If you tax every stage of handling and production, the taxation cascades and you end up paying tax on the tax on the tax.
What taxes do you prefer?
- Thread starter Machjo
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If you tax every stage of handling and production, the taxation cascades and you end up paying tax on the tax on the tax.
If I'm not mistaken, the GST applies only to the final end user and is not charged on products going into other products along the production scale, so i don't think that's a problem in itself. The problem I see is that taxing the end product is too blunt of an instrument. For example, imagine a product that contains some environmentaly friendly chemicals and harmful ones at a 9:1 ratio and another at a 5:5 ratio. If we taxed the source producer or extractor of the harmful chemical, then the second product would be more expensive as a result of the extra cost of the harmful chemical, while the otehr product would be less expensive by avoiding so much of the harmful chemical. By taxing the end user, both products pay the same GST and so provides no incentive to actually cut back on the use of that harmful chemical.
I'm almost tempted to create a new thread and poll: Should we tax the original extractor or producer or should we tax the end user? I'd vote the former.
I think the whole taxation system should be scrapped and started over from scratch. What has been done over the years is adding taxes here, exemptions there, tweaking and fiddling until nobody understands the system completely.
I still favour a flat tax for everyone. make it fair and reasonable with no exemptions. No extra taxes on anything.
It isn't fair to tax legal products heavily while others go untaxed. There was a time when cigarette companies funded much of what the government is now scrambling to fund and not making it. People are going to smoke no matter what and it would be better to sell cigarettes like any other product than to lose the market completely to other sources.
I don't believe the debt will ever be paid. so we might as well forget that pipe dream. It should never have happened. The interest on the national debt would relieve the need for a deficit every year. Add to the National debt the Provincial and Municipal debts and it's an impossible burden to ever be free of.
As for health care, yes I agree with a two-tier system. I don't think anyone who is not a legal citizen should receive free health care. Private health care services should also be allowed.
I think Health Care should either be run by the Federal or Provincial government; there shouldn't be the overlap that there is now. All the overlap does is provide a 'pass the buck' excuse whenever a problem arises.
Government is too big, top heavy and too authoritarian. If something isn't changed soon we are going to end up with the same revolt that is now taking place in the U.S. The 'little' people are fed up!
I don't believe that a business that buys a product from anotehr business to then include it in its own production pays the GST on that product. The GST really is an exclusively end-user tax. That's one of its virtues. I'd just reverse it and make it a source tax on undesirable products and services instead and eliminate any end-user tax.
What happens when you are manufacturing is that you pay the GST for the component goods and services and then claim the GST that you paid back.The end user pays the final value added shot and does not get to claim it back.
Manufacturers remit GST right away for their materials but there is a quarterly lag between shelling it out and getting it back... interest free, too. Who knows how many untold billions are collected by that fiddle? Like, how many untold billions are collected by harvesting excess income tax from us quarterly, that is rebated to us annually with no interest paid for all those months when they had your money?
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Good points. So not only would a source producer or extractor tax allow for more precision taxing, but would also allow many businesses to simply operate tax free and so cut out much of the bureaucracy and interest collected on taxes too.
The government could also increase the tax on source products to compensate for the loss of revenue. That way, responsible buyers would pay less tax while less responsible buyers would pay more tax.
GST goes right from raw materials clear up the supply chain to finished product served to the end user.
As Curious CDN said, they can claim it back. That is what I intended in my earlier post but he just explained it in more detail. They pay it but claim it back, so essentially don't pay it. But he did bring up the point of the lag which costs interest on that money which must be passed on to consumers, not to mention the extra administrative costs.
With that in mind, a tax at the source makes more sense than an end-user tax. It's more precise, can collect more money in one shot, and so reduces administrative costs and makes it more efficient.
Again, the government could always charge a high source tax on undesirable products and services to compensate for the lost revenue from products and services that would no longer be taxed.
Okay, I might be wrong. If so, then this amounts to a hell of a lot of bureaucracy and administration of collecting a dollar here and a dollar there. Why not just charge one large source tax on undesirable products? This would mean fewer taxes but larger taxes. Less overhead costs to collect large sums, so making the work worthwhile. Shy put so much work into collecting pennies at every turn? Too much administrative overhead.
If Trump unilaterally scraps NAFTA, I say we gradually introduce an export tax of X$/kg to the US and gradually eliminate any remaining import tariff from the US.
It might seem counter-intuitive and would undoubtedly hurt some Canadian industries (as any trade-war tactic will), but it would be the most effective way to create sufficient inflation in the US economy to cause a rapid reaction on the part of the US electorate against protectionism so as to force Trump to back down and return to free trade.
The US has a distance advantage over any other trade partner, so no matter what, we'll need to promote trade with it.
That said, yes, we should expand our trade agreements. I would start with a circumpolar multilateral agreement with any interested state. This could include Greenland, Russia, and the Scandinavian countries. We should invite Alaska (i.e. the US) too, but under Trump, it will probably refuse unless we can force his hand in some way such as how I'd advised above. Given the economic weight of the US compared to Canada, we'd need to do a little bit of economic Kung fu to even the odds. That's where I think an export tax by weight would be a good strategic move to hit the US where it hurts the most: in the importation of raw materials and minerals. A by-weight tax would make Canadian raw-materials exports to the US very expensive and higher-end products less expensive. We should scrap that export tariff the moment Trump finally gets his act together though. It should be used only as a trade-war tactic if it comes down to that since it would hurt Canada too.
Friedman on free trade for dummies:
Read NAFTA. You'll learn what has tarrifs, preferred source countries to buy from to enjoy lower tarrifs etc but one thing you'll also learn is everybody pays GST