GST - Should it be raised?

[Goober]

Increasing tax rates is not always a revenue generator - The Globe and Mail

The Conservatives’ decision to cut two percentage points from the GST removed roughly $12-billion from the federal government’s revenues, and closing this hole in the budget balance will require some combination of spending cuts and tax increases. While the Conservatives have made it clear that they will not increase taxes, the opposition parties have proposed that instead of cutting programs, some taxes should increase. But the estimated revenues that are associated with these measures are overstated by a factor of at least two, and probably much more

A similar story can be told for corporate taxes: this study of OECD countries finds that a 10 per cent increase in the corporate tax rate reduces the tax base by about 7 per cent. It is standard practice in Canadian politics -- government and opposition parties alike -- to assume that this effect is zero. The actual effect of a corporate tax increase on revenues will be a fraction of estimates based on an assumption of no behavioural responses.

One of the reasons why the GST is such an effective generator of revenues is that it generates very little in the way of a behavioural response. The GST tax base is relatively stable: people generally buy almost as much after an increase in the GST as before.

It may be politically attractive to talk about taxing corporations and high earners, and there may be advantages for doing so that have nothing to do with revenue generation. But the effects of these measures on the budget balance are being greatly overestimated.

 

[mentalfloss]

No.

Raise corporate taxes, but not GST.

 

[Goober]

No.

Raise corporate taxes, but not GST.

Why?

 

[TenPenny]

To me, I am in the high income rate and a raise in GST would affect me substantially.

Only if you spend that money.

That's the beauty of the GST; you can choose whether to spend the money or not.

 

[mentalfloss]

Why?

Because they can still make a profit.

 

[Machjo]

Should the GST be raised. As a consumption Tax it is the fairest tax possible. The more you consume the more you pay.

Should it raise with corresponding lowering of Income Tax Rates. Lower incomes to gain more (GST Rebates) and higher thresholds for basic Income Tax - Increasing support for elderly low income.

Food and other items would be exempt, such as prescription drugs and I am sure a few more could be added.

Myself I think the Cons have screwed up the Tax system with some useless deductions -Sports for one - Transit for another.

And cutting the GST. Dumb move.

The GST might be fine as a temporary measure to pay off the debt. As a long-term tax though, it's too broad. If we're talking about covering things all should have a right to, such as children's public education, police, courts and such, then I'd say income tax since who can afford it should pay into it.

However, if we're talking about things not everyone uses as much, then make the tax more consumption based. For example, road construction could come from a gas tax. Likewise with financing asthma research and such. Funding care for heart disease and such maybe from cholesterol laden raw ingredients such as meat milk and eggs, etc.

So I would argue that no, a universally applicable consumer-ended tax is not the fairest tax for most things, but rather a resource tax, with income tax for those services all ought to have equal access to.

 

[taxslave]

Fairness is of course relative to the reason you are consuming. For example if I
have lots of income and sufficient disposable income paying tax on consumer
goods is not a burden at all. The same can be said if I have lots of income and
I pay more tax it is not as serious as someone who has almost no disposable
income and is paying taxes.
The poor however don 't see it as fair as you might. If they require items that are
taxed and pay that tax there might not be disposable income to buy enough milk
for the children today. Oh they get refunds and what have you because they are
poor. They do not get their amount of tax returned, and more important they need
the money today for necessities not in a few months when some is returned.
Besides I am not in favour of these taxes as the business community gets almost
everything back and they don't pay for the their fair share in the end. Secondly
if they were to lighten the income tax burden on the business community they
would get almost everything back without paying anything in the end.
What should happen is their should be an income tax reduction of sorts and then
close all the deduction loopholes for everyone including business.
We have to get everyone paying something. I believe business should not get
away with passing the bulk of their tax burden on to consumers and at the same
time I believe even those on social assistance should pay even five or ten dollars
a month for taxes, as it reflects their contribution by income, and at the same time
the image of everyone paying allows those on assistance an even say as they
would be paying taxes too.

