Time to Scrap the GST, Write to Your MP Now!

[ice_dog]

As u recall, the Canadian GST is the brainchild of Brian Mulroney. It is also fair to say that GST is a big reason for the downfall of the Progressive Conservative. At one time, the PC had only two seats. MUlroney was public enemy number 1.

In his 1992 campaign, Chretian 'promised' to scrap the GST, but later denied he ever meant that.Rememeber the confrontation between Chretian and the waitress from MOntreal in one of CBC's town hall meeting hosted by Peter Mansbridge? That was more than 6 years ago, I think. Chretian has never forgiven CBC for this 'ambush'.


Obviously, this GST has helped the liberal to balance the budget tremendously, and achieve the eventual surplus. As a matter of fact, the surplus has been running for several years now. Guess Mulroney did the dirty work,but the smart liberal has been getting the credit for balancing the budget

According to estimate, the recent surge in gasoline price at the pump will bring in another 1.5 million GST for the Federal Governemnt.

It is about time for the government to scrap the GST or at least reduce it by half. This is not just for benefiting the 'rich'. It is to give the average joe a break.

Write to your MP now !

[Svend]

I agree.
All sales taxes are regressive because poorer people pay a higher percentage of their income on them. The most poor do get GST rebates but this just creates more bureaucracy.
The NDP has a policy to reduce the GST but not eliminate it. The Conservatives seem to have backed off making any changes. I think the first party to totally get rid of this daily reminder of our anger will do quite well in the next election.

[someone]

I agree.
All sales taxes are regressive because poorer people pay a higher percentage of their income on them. The most poor do get GST rebates but this just creates more bureaucracy.
This is a misconception that a lot of people have. It is true that the poor spend a higher proportion of their “current income” (their income in any given year) on goods and services. However, in terms of “permanent income” (the present value of a person’s income over their lifetime e.g. a doctor is “poor” when he is a student and when he retires but his permanent income is still high) a consumption tax on all goods and services is roughly proportional to income (“roughly” because it won’t be proportional if bequests after someone dies are not subject to the GST). Moreover, it the consumption tax does not cover food or rent (as is the case with Canada’s GST), it is actually progressive in terms of permanent income (the poor spend a higher proportion of their life time income on food and rent). You add on the GST rebate and it is even more progressive.

It is also important to remember that the GST replaces an invisible manufacture’s sales tax that created a greater economic distortion, so it was not really a brand new tax. Moreover, it you get rid of it, you will have to make up the revenue somewhere else.

Other advantages of the GST are that it.

1. Is paid by those who earn income from the underground economy (e.g. even drug dealers and SPs have to pay it when they spend their income.)
2. It has a positive effect on Canada’s terms of trade. Indeed, given the number of countries that have either a GST or a VAT, Canada would be at a disadvantage without it.

All this being said. I realize that people hate it and few are going to be convinced by my points. Still, you might ask why so many countries now have either a GST or a VAT.

[wollensak]

Someone makes valid points in defense of the GST.

The GST, like it or not, is the tool that has allowed Canada to pay down the debt. It is easier to administer than other forms of taxation as well, so the bureaucratic overhead is less. Notice how you never see the politicians dicking around with the GST? It's the cash cow. Also the costs of undoing the thing or changing the rate would probably be horrendous.

We're stuck with it. Other countries have much higher VAT rates than we do.
We of course look at the USA where they don't have any consumption taxes
and feel sorry for ourselves.

[Svend]

I still think any sales tax is regressive, and I'm glad the manufacturer's tax was abolished since it was a job killer.
I can see the point of a consumption tax if we're trying to discourage the use of a product.
We're not stuck with it, there are many options.
I just think we need to come up with a different tax that isn't in our face with every purchase. Whether it's raising the general income tax, putting a small tax on every stock transaction or something else, I'd like to see something else.

[someone]

I just think we need to come up with a different tax that isn't in our face with every purchase.
You could do what most counties do and simply bury the GST in the price.

