The Commons: James Moore refuses to believe his government would increase a tax

By Aaron Wherry - Thursday, April 18, 2013 at 5:44 PM - 0 Comments

Like most everything interesting that Michael Ignatieff ever said, he probably should not have said it.

“I never want to raise your taxes; I pay them (the same way) as you do,” the former Liberal leader told a crowd in Mississauga on a July day in 2010. “But we pay them to express fundamental social solidarity, one with the other. This is the contract that holds us together.”

He had actually gone on at some length about this in a speech to the Economic Club of Canada in the fall of 2009. “Back in July, after the G8 Summit in Italy, Mr. Harper gave an interview to The Globe and Mail, in which he said, and I quote: ‘I don’t believe that any taxes are good taxes.’ Think about that for a moment,” Mr. Ignatieff begged. “It’s an astonishing statement for a prime minister to make. We pay taxes, Mr. Harper, so that premature infants get nursing care when they’re born; so that policemen will be there to keep our streets safe; so that we have teachers to give our kids a good education. We pay taxes, Mr. Harper, because we’re all in this together. It costs us something, but it makes Canada the place it is: a place where we look out for each other. But Stephen Harper doesn’t think that way. Stephen Harper thinks no taxes are good taxes because he believes that the only good government is no government at all.”

In fairness, Mr. Harper does not appear to be an anarchist. And even Ron Paul allows that the government might be of some use. And for all Mr. Ignatieff’s willingness to defend the social contract, he would move to loudly proclaim his opposition to raising the GST after being caught musing about the possibility.

Even if one does not accept Mr. Ignatieff’s larger premise, rare is anyone willing to suggest that taxes might be applied in larger quantities to anyone other than the wealthy or the faceless (corporations). Because even if no one is seriously calling for taxes to be eliminated—even if the debate is basically, if quietly, about the size, shape and execution of our fundamental social solidarity, or at least the precise number of services we would lament if they suddenly disappeared—we have generally come to Mr. Harper’s position. Taxes are bad. Mr. Harper has sworn that, so long as he is prime minister, there will be no new taxes. Thomas Mulcair has said no to increasing taxes (even if he also advocates for a price on carbon). Justin Trudeau has said he would not increase the GST, nor the corporate tax rate and he would not implement a tax on the rich. Taxing the earnings of corporations is a tax on job creators. Taxing pollution is a tax on everything. Tax Freedom Day is something that is proudly celebrated.

Possibly this is all Bev Oda’s fault, she and her $16 glass of orange juice. And at least so long as we are never in need of more general revenue, perhaps we will be fine. But this now drives us to distraction. The abject awfulness of taxes apparently now so deeply felt that one cannot even bring oneself to admit that one is responsible for the imposition of such suffering. Continue…

The Commons: Ted Menzies challenges everyone to find a tax increase in the budget

By Aaron Wherry - Tuesday, March 26, 2013 at 6:13 PM - 0 Comments

“You know, there’s two schools in economics on this,” Mr. Harper once said, “One is that there are some good taxes and the other is that no taxes are good taxes. I’m in the latter category. I don’t believe any taxes are good taxes.”

“I give you my word: As long as I will be prime minister … there will be no new taxes,” Mr. Harper had said two years before that.

Perhaps that was merely a commitment to refrain from inventing entirely new taxes that had not previously existed. But otherwise it is to wonder if the Prime Minister was a touch disappointment when he opened the budget book last Thursday and found that, not only hadn’t the Finance Minister eliminated all taxes, but he’d seen fit to budget for several increases in the cost of civil society. If he was heartbroken to read as much, it is surely a testament to Mr. Harper’s commitment to party loyalty that he has not yet gone rogue and pronounced the budget to be unworthy of his support.

As it is, it must have been rather odd for the Prime Minister to have to stand in his place this afternoon and defend such a document.

First for the opposition this afternoon was David (Furious D) Christopherson, the NDP deputy whose floppy hair has a way of bouncing in time to his indignation. Continue…

A tax on imported blankets

By Aaron Wherry - Tuesday, March 26, 2013 at 8:10 AM - 0 Comments

Mike Moffatt reviews the Harper government’s changes to the tariff system.