You , like so many people need to learn some fundamentals about taxation. First and most important business does NOT pay any tax. Never have and never will. To a business all taxes are an expense that is simply added into the retail price of their product. This harms the poor far more than those that are better off since it also includes food stores.
Next. As taxes go consumption taxes like the GST/HST are far more fair than income taxes as well as an incentive to save money. DOn't buy **** you don't need and you don't pay taxes.
Most of the poor get far more back in credits and government services than they will ever pay in taxes.
The best way to keep taxes under control is to scream really loud every time any level of government wastes money.

Where we could possibly raise tax money without hurting Canadians is an export tax as high as the market will bear and still leave us competitive.

 

[Goober]

You , like so many people need to learn some fundamentals about taxation. First and most important business does NOT pay any tax. Never have and never will. To a business all taxes are an expense that is simply added into the retail price of their product. This harms the poor far more than those that are better off since it also includes food stores.
Next. As taxes go consumption taxes like the GST/HST are far more fair than income taxes as well as an incentive to save money. DOn't buy **** you don't need and you don't pay taxes.
Most of the poor get far more back in credits and government services than they will ever pay in taxes.
The best way to keep taxes under control is to scream really loud every time any level of government wastes money.

Where we could possibly raise tax money without hurting Canadians is an export tax as high as the market will bear and still leave us competitive.

Consumption tax - Wikipedia, the free encyclopedia

Value-added taxA value added tax (VAT) applies to the market value added to a product or material at each stage of its manufacture or distribution. If a retailer buys a shirt for $20 and sells it for $30, this tax would apply to the $10 difference between the two amounts. A simple VAT would be proportional on consumption but also be regressive on income at higher income levels (as consumption falls as a percentage of income). Savings and investment are tax-deferred until they become consumption. A VAT may exclude certain goods, intent being creating progressive effects. The tax is used in countries within the European Union.

In Australia, Canada, New Zealand, and Singapore this form of national tax is called a Goods and Services Tax (GST). In Canada it is also called Harmonized Sales Tax (HST) when combined with a provincial sales tax.

 

[wulfie68]

You , like so many people need to learn some fundamentals about taxation. First and most important business does NOT pay any tax. Never have and never will. To a business all taxes are an expense that is simply added into the retail price of their product. This harms the poor far more than those that are better off since it also includes food stores.
Next. As taxes go consumption taxes like the GST/HST are far more fair than income taxes as well as an incentive to save money. DOn't buy **** you don't need and you don't pay taxes.
Most of the poor get far more back in credits and government services than they will ever pay in taxes.
The best way to keep taxes under control is to scream really loud every time any level of government wastes money.

Where we could possibly raise tax money without hurting Canadians is an export tax as high as the market will bear and still leave us competitive.

You're being disingenuous. Businesses TRY to recoup what they pay in tax, as well as grabbing every deduction possible, deferring the taxes they pay and lobbying for more tax relief. They do not, however manage to get out of paying.

As for the basic argument, the whole GST-VAT vs income tax debate has been going on at least since Mulroney instroduced the GST, and probably before then. I liked the idea, once I got over my born-in-Alberta revulsion of all things sale tax. I heard my uncle (a now-retired senior bean counter for Revenue Canada) talk about it one time, during a family BS session, that there was pressure to do away with income tax entirely when the GST was introduced, and move to a purely consumption based tax but the federal civil service unions vowed to fight it as hard as they could because simplifying the tax code in that manner would have cost too many jobs to both private accountants and Revenue Canada staff.

ps and it was the Liberals who were/are primarily responsible for the bureaucratic abortion that our tax system is, so lets try to refrain from dumping that where it doesn't belong. They did have some help from Conservative gov'ts, but its mostly on the Libs.

 

[taxslave]

You're being disingenuous. Businesses TRY to recoup what they pay in tax, as well as grabbing every deduction possible, deferring the taxes they pay and lobbying for more tax relief. They do not, however manage to get out of paying.