[cyrus]

I will not support GST unless it replaces the income tax or a big part of it! As IMO any consumption tax is better than income tax; it makes sense from many points of view
1- Every one pays it, poor or rich
2- A drug dealer or a lawyer it doesn't matter either
3- It ties to ones actual purchase power and the will to spend
4- More disposable income encourages more consumption
5- Easy to administrate
With some modifications, the government also could ensure that the have not don't pay as much as those who do have more....i.e., reducing the tax rate on more essentials and increasing it on more luxury & durable goods
The only issue I see is on how to deal with those incomes that get saved in an interest bearing accounts rather than get spent, but I am sure there will be creative ways to take care of that too!

[ice_dog]

This is a misconception that a lot of people have. It is true that the poor spend a higher proportion of their “current income” (their income in any given year) on goods and services. However, in terms of “permanent income” (the present value of a person’s income over their lifetime e.g. a doctor is “poor” when he is a student and when he retires but his permanent income is still high) a consumption tax on all goods and services is roughly proportional to inco.....

All this being said. I realize that people hate it and few are going to be convinced by my points. Still, you might ask why so many countries now have either a GST or a VAT.



The underground economy is a legal issue and should be address as such, i.e decrminalize it. The progressive way to gain an advantage in trade is through productivity increase. Prior to 2003, the exchange rate helped the Canadian exporters tremendously, but that's anotheer issue.

To sove these problems by putting the burden on the average tax payer is unfair.

It seems to me that the crux of your argument centers on the premise that 'the end justificies the means'

[cyrus]

The underground economy is a legal issue and should be address as such, i.e decrminalize it. The progressive way to gain an advantage in trade is through productivity increase. Prior to 2003, the exchange rate helped the Canadian exporters tremendously, but that's anotheer issue.

To sove these problems by putting the burden on the average tax payer is unfair.

It seems to me that the crux of your argument centers on the premise that 'the end justificies the means'
Yes these are other issues!
As for underground economy being a legal issue, well it is also an economical issue and a huge one too!

[chd]

The Gst If It Has To Stay
Should Be On Goods Only
The Tax It Replaced The Old Fst
Take It Off The Service Side
It Is Nuts To Pay When Using A Lawyer Or Any Tradesmen
Also There Should Be A Max Amount Per Ltr
That Any Level Of Gov. Gets From Gas
That Way They Do Not Win With Higher Oil
Prices

[sizematters]

If I must pay tax, I prefer 'visible' taxes like GST rather than the old 'buried' FST or manufacturer's tax.

[cyrus]

The Gst If It Has To Stay
Should Be On Goods Only
The Tax It Replaced The Old Fst
Take It Off The Service Side
It Is Nuts To Pay When Using A Lawyer Or Any Tradesmen
Also There Should Be A Max Amount Per Ltr
That Any Level Of Gov. Gets From Gas
That Way They Do Not Win With Higher Oil
Prices
One of the main advantages of the consumption tax is its simplicity i.e., lower cost & red tapes thus playing with it too much negate the purpose.
Also it is not a good idea to exclude services or any particular industry unless your intention is to give one advantage over the other! Very very bad idea!
i.e., a purely service economy is a poor economy . . . etc!

[Don]

I agree with the others who somewhat support the GST. I rather increase the GST and lower income tax.

[ice_dog]

Yes these are other issues!
As for underground economy being a legal issue, well it is also an economical issue and a huge one too!

My point is that it is about time for our political leaders to show some
leadership, come up with some innovative solution, and set them apart from those tax acountants on Bay Street.

I never said the job of a primer minister is easy.

[oldjones]

Besides having to pay it, the GST aspect that irks me most is that it's only added on when I get to the cash, so I never really know how much I'm spending. All because Brian thought it would be a good idea. He said it was so there'd be no secret taxes and aware consumers would be alert taxpayers and demand thrifty governments: a fair enough argument.

But since almost none of us shop by running totals on a calculator, what really happens to me is that I underestimate the add-ons for taxes and buy a bit more than I would if the price included the tax. Great for the merchant, bad for me. To my way of thinking, changing the law so it required inclusion of the GST, instaed of forbidding it would make savvier consumers. Requiring that the total tax paid show as a separate line on the bill would still give us all the info we need to complain about high taxes.

Take a look at your next receipt from a gas station. That's how they've always done it.