The 2013 Budget would decimate the GPT category, and apply the higher MFN rate to imports from the 72 countries losing GPT status. The countries losing the GPT classification comprise some of Canada’s largest trading partners and include Argentina, Brazil, China, Hong Kong, India, Indonesia, Malaysia, Russia, Singapore, South Africa, South Korea, Thailand and Turkey. Beginning Jan. 1, 2015, an imported blanket (made of synthetic fibres) imported from one of these 72 countries will be assessed the higher 17-per-cent MFN rate, rather than the 12-per cent GPT rate – making them more expensive to consumers.

By my estimate, there are 1,290 product classes where the existing GPT rate will be replaced by a higher MFN rate. It is difficult to say where consumers will feel the biggest hit from these rate increases, since import statistics at the product level are unavailable to the public. The tariff on bicycles is going up significantly (from 8.5 per cent to 13 per cent), as well as scissors (from 0 per cent to 11 per cent), rubber sandals (0 per cent to 16 per cent), wigs (0 per cent to 15.5 per cent), vinegar (0 per cent to 9.5 per cent), petroleum jelly (0 per cent to 7 per cent), carving knives (0 per cent to 7 per cent), perfume (0 per cent to 6.5 per cent) and artists’ brushes (0 per cent to 7 per cent). The tariffs on some less common goods are increasing as well, including rocket launchers (0 per cent to 7 per cent), diesel-electric locomotives (5 per cent to 9.5 per cent), swords (0 per cent to 7 per cent) and grand pianos (0 per cent to 7 per cent). Fortunately, the tariff on nuclear reactors will remain unchanged.

In defending the changes yesterday, Ted Menzies said the general preferential tariff program was a “foreign aid program.” This is basically true.

But if you’d like more information on the changes, you might consult the budget. Specifically Annex 2. Which is entitled “Tax Measures.” (The previously leaked plan to eliminate tariffs on hockey equipment and baby clothing is covered under “Supporting Families and Communities.”)

Meanwhile, Stephen Gordon deems this the anti-trade budget.

Thomas Mulcair on taxes

By Aaron Wherry - Friday, March 15, 2013 at 10:54 AM - 0 Comments

The NDP leader reminds Bloomberg that his party opposes the cuts to the corporate tax rate that have been made by the Harper government. The NDP’s budget submission in 2011 recommended setting the rate at 19.5% (the NDP’s 2011 platform committed to maintaining a corporate tax rate lower than the rate in the United States). The NDP also proposed reducing the small business tax rate and establishing a job creation tax credit. In its 2012 budget submission, the NDP asks ”the federal government to tie financial incentives to real job creation.”

More interesting, Mr. Mulcair seems to eliminate any possibility of a tax-the-rich proposal from the federal NDP.

Mulcair said he would not raise taxes for high-income earners because marginal tax rates in the country are already too high. “Absolute guarantee it will never be part of my program,” he said. “It’s never been my policy and it never will be.”

Last year, the Ontario NDP successfully convinced the Liberal government to accept a surtax on those earning $500,000 or more in return for the NDP’s support for the government’s budget. And the surtax enjoyed widespread public support.

More than three-quarters of people surveyed — 78 per cent — like her idea with only 17 per cent opposed and 5 per cent unsure, according to the Forum Research poll. “It’s hugely popular. You never see that — that’s huge,” Forum president Lorne Bozinoff said Wednesday.

Switch back to PST consumed, exhausted bureaucrats

By The Canadian Press - Thursday, February 28, 2013 at 8:32 PM - 0 Comments

VICTORIA – Exuberant British Columbians celebrated the power of direct democracy in August 2011 when they voted to kill the harmonized sales tax, but in the windowless, bunker-like rooms in the Ministry of Finance building across the street from the B.C. legislature, bureaucrats could barely hold back their tears.

“That was a sobering, sad, sad day,” said Jordan Goss, a finance ministry tax policy adviser in an interview this week.