As for the basic argument, the whole GST-VAT vs income tax debate has been going on at least since Mulroney instroduced the GST, and probably before then. I liked the idea, once I got over my born-in-Alberta revulsion of all things sale tax. I heard my uncle (a now-retired senior bean counter for Revenue Canada) talk about it one time, during a family BS session, that there was pressure to do away with income tax entirely when the GST was introduced, and move to a purely consumption based tax but the federal civil service unions vowed to fight it as hard as they could because simplifying the tax code in that manner would have cost too many jobs to both private accountants and Revenue Canada staff.

ps and it was the Liberals who were/are primarily responsible for the bureaucratic abortion that our tax system is, so lets try to refrain from dumping that where it doesn't belong. They did have some help from Conservative gov'ts, but its mostly on the Libs.

Not so. Business either recoups what they pay in tax in the form of higher prices or they either move to a lower tax jurisdiction or go bankrupt. There is no inbetween.

 

[DurkaDurka]

Well lower taxes all around stimulates economic growth, so if we're willing to lower the corporate tax rate it only seems reasonable that everyday consumers like you and me also get a tax reduction. Lower taxes help combat a recession and as far as the deficit is concerned, we can keep lower taxes if we're willing to cut costs in other areas.

Lower taxes don't mean squat if you don't have a job...

 

[captain morgan]

Lower taxes don't mean squat if you don't have a job...

It's a catch-22... Increase the cost of doing business too much and the job market gets impacted in response.

 

[wulfie68]

Not so. Business either recoups what they pay in tax in the form of higher prices or they either move to a lower tax jurisdiction or go bankrupt. There is no inbetween.

And you're wrong. Small businesses are probably the best example of how you are mistaken. Business plans do not have to based on zero tax to be successful, they just have to appropriately plan for the level of taxation they will be exposed to. You're somewhat correct in stating they pass on higher costs, because in most business the margin is what they live or die on, but that doesn't mean they don't pay.

 

[mentalfloss]

Small businesses are probably the best example of how you are mistaken. Business plans do not have to based on zero tax to be successful, they just have to appropriately plan for the level of taxation they will be exposed to.

An excellent point that too many on the right don't realize or are paid to obscure.

 

[DurkaDurka]

It's a catch-22... Increase the cost of doing business too much and the job market gets impacted in response.

I don't have a problem with lowering taxes. What I dispute is his over-simplification of lowering taxes = good economy.

 

[Machjo]

I don't have a problem with lowering taxes. What I dispute is his over-simplification of lowering taxes = good economy.

Agreed. Reagan and the Bushes took that philosophy too far, lower taxes and increase military spending, and look where the US is now.

 

[DurkaDurka]

Agreed. Reagan and the Bushes took that philosophy too far, lower taxes and increase military spending, and look where the US is now.

That's all it is, political rhetoric for the most part.

 

[mentalfloss]

I don't have a problem with lowering taxes. What I dispute is his over-simplification of lowering taxes = good economy.

Yup. Another good fallacy that the right suffer from.

I suggest everyone picks up this wonderful book which points out economic fallacies of both the right and left:

Mine is coming in by the end of the week.

 

[captain morgan]

An excellent point that too many on the right don't realize or are paid to obscure.

?????

 

[JLM]

Should the GST be raised. As a consumption Tax it is the fairest tax possible. The more you consume the more you pay.

Should it raise with corresponding lowering of Income Tax Rates. Lower incomes to gain more (GST Rebates) and higher thresholds for basic Income Tax - Increasing support for elderly low income.

Food and other items would be exempt, such as prescription drugs and I am sure a few more could be added.

Myself I think the Cons have screwed up the Tax system with some useless deductions -Sports for one - Transit for another.

And cutting the GST. Dumb move.

NO- How is raising the "price" of goods going to help. If times are as tough as many make out, then people are taking a close look at wants vs. needs, they are eliminating the "wants" and paring down the "needs" and prices determine what gets pared.