[someone]

The underground economy is a legal issue and should be address as such, i.e decrminalize it. The progressive way to gain an advantage in trade is through productivity increase. Prior to 2003, the exchange rate helped the Canadian exporters tremendously, but that's anotheer issue.

To sove these problems by putting the burden on the average tax payer is unfair.

It seems to me that the crux of your argument centers on the premise that 'the end justificies the means'
Not really. My argument is based on a very standard result that every student who has taken a course on the taxation side of public economics learns. Over a person’s lifetime, a proportional tax on income is equivalent to a proportional tax on consumption (I’m ignoring a minor complication concerning the treatment of bequests/ inheritance). This is a very standard result. If you exempt a good that low income people spend a higher proportion of their income on (e.g. food, rent), it becomes progressive. As far as decriminalizing the underground economy, are you really suggesting that the illegal arms trade, child prostitution, etc. be legalized?

[someone]

The Gst If It Has To Stay
Should Be On Goods Only
The Tax It Replaced The Old Fst
Take It Off The Service Side
It Is Nuts To Pay When Using A Lawyer Or Any Tradesmen
Also There Should Be A Max Amount Per Ltr
That Any Level Of Gov. Gets From Gas
That Way They Do Not Win With Higher Oil
Prices
It is very easy to show that doing so would result in a greater "deadweight loss" from the tax. This is because it would distort the choices individuals make between goods and services. Simple indifference curves analysis that students taking first year economics learn, can be used to show that taxing both goods and services can raise the same revenue at a lower loss in utility to the average person.

[langeweile]

I think Canada should raise their GST and PST to a combined 30%. this way the goverment will have enough money to take care of everybody.
Why stop at healthcare and daycare.?
I think everybody should make at least $50000 per year and the goverment should pay for it.There should be also a goverment funded rebatte program if gasoline prices should get too high.
To make transition easier the goverment should also pay 50% of the cost of a hybrid vehicle.
Guaranteed pensions of 80% of your last income should become standard. If the goverment runs short of money., just raise the taxes again so they can keep up the spending.

This makes perfect sense to me?

[oldjones]

I think Canada should raise their GST and PST to a combined 30%. this way the goverment will have enough money to take care of everybody.
Why stop at healthcare and daycare.?
I think everybody should make at least $50000 per year and the goverment should pay for it.There should be also a goverment funded rebatte program if gasoline prices should get too high.
To make transition easier the goverment should also pay 50% of the cost of a hybrid vehicle.
Guaranteed pensions of 80% of your last income should become standard. If the goverment runs short of money., just raise the taxes again so they can keep up the spending.

This makes perfect sense to me? Right up there with all your other contributions.

[Svend]

It would be about 18 billion, a lot but could be made up with increasing income tax by a small percentage and getting rid of a few loopholes in that system.
That's my opinion, anyway.

I'd also increase the basic exemption, double or triple it so that more poor people aren't paying tax.

Perhaps I'm wrong and people have come around to a general consumption tax?

[langeweile]

Right up there with all your other contributions.

You are a classy guy..why can't there be more like you. This board could really benefit from it.
If you don't like my posts i suggest you put me on ignore. Or are you that desperate for attention???
Cheers my good friend.

[langeweile]

Actually it made some sense - it explained why I had this urge to boot him out of the country.

I would like to know what people think should replace the GST/PST - an increase in taxes, especially for the rich (it would be the only group to make up the difference) or do we take Lang's position - no government benefits, no taxes, including property taxes and one shotgun and a box of shells to protect that property.


bbk

Like you i like to take things to the extreme to raise a point. Taxes have gone up over the years and services haven't improved(see healthcare).
Goverments(like any other large organizations) are ill equipped to deal with issues on a personal level. The broad brush approach comes with a price tag. The question is how and when are we the taxpayers going to say enough is enough?
How much do we expect our goverment to do for us? When do we take responsibility for our own actions?
If you want to see what too much goverment does to a country and it's economy, look no further than to Europe.
I know you are getting sick of this analogy. What I can't understand is, that people don't want to learn from mistakes.

I do understand the necessity for a goverment to do certain things, but when is it enough? The cost model just doesn't work in the long run.