“When that referendum result came down, we cried,” she said. “We had to keep our eyes from watering when the minister went to the press theatre.”

British Columbians had just voted in a referendum on Aug. 26, 2011, with a 55-per-cent majority, to dump the value-added tax many believed represented a sweet deal for businesses and others suggested involved a secret Liberal government plan to balance their deficit budget with federal dollars.

This past Tuesday night, almost four years after the Liberals introduced the HST in July 2009, the legislature unanimously passed its Provincial Sales Tax Transitional Provisions and Amendments Act — putting the final stake in the HST and paving the way for B.C.’s return to its former tax, the provincial sales tax, on April 1.

“As they say at the golf course, polite applause from the always appreciative gallery,” said Finance Minister Mike de Jong, who then saluted what he called the “small army of very talented taxation experts, located in a room just off site here.”

That praise may not adequately depict the work of the normally faceless and silent bureaucrats who toiled for the past four years to help introduce the ill-fated HST, only to preside over its merciless burial.

Those same people then dutifully resurrected the old PST, a task the usually publicity-phobic civil servants say was an ordeal and an accomplishment of near biblical proportions.

A team of 14 bureaucrats, including analysts, auditors and legal experts, hunkered down through the HST’s introduction and death and then through the rebirth of the old, but remodelled PST, which hasn’t been redrafted in 60 years.

Glen Armstrong, the finance ministry’s tax policy branch executive director, said he still can’t completely comprehend what the team accomplished.

He is convinced British Columbians will never know other than experience a sense of deja vu on April 1 with the return of the PST.

“In an ideal world, if one was going to rewrite a statute, this was going to be a four-year job,” said Armstrong about the government’s pledge following the referendum result to bring back the PST within 18 months.

“I don’t think that there’s any question that it is the largest legislative project ever undertaken and completed in such a short period of time. Certainly in British Columbia, and I would guess there are very few projects with the same number of people that would have been done in this period of time.”

Armstrong said he essentially spent that last 10 months — following last May’s passage of Bill 54, the Provincial Sales Tax Act — sheltering his 14-member team from their normal day-to-day ministry duties to allow them to work full out on bringing back the PST.

He said the team worked 80-hour weeks for months on end, sacrificing their personal and family time with no extra pay. The bureaucrats are excluded staff members and not eligible for overtime pay.

“As soon as the commitment was made to have the PST back on April 1, 2013, then you know what your finish line is,” he said. “Then you’ve got to do it. There’s no ifs, ands or buts, you’ve got to deliver.”

Armstrong said there was an emotional toll on his team, but nobody quit, even though he suggested his legal advisors could have easily bolted to the private sector as the most knowledgeable tax lawyers in the province.

“I still sit here and wonder,” he said.

Armstrong said the team approached the introduction of the HST with enthusiasm because many felt they were bringing a new and more efficient tax system to the province.

But that gusto was quickly challenged when British Columbians rebelled against the HST.

“What made bringing the HST so awful for the people who work here was there was 150 newspaper articles everyday complaining about it and the tsunami of it did not allow staff and officials to have the time to deal with all the issues that were being raised,” he said.

“We were swamped.”

Armstrong said the bureaucrats were insulated from the raging political debate and never commented publicly, but “who do you think is doing all the research and getting all the answers and providing all the information to the people who have to speak?”

Armstrong, like Goss, said the referendum defeat was a monumental let down.

“To work that hard and to put up with all that and then to just have it thrown out was very hard,” he said.

But the team devoted the same energy to rewriting the PST law “to put it back as well as you can to make it as structurally sound as you can.”

Goss describes the HST experience as the most exciting and rewarding of her career. But she said it took all the professionalism she could muster to tackle the PST.

“That was the best project I ever worked on in my life, the HST. It was exciting to me,” she said.

“As sick as it is, I’m passionate about tax administration. During this time, I would be saying to my husband: ‘Do you want to know something interesting?’ And he’d say: ‘Is it about the tax?’ I’d say ‘Yes.’ Then he’d say, ‘No.’”

