. However, the government’s surplus last year was TWENTY-SIX BILLION dollars. The writers of this article suggest that this surplus would warrant more substantial tax relief than a 1% cut. They also divide the category “tax cuts” into two slightly more specific ones:
1) Tax cuts that improve the economy
2) Tax cuts that don’t do much
1) Cuts That Improve the Economy
Tax cuts that do fall in Category One, such as income tax cuts, encourage people to be more productive at work. Why? Income tax rates in Canada are pretty high, meaning that the harder you work, the more taxes you have to pay (because you earn more money). Doesn’t make much sense, does it? If the government lowered INCOME taxes, people would feel better about putting more effort into their jobs because they know that they’d get to keep more of their money. Canadians, then, could be persuaded to work harder, save more, and invest more - activities that would significantly improve the economy.
2) Cuts that Don’t
The average consumer’s reaction to a 1% decrease in GST:
“Oh joy! Instead of paying SEVEN percent GST, we’ll only pay SIX percent now!” Was that your reaction? …Because it kind of was mine.
Anyway, that said, our tax cuts would fall in Category Two. The reason: What does a lower GOODS & SERVICES tax make YOU want to do?
I can think of a four-letter word starting with S. Next letter’s H. Shop! A lower GST (even though it’s only one percent, hardly noticeable) would only encourage people to spend more and not save their money, which… wouldn’t be much good when they retire and realize they’re going to have to live off canned tuna for the rest of their lives.
Chapter 4 in the book explains Canada’s high tax rates, and the uses the money generated from these income taxes are put to. Canada uses a progressive income tax system; the more you earn, the more you have to pay. Which could be translated to be an undue penalty for ambitious people willing to work hard at their jobs. However, we also have a public health care system that many people are proud of. The flip side of this is the access to health care is sub par when you consider how much money is put into it. Instead of encouraging consumer spending by decreasing GST, the government should think about decreasing income tax rates to drive Canadians to work, save, and invest.
Ch 4
Cut Meaningful Taxes!
The article above was found in an Ontario newspaper last July. It is a response to the government’s much-heralded GST cut... from 7% to 6%. According to it, the average household would save about $300 a year because of this decrease in Goods and Services Tax. However, the government’s surplus last year was TWENTY-SIX BILLION dollars. The writers of this article suggest that this surplus would warrant more substantial tax relief than a 1% cut. They also divide the category “tax cuts” into two slightly more specific ones:
1) Tax cuts that improve the economy
2) Tax cuts that don’t do much
1) Cuts That Improve the Economy
Tax cuts that do fall in Category One, such as income tax cuts, encourage people to be more productive at work. Why? Income tax rates in Canada are pretty high, meaning that the harder you work, the more taxes you have to pay (because you earn more money). Doesn’t make much sense, does it? If the government lowered INCOME taxes, people would feel better about putting more effort into their jobs because they know that they’d get to keep more of their money. Canadians, then, could be persuaded to work harder, save more, and invest more - activities that would significantly improve the economy.
2) Cuts that Don’t
The average consumer’s reaction to a 1% decrease in GST:
“Oh joy! Instead of paying SEVEN percent GST, we’ll only pay SIX percent now!” Was that your reaction? …Because it kind of was mine.
Anyway, that said, our tax cuts would fall in Category Two. The reason: What does a lower GOODS & SERVICES tax make YOU want to do?
I can think of a four-letter word starting with S. Next letter’s H. Shop! A lower GST (even though it’s only one percent, hardly noticeable) would only encourage people to spend more and not save their money, which… wouldn’t be much good when they retire and realize they’re going to have to live off canned tuna for the rest of their lives.
Chapter 4 in the book explains Canada’s high tax rates, and the uses the money generated from these income taxes are put to. Canada uses a progressive income tax system; the more you earn, the more you have to pay. Which could be translated to be an undue penalty for ambitious people willing to work hard at their jobs. However, we also have a public health care system that many people are proud of. The flip side of this is the access to health care is sub par when you consider how much money is put into it. Instead of encouraging consumer spending by decreasing GST, the government should think about decreasing income tax rates to drive Canadians to work, save, and invest.
posted by Grace at
8:03 PM
6 Comments:
Nice, Nice. I agree with you on most of the points that you elaborated on. Mainly, if you lower the income percentage rate, employees would likely feel obligated to work harder because they felt like they truly earned the money that they worked for. I don't necessarily agree with Canada's progressive system. It doesn't seem to make any sense to me. People who work hard in society should be given the amount that they deserve. I would like to have a proportional system, everybody would have the same, fixed tax rate. Then it kind of ties in with the equality and fairness. Moving along, I totally agree with the healthcare in Canada, sure, it's something to be proud of but the service is way below par, and I'm talking WAY BELOW. Statistics show that it takes over 17 weeks to attain quality hospital care. Which is absolutely absurd. Nonetheless, you have some really interesting perspectives and opinions that I also seem to share with you, strange enough. Great Blog! =P
By
Jimmy, at 10:21 PM
This comment has been removed by the author.
By
wini_lao, at 6:15 PM
Hey Grace! From your blog, it seems like you don’t really support the progressive tax system that we have in Canada. However, I think the progressive tax system is more appropriate than the proportional and recessive system. It is true that people who have a higher income have to pay more taxes, but they have the ability to afford high taxes. If it is proportional then everyone will have to pay the same amount. Then, what amount is considered suitable? 20% of their income? If so, those who earn low income will have to pay a large portion of their paycheque as taxes, whereas those who earn a lot will have lots of money in their pockets. Haha, thinking about it, all the systems really suck. Also, the government is not using the taxes they collected effectively. The services we receive like Jimmy has described are way below standards. I’ve read in an article that the waitlist in hospital doesn’t decrease with the increase in taxes. What do they do with the tax money? Hmm… No wonder everyone is going towards private healthcare!
W. Lao
By
wini_lao, at 6:18 PM
This comment has been removed by the author.
By
professorwong, at 1:46 AM
For many Canadians, the reduction of GST would be highly beneficial nonetheless. There's always going to be pros and cons to every decision making affiliated with politics & government decisions. Evidently in Western nations, the method of progressive tax is the most efficient . Without a doubt the more income that an individual earns the more taxes that individual has to pay. However, this seems to be more logical than the other two tax methods. I think many would say that either we cut taxes or income taxes, however, indirectly this would affect many Canadians. Every nation has a national debt to pay off and reductions in taxes might not always be a sound idea...but hey, it wins elections. All in all, your views on the progressive tax is interesting to hear.
Jordan Wong
By
professorwong, at 1:46 AM
Everyone is not born wealthy and without high taxes, social programs cannot be funded properly.
Denmark has one of the highest tax rate in the world and they created an equal distribution of wealth within the country. They are even able to contribute to UN Millennium Goals with their surplus. This is what high taxes does if used wisely by the government. Taxes can MAKE POVERTY HISTORY. Tax cuts usually aid the rich and does not improve the overall conditions of the economy. Although the government do generate revenue from other sources, income tax provides a large portion of it. We need to establish a stable economy and eliminate unemployment. Have high taxes and provide incentives to work then people can prosper to work, save, and invest.
I agree that GST should have remained the same and the 1% difference caused more harm than good. People were encouraged to spend more contributing more to consumerism. Thus, our ecological footprints are leaving a terrible trail behind. Spending keeps the economic cycle in order. So my stance on GST remains neutral.
By
Anne, at 1:11 PM
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