[someone]

I agree with most of what you said but I am curious about one thing:


GST should be removed from legal fees that are under 10K or criminal.
You don't happen to be a lawyer by any chance :D .

[Svend]

Nobody has said they liked the MST.

[langeweile]

Oh, you want to have the tax "hidden" in the price? Guess what, it was for years.

Under the Liberals, the MST was a 13.5% hidden, cascading tax. That's right kiddies, the Liberals was hosing you for almost 14%, but because it was hidden you were happy to pay.

The MST was a cascading tax, the GST is not. Need me to explain? Ok...

You buy a car. You don't see the MST because it is buried in the price. But each component of that car was taxed as it moved down the chain. The iron ore was taxed to the steel company at X+13.5% . The rolled steel was taxed at (X+13.5%)+(Value Added+13.5%). The Rolled steel was shipped to a company which makes screws. Screw price is (X+13.5%)+(VA+13.5)+ (VA+13.5%) etc etc etc all the way up the process. In other words, under the Liberal MST, you were being taxed on the tax each time a value was added.

Under the GST, only the value of the final good is taxed at 7%. Every step along the way, each firm gets the GST refunded back. The tax is ONLY on the value of the good, not on the value of the good + the previous tax.

Under the MST, the tax discriminated AGAINST Canadian manufacturers. Only items manufactured in Canada were taxed. Which means that the tax distorted the market and made it more difficult for Canadian companies to compete. Meaning less Canadian jobs.

The GST is applied to all goods, no matter what the origin is. A much more fair tax.

The MST was a hidden tax. I am assuming that most of you were not aware of its presence.

The GST is very visable.

The GST is a tax on consumption. From an economic POV, it is a decent tax because it gives us more reason to save and invest.

The GST is not going anywhere. I for one, would like to see the income tax rate fall, but the GST increase to make up for the revenue shortfall. GST should be removed from legal fees that are under 10K or criminal.


I agree. A consumption based tax makes a lot more sense than a "catch all" tax.
Either that or a flat tax.

[oldjones]

Oh, you want to have the tax "hidden" in the price? Guess what, it was for years.…edit… My guess is, you're responding to my suggestion, but I did not say "hidden" in the price; I said included in the price. Not the same thing.

The various taxes on gasoline, other than the GST, are hidden in the price (the Conservatives did nothing about that). The GST is included in the price, but is shown on your bill as a distinct and separate amount. That gives you everything Brian promised about visibility—a good thing. At the same time it means I can easily do the math to figure out what 40 litres will actually cost coming out of my wallet. I just wish it was the same at Home Depot or Loblaws as it is at Sunoco.

Taxes in some aspects are like surgery, I want to know everything there is to know, so I can make the right decision, but let's make it as painless as possible. Right now the shock at the cash from taxes I can't avoid is distracting me from what I can do to be a wise consumer. Which is why retailer's will never go for it.

[someone]

If you don't like my posts i suggest you put me on ignore.
This is really of topic but I was wondering: what exactly do the "ignore" and "buddy" options do? I assume that the posts must still come up when you read a thread.

[ice_dog]

I think Canada should raise their GST and PST to a combined 30%. this way the goverment will have enough money to take care of everybody.
Why stop at healthcare and daycare.?
I think everybody should make at least $50000 per year and the goverment should pay for it.There should be also a goverment funded rebatte program if gasoline prices should get too high.
To make transition easier the goverment should also pay 50% of the cost of a hybrid vehicle.
Guaranteed pensions of 80% of your last income should become standard. If the goverment runs short of money., just raise the taxes again so they can keep up the spending.

This makes perfect sense to me?