Goss, who remembers sending PST transition emails on Christmas Eve, said she would have worked even more hours if she could have hired a nanny and housekeeper.

“We joke that our hourly wage was down to pennies,” she said. “Between the group of us, we were working 24 hours a day. Some are better working during the day, some of us through the night.”

Goss describes the last 10 months as a period where 14 people did nothing but work on bringing back the PST.

“I would not want to say it was fun, but there were aspects that were enjoyable,” she said.

“People were dedicated. You felt the support and it’s incredible how rare it is that you find good chemistry. The stars were aligned in making this work.”

Armstrong said the job isn’t finished as the government will soon be introducing PST regulations, which amount to about 200 pages of amended legislation covering where the tax applies and where it doesn’t.

The government must also get the word out to businesses that the old tax is coming back, which so far includes two mass mail outs, registration calls to 60,000 businesses, dozens of news releases and web-based briefings, requests for one-on-one consultations with finance ministry tax specialists and 66 seminars with business groups like the chamber of commerce.

Forty other similar meetings are scheduled during March.

Taxman won’t go back to routinely mailing income tax forms: minister

By The Canadian Press - Thursday, January 31, 2013 at 7:30 PM - 0 Comments

OTTAWA – A major seniors’ group called on the government Thursday to return to routinely mailing income tax forms but the minister in charge she doesn’t plan to take that step.

Revenue Minister Gail Shea brushed off concerns raised by the opposition and a seniors’ group that the new system isn’t fair.

“The way that Canadians file their taxes is changing and we are changing to meet those needs,” Shea said.

Physical forms can still be picked up at post offices and Service Canada centres, or requested over the phone.

Continue…

Richest one per cent earn a tenth of all income: StatsCan

By The Canadian Press - Monday, January 28, 2013 at 9:48 AM - 0 Comments

OTTAWA – Statistics Canada says the top one per cent of the country’s 25.5 million tax filers accounted for 10.6 per cent of the nation’s total income in 2010, down from a peak of 12.1 per cent in 2006.

However, that top one per cent also paid 21.2 per cent of all federal and provincial or territorial income taxes, down from the peak of 23.3 per cent in 2007.

In 2010, a tax filer required an annual income of $201,400 to be in the top one per cent, up from $147,500 in 1982.

Continue…

Who wants to raise the GST?

By Aaron Wherry - Thursday, January 10, 2013 at 1:09 PM - 0 Comments

Former Liberal MP Martha Hall Findlay does, apparently.

An important thing she mentioned was that if she were elected, and the LPC won a majority government (and only a majority), she would raise the GST.

The former and current Liberal leadership candidate seems not to deny this Redditor’s account.

Former Liberal leader Michael Ignatieff flirted with the possibility of proposing an increase, but then became resolutely opposed to the idea.

Stephen Gordon has argued that the cut to the GST is responsible for the current federal deficit.

99 stupid things the government did with your money: Part III

By Jason Kirby, Tamsin McMahon, Rosemary Westwood, Nick Taylor-Vaisey, and Mika Rekai - Wednesday, January 9, 2013 at 10:52 AM - 0 Comments

For taxpayers concerned with out-of-control government spending, 2012 started on a bright enough note. Last January, the Department of National Defence announced it wanted to buy 20,000 custom-printed stress balls for its staff. Once Defence Minister Peter MacKay caught wind of the plan, he quickly cancelled the contract, calling it an “unnecessary expense of taxpayer money.” Noble words, but it was a brief reprieve. As Maclean’s found once again when researching this project, whether it was Ottawa, the provinces, municipalities or the organizations they oversee, governments couldn’t help themselves when it came to doling out cash. What follows is but a fraction of the foolish, wasteful and blatantly stupid ways governments found to spend taxpayers’ money. To uncover this year’s 99 items we pored over press releases and auditor generals’ reports, sifted through proactive disclosure statements and delved into media databases across the country, ferreting out examples of spending that occurred in 2012 or came to light last year. There will be those who take issue with some items on this list, arguing, for instance, that funding rock concerts boosts the economy. But the reality is that at every level of government, we’re in far worse fiscal shape than we were even a year ago, despite all the talk of cutbacks and austerity. And as this list makes clear, those who control the public purse have yet to really change their ways.