$50k/year is not sufficient for me. If you can make it $100K, then I am all for that 30% GST/PST you proposed....lol

[chd]

Maybe Someone Can Answer This For Me
In Ontario We Pay
7% Gst And 8% Pst
@ One Time In Nova Scotia I Think
Their Prov. Tax Was 11%
If I Am Correct They Now Pay
A 15% Harmonize Tax
What Is The Breakdown On The 15%
Is It A 7/8 Split Like Ontario
Or Is Nova Scotia Sending Less The 7% Gst To Ottawa

[chd]

Re Nova Scotia
Is The 15% Paid On Services
Or Just The 7%
Also Nova Scotia Took A Pst Hit To Harmonize The Tax
I Find That Odd

[someone]

Maybe Someone Can Answer This For Me
In Ontario We Pay
7% Gst And 8% Pst
@ One Time In Nova Scotia I Think
Their Prov. Tax Was 11%
If I Am Correct They Now Pay
A 15% Harmonize Tax
What Is The Breakdown On The 15%
Is It A 7/8 Split Like Ontario
Or Is Nova Scotia Sending Less The 7% Gst To Ottawa
It is a 7/8 split but you should be careful about comparing it to the PST as the PST was on a narrower tax base. By taxing all goods and services, you can get the same revenue with a lower tax rate. I don’t remember the source but I do recall that a number of economists studied this and concluded that the Atlantic provinces, were basically getting bribed by Ottawa (e.g. not only were they getting more revenue from the tax but Ottawa was also giving them extra payments for some reason) to accept the HST so Ottawa could claim they had “replaced/changed” the GST and thus sort of kept an election promise (which of course was not true). Of course, taxpayers in the rest of Canada would have been paying for this bribe.

[someone]

Re Nova Scotia
Is The 15% Paid On Services
Or Just The 7%

I currently live in a province that has the HST and it is basically 15% on everything you pay GST on in Ontario

[chd]

Thats What I Thought
Maybe I Am Wrong
Is Ontario Footing The Bill Agian?
Do Not Want To Sound Like A Snob Up In The Big Town
But The People Of Toronto Can Only Help Out So Much
If I Am Off Base Here Could Someone Let Me Know
Ps
I Love The Atlantic Canadians
It Is Just An Economic Question

[someone]

Thats What I Thought
Maybe I Am Wrong
Is Ontario Footing The Bill Agian?
Do Not Want To Sound Like A Snob Up In The Big Town
But The People Of Toronto Can Only Help Out So Much
If I Am Off Base Here Could Someone Let Me Know
Ps
I Love The Atlantic Canadians
It Is Just An Economic Question
I completely agree with you. I find it very frustrating living in a province were they constantly complain about being victimized by the rest of Canada but in dollar terms receive so much more from the rest of Canada than they contribute (although they do bring up a lot of counter arguments, many of questionable relevance in my opinion). That being said, I otherwise really like the people.

[langeweile]

$50k/year is not sufficient for me. If you can make it $100K, then I am all for that 30% GST/PST you proposed....lol

I am glad that somebody got the joke...sshhh I got worried for a minute

[ice_dog]

Consumption increases economic activities.

I can see now that consumption tax actually makes lots of sense because a robust economy is bad for us. Agree ?

[galt]

I confess that I have not read the entire thread but, as long as the Government of Canada is running an exhorbitant surplus :mad: then we are being overtaxed in every way shape and form unless 100% of that surplus is going toward debt repayment. The GST should be retired. It had it's uses those uses are now over. EI premiums are still going toward funding an illegally high surplus in Canada's EI fund (which is being lumped into general revenues so that Mr Dithers' budget numbers look even better). As long as the Liberal Government and Liberal Party of Canada have an outstanding debt repayment on the money that they stole from us through AdScam income tax should be reduced and as long as there is money in Ottawa being routed to special trusts (read massive slush funds) that are outside the scrutiny of Parliament no Canadian should have to pay one single red cent in tax. We deserve to know what our money is being used for. The Liberal Government under our current PM and the baffoon that preceded him have been woefully inadequate in spending that money wisely and being accountable to the Canadian Public.

True they have balanced the budget but this is because they were the beneficiaries of the Conservatives that came before them and adopted a low inflation economic strategy that drove the interest on the service charges on our national debt down thereby greatly lowering the cost of maintaining that debt.

[langeweile]

I confess that I have not read the entire thread but, as long as the Government of Canada is running an exhorbitant surplus :mad: then we are being overtaxed in every way shape and form unless 100% of that surplus is going toward debt repayment. The GST should be retired. It had it's uses those uses are now over. EI premiums are still going toward funding an illegally high surplus in Canada's EI fund (which is being lumped into general revenues so that Mr Dithers' budget numbers look even better). As long as the Liberal Government and Liberal Party of Canada have an outstanding debt repayment on the money that they stole from us through AdScam income tax should be reduced and as long as there is money in Ottawa being routed to special trusts (read massive slush funds) that are outside the scrutiny of Parliament no Canadian should have to pay one single red cent in tax. We deserve to know what our money is being used for. The Liberal Government under our current PM and the baffoon that preceded him have been woefully inadequate in spending that money wisely and being accountable to the Canadian Public.