Here are the last 33 of the 99 ways the government spent your tax dollars in 2012. (Here’s Part I and Part II)

Continue…

The trouble with taxes

By Aaron Wherry - Tuesday, January 8, 2013 at 1:35 PM - 0 Comments

The Globe wonders whether this will be the year we learn to love taxes.

It’s all part of a remarkable embrace of taxes, not only for the wealthy but for all of us. Portugal, Spain, Ireland, Italy, Greece, Britain, France, Japan and the United States have all introduced tax increases to cover growing national debts and costly stimulus programs. According to the Organization for Economic Co-operation and Development, the average tax burden increased in 26 out of 34 OECD countries last year.

Whether these tax measures can come close to solving fiscal problems remains to be seen. More interesting is the shift in our attitudes: The language around current tax debates taps into social values of fairness and equality as well as responsibility – the latest measure of patriotism is paying up.

But how exactly would this conversation take shape here? Maybe a royal commission on taxation would start the discussion. But, at least federally, the NDP leader has ruled out increasing taxes. And the frontrunner to lead the Liberal party has ruled out increasing the GST. That still leaves a little room to maneuver: a price on carbon could be part of a discussion about “paying up” and, one supposes, Mr. Trudeau could institute a small tax on the highest earners without breaking his word to focus on the middle class. And, one imagines, the New Democrats and Liberals could make the same proposals they made in 2011 to raise the corporate tax rate. But where other countries have large deficit and debt problems, the federal deficit is not talked about as a profound crisis here. Meanwhile, the spending cuts so far made by the Conservatives have not yet inspired a great deal of public consternation. And discussion about taxes probably has to start not with the question of why new revenue would be needed: what exactly makes raising revenue necessary and how that revenue would be used.

99 stupid things the government did with your money: Part II

By Jason Kirby, Tamsin McMahon, Rosemary Westwood, Nick Taylor-Vaisey, and Mika Rekai - Tuesday, January 8, 2013 at 10:38 AM - 0 Comments

For taxpayers concerned with out-of-control government spending, 2012 started on a bright enough note. Last January, the Department of National Defence announced it wanted to buy 20,000 custom-printed stress balls for its staff. Once Defence Minister Peter MacKay caught wind of the plan, he quickly cancelled the contract, calling it an “unnecessary expense of taxpayer money.” Noble words, but it was a brief reprieve. As Maclean’s found once again when researching this project, whether it was Ottawa, the provinces, municipalities or the organizations they oversee, governments couldn’t help themselves when it came to doling out cash. What follows is but a fraction of the foolish, wasteful and blatantly stupid ways governments found to spend taxpayers’ money. To uncover this year’s 99 items we pored over press releases and auditor generals’ reports, sifted through proactive disclosure statements and delved into media databases across the country, ferreting out examples of spending that occurred in 2012 or came to light last year. There will be those who take issue with some items on this list, arguing, for instance, that funding rock concerts boosts the economy. But the reality is that at every level of government, we’re in far worse fiscal shape than we were even a year ago, despite all the talk of cutbacks and austerity. And as this list makes clear, those who control the public purse have yet to really change their ways.

Here are 34 to 66 stupid things on our second annual list of waste that shows spending by all levels of government is still way out of control. Check us out tomorrow to see the last 33 stupid things your government did with your money. (And find 1 to 33 right here.) Continue…

99 stupid things the government did with your money: Part I

By Jason Kirby, Tamsin McMahon, Rosemary Westwood, Nick Taylor-Vaisey, and Mika Rekai - Monday, January 7, 2013 at 12:38 PM - 0 Comments