True they have balanced the budget but this is because they were the beneficiaries of the Conservatives that came before them and adopted a low inflation economic strategy that drove the interest on the service charges on our national debt down thereby greatly lowering the cost of maintaining that debt.


<< rubbing eyes in disbelieve>> a canadian that is upset about high taxes? This can't be true.
All this time in Canada i was asking myself " Why is everybody so proud of multi billion surplus?" To me it means that we are being over taxed.
Especially if all the politicians are trying desperately to spend it i.e. National Day Care.
Thanks, you have restored my faith.

[someone]

Consumption increases economic activities.

I can see now that consumption tax actually makes lots of sense because a robust economy is bad for us. Agree ?
In the short run an increase in consumption can increase GDP but at the cost of long run growth. Higher consumption means lower savings which means lower capital accumulation. Capital accumulation is needed for long run growth. In 1968, Hong Kong had a GDP per capita significantly lower than Canada’s. One reason they have more or less caught up is their higher savings rate.

All this being said, in terms of savings/consumption rates, I don’t think the trade off between a broad based consumption tax and a broad based income tax is that great anyway (the relative price of current and future consumption is not really effected). I just wanted to make the point that when you say consumption increases led to a robust economy your statement is based on a short run analysis.

[ice_dog]

BBKing,

Just because there is a tax cut, it does not necessarily mean Toronto will start look like Detroit. It all depends how the tax reduction is done. For one thing, I am not in favor a tax cut which only benefits the top 10% earner like you...sorry about that...lol

On the other hand, just because the Federal has surplus, it does not mean Toroto will get any help(from the Fed) to solve its homless problem. Mel Lasman had a hard time with Chretian on this issue, if you recall.

[onthebottom]

Hey Ice, I'm not saying that if a responible cut is made here we would turn our Cities into Detroit etc, I was just answering Lange who's only complaint is taxes and how we should adopt American levels of taxation. I'm actually more sick and tired of someone who has moved his business from his so-called Nirvana the US to Canada, then not become a citizen thinking he can go on and on with inaccurate comments that slam Canada. If it's so bad here he should leave or at min. become a citizen and vote.

As for tax cuts - your right it shouldn't be for the top 10%, unfortunately those crying for deep tax cuts are in the 10% - me, I'm just thankful for the opportunities this Country and my hard work gave me - I don't begrudge a dime - well maybe now for small biz owners who are not citizens.



bbk


Cut taxes and grow faster (from one of bbking's favorite authors):

Larry Kudlow in the National Review Online
April 06, 2005, 7:58 a.m.
Evidence, Evidence, and More Evidence
Lower tax rates spur economic growth. End of story.

WAn opinion piece by reporter Anna Bernasek in last Sunday’s New York Times actually argues that there’s no real evidence that lower tax rates spur economic growth. Bernasek finds a couple of economists to back up her idea before concluding that tax “reform based on a notion that taxes are bad for the economy is just that: a notion not backed by strong evidence.”

Let me beg to differ in a very strong way.

Before making her strange assertions, Bernasek should have referenced the work of Harvard economists Martin Feldstein and Greg Mankiw, along with numerous articles published by the National Bureau of Economic Research. Then there’s the work of Columbia economist Glenn Hubbard and Princeton economist Harvey Rosen. These are no small thinkers when it comes to tax theory. Each has found a high correlation between lower tax rates and higher economic growth.

Then there’s the Nobel-prize-winning Edward Prescott of Arizona State and Robert Mundell of Columbia. Add two more sound minds to the lower-tax, higher-growth list. Sure, the above economists have been Republican advisors at one time or another, but Bernasek could have found a trove of data contrary to her thesis had she looked to the “non-partisan” OECD, IMF, or Congressional Budget Office.

cont....

OTB

[onthebottom]

Cont...

Then there’s the real-world evidence. Let’s start overseas.

Margaret Thatcher’s tax cuts had made Britain the strongest European Union economy until Ireland passed it with even lower tax rates. Russia and almost all the former Soviet bloc countries in East Europe have moved to low flat-tax-rate systems. Western Europe, until recently, has not. Consequently, their economic growth rate has fallen 25 percent behind the pace set in the U.S. over the last decade.

A recent BusinessWeek article notes that only last year “Germany was among the ringleaders of an effort to force low-tax countries like Estonia to raise their rates.” Now Germany is joining the race to cut taxes by slashing their corporate income tax. BusinessWeek continues, “Chances for just such economy-boosting tax cuts are looking better.” (My italics.)

Back at home, real-world evidence throughout the 20th century shows a stark contrast between high- and low-tax policies. In the 1920s, the Harding-Coolidge-Mellon tax cuts produced the Roaring Twenties. But repeated tax increases by Herbert Hoover and Franklin D. Roosevelt produced and prolonged the Great Depression.

John F. Kennedy vowed to get the economy moving again after the sluggish growth of the high-tax Truman-Eisenhower years. JFK made good on his promise when he lowered the top income-tax rate from 91 percent to 70 percent. The result was the 1960’s boom. Twenty years later, Ronald Reagan turned stagflation into the 1980’s boom by slashing the top personal tax rate from 70 percent to 28 percent.

President Clinton, you might recall, raised taxes in his first term, but lowered them in his second term, contributing to a burst of investment and growth. Note the difference. In his first four years, the economy increased at a 3.2 percent annual rate. But his next four years produced a 4.2 percent economic pace.

Are we to throw out all this overwhelming historical evidence? Hardly. More likely, former-Sen. Connie Mack, the head of President Bush’s tax-reform commission, will recommend a new tax plan for the U.S. that will borrow heavily from the path-breaking flat-tax-reform work of Steve Forbes, Dick Armey, and Art Laffer. No amount of academic-style econometric finagling can take away from the historical evidence that flatter and simpler taxes are the best way to maximize our economy’s potential to grow.

To think otherwise only defies the laws of common sense. Higher after-tax returns to work, investment, and entrepreneurial risk-taking will promote more employment, more capital formation, and more wealth. If it pays more to produce then people will produce more. As Dr. Laffer put it three decades ago, when you tax something more you get less of it. When you tax something less you get more of it. Higher after-tax rewards always generate a greater supply of work effort and investment capital.

In our capitalist free-market system, strengthening the link between effort and reward has proven to work time and again. I respectfully disagree with Anna Bernasek and the New York Times. More tax freedom will always fuel our free economy.

[someone]

To think otherwise only defies the laws of common sense. Higher after-tax returns to work, investment, and entrepreneurial risk-taking will promote more employment, more capital formation, and more wealth. If it pays more to produce then people will produce more. As Dr. Laffer put it three decades ago, when you tax something more you get less of it. When you tax something less you get more of it. Higher after-tax rewards always generate a greater supply of work effort and investment capital.

There is some merit in the rest of the post but Laffer turned out to be completely wrong regarding his famous Laffer curve. By taking his advice, Regan only increased the U.S. debt. Even in a very high taxed country like Sweden, to be on the downward sloping part of the Laffer curve you would have to have an elasticity of labour supply much greater than any creditable estimates. Moreover, history shows he was wrong.

[cyrus]

.....l this being said, in terms of savings/consumption rates, I don’t think the trade off between a broad based consumption tax and a broad based income tax is that great anyway (the relative price of current and future consumption is not really effected). I just wanted to make the point that when you say consumption increases led to a robust economy your statement is based on a short run analysis.
The trade off is more apparent in how money spent or tax collected, anyway a lower consumption tax contrary to a higher income tax has positive influence on both the rate of consumption and the savings! The rich will save more and the middle class will spend more all because they both have more money in their pockets thus both short & long terms are positive :)

[galt]

<< rubbing eyes in disbelieve>> a canadian that is upset about high taxes? This can't be true.
All this time in Canada i was asking myself " Why is everybody so proud of multi billion surplus?" To me it means that we are being over taxed.
Especially if all the politicians are trying desperately to spend it i.e. National Day Care.
Thanks, you have restored my faith.


It is not so much that I am upset about high taxes. I am upset by high taxes in return for little or no value.

While the Liberals steal from us and set up national daycare programs as "special trusts" and build other massive slush funds outside of the scrutiny of the Canadian Public that are not included in the federal surpluss and STILL they reach into our pockets at every turn. THAT is what makes me irate. If we have a surplus FINE 100% of that surpluss should be slapped down on the national debt. It should not be spent so that a special fact finding group should head to Amsterdam to check out the SP trade. It should not be spent for more Liberal kickbacks.

If BBK loves paying taxes so much I'd suggest he walk down to the office of his local MP and just hand over his paycheque as an election donation cause that appears to be where his tax dollars are going anyway

[enjoyall]

I have lived and payed taxes in both US and Canada. I have no problem writing a big check for my income tax, but I think high sales tax discourges spending. In the US I never think of sales tax when I shop for big ticket items. Now I think twice before I do it, simply because of the 15% sales tax. I had friends who fly to the US to buy those real expensive watches and diamond rings.

The government should replace the GST with some other forms of tax that is not so in your face.

[ice_dog]

Those who are in favor of GST, what if your SP or MP start charging you GST on service rendered ? You are not gonna to bitch about it, eh ?

I am not pulling your leg but in Ottawa, there is an asian barber shop where GST is applied to massage, which includes a release by hand.

But look at this :

http://story.news.yahoo.com/news?tmpl=story&cid=1548&ncid=1548&e=5&u=/afp/20050504/lf_afp/afpentertainmentnorway

[ice_dog]

Me, in favor of running the national debt ? What r u talking about ?

Seriously, before we discuss the taxation aspec, the legal issue should be addressed. I am not just convinced that all the SPs and MP attendants/owners report all their incomes honestly. No way I want to pay GST if they cannot prove to me that they actually report their income.

That is really my point. I knew some of you wouldl overlook this and jump on the tax bandwagon right away. I know tax is in your blood, bare back or otherwise, ...lol







Not really - because it's not covered under the act. Anyways Dog, I have always wondered what those who are not in favour of a national sales tax plan to replace that revenue with - personal and corp. tax increases.

Oh! I forgot you conservative types like to run up the debt.



bbk

[someone]

Those who are in favor of GST, what if your SP or MP start charging you GST on service rendered ? You are not gonna to bitch about it, eh ?

I am not pulling your leg but in Ottawa, there is an asian barber shop where GST is applied to massage, which includes a release by hand.

But look at this :

http://story.news.yahoo.com/news?tmpl=story&cid=1548&ncid=1548&e=5&u=/afp/20050504/lf_afp/afpentertainmentnorway
When I lived in New Zealand, GST was included in brothel fees as with almost everything else including food. Basically, you just accepted it.

[K Douglas]

I agree.
All sales taxes are regressive because poorer people pay a higher percentage of their income on them. The most poor do get GST rebates but this just creates more bureaucracy.
The NDP has a policy to reduce the GST but not eliminate it. The Conservatives seem to have backed off making any changes. I think the first party to totally get rid of this daily reminder of our anger will do quite well in the next election.

Poorer people also pay a higher percentage of their income on food and accomodation, so on that basis should they somehow pay less for food and rent/mortgage than someone who is middle or upper class. Your argument is foolish.
Sales taxes are the fairest of all taxes as they are charged on one's consumption and wealthier people pay more because they consume more. I would be a proponent of reducing income taxes drastically (I'd even entertain a flat tax combined with surtaxes/luxury taxes) while at the same time increasing sales taxes - GST to 10%, PST to 15-20%.
BTW, please tell me how in the hell the NDP has a plan to reduce the GST when they want to spend billions to
1) introduce a national child care system
2) meet the Kyoto targets
3) increase foreign aid to .7% of GDP
4) reduce tuition fees, reintroduce the grant system and write off millions in student loans
5) buy off votes in urban areas by transferring truckloads of cash to municipalities
just to name a few. If you believe that you're dreaming in technicolor just like most socialists do.