For taxpayers concerned with out-of-control government spending, 2012 started on a bright enough note. Last January, the Department of National Defence announced it wanted to buy 20,000 custom-printed stress balls for its staff. Once Defence Minister Peter MacKay caught wind of the plan, he quickly cancelled the contract, calling it an “unnecessary expense of taxpayer money.” Noble words, but it was a brief reprieve. As Maclean’s found once again when researching this project, whether it was Ottawa, the provinces, municipalities or the organizations they oversee, governments couldn’t help themselves when it came to doling out cash. What follows is but a fraction of the foolish, wasteful and blatantly stupid ways governments found to spend taxpayers’ money. To uncover this year’s 99 items we pored over press releases and auditor generals’ reports, sifted through proactive disclosure statements and delved into media databases across the country, ferreting out examples of spending that occurred in 2012 or came to light last year. There will be those who take issue with some items on this list, arguing, for instance, that funding rock concerts boosts the economy. But the reality is that at every level of government, we’re in far worse fiscal shape than we were even a year ago, despite all the talk of cutbacks and austerity. And as this list makes clear, those who control the public purse have yet to really change their ways.

Luxury hotels, hemp body cream and subsidized hip-hop concerts: our second annual list of waste shows spending by all levels of government is still out of control. Find 33 of those stupid things below. And check us out tomorrow to see 33 more stupid things your government did with your money. Continue…

Cities look to new billboard taxes to boost revenue

By Tamsin McMahon - Monday, December 17, 2012 at 2:36 PM - 0 Comments

(Getty Images)

In the past, when residents complained billboards were a blight on the urban landscape, politicians might have responded by banning them. Now cash-strapped cities view them as an untapped source of tax revenue.

Winnipeg city council recently debated a plan to hike taxes on billboards by as much as 380 per cent. Taxes on animated digital boards would have increased from $1,000 a year to $23,000. Last week, the city postponed the decision until next year following an outcry from the industry, which argues billboards aren’t quite the cash cow councillors believe.

Still, it appears to be a losing battle. Last month the Supreme Court of Canada refused to hear an appeal by the outdoor advertising industry to strike down Toronto’s 2009 billboard tax. The industry had argued it is an indirect tax not permitted under the City of Toronto Act. The city estimates it will bring in more than $10 million a year in added revenue, which the industry contends would be more than the profits of the billboards themselves.

Continue…

Q&A with Thomas Mulcair

By Aaron Wherry - Friday, December 14, 2012 at 2:38 PM - 0 Comments

I sat down with NDP leader Thomas Mulcair in the leader of the opposition’s office yesterday. Here is a transcript of our conversation, slightly abridged and edited.

How do you see the last year for you and the NDP? Do you feel you’re winning? Do you feel you’re getting somewhere?

We’re doing well. And the Abacus poll was confirmation of that … I dare say that we’ve been through a rough 18-month cycle. I mean, we started off in 2011 with a huge high, May 2. We realized then … It was interesting. I don’t think I’ve told too many people this story. I sat down with Jack shortly after, like two, three days after the election and when we became official opposition, he was asking me to become opposition House leader, it was a great feather in my cap. And then he said something to me that was quite interesting, he said, you know, this is a huge challenge. And I was just expecting him to be so effusive with the breakthrough and everything and he said, no, no, this is going to be a huge challenge. So then the huge challenge became all the bigger with his loss. And then we had to really work hard through a long, seven-month leadership  where we were missing a lot of our frontbenchers who were in the campaign and then we had to rebuild.

When I held the little press conference up in Toronto after the leadership, the next day, I used an expression that came to spontaneously, I said, we’re going to have a cascading transition under the sign of continuity. So I was so lucky, like somebody like [chief of staff to Jack Layton] Anne [McGrath] stayed with me long enough to hand off to [current chief of staff] Raoul [Gebert], overlapped with Raoul … So a couple of the other changes that took place were like that. We brought in a few people, the core team you still recognize when you see them around us. And so it’s been a huge challenge in terms of the structure and the organization, but some of the good points for me after becoming leader: in August I was doing my parish visit in Quebec, I would be in places like Vercheres—Les Patriotes, where Sana Hassainia is our MP, and be in a community hall on a Sunday morning with several hundred people who had all paid as part of a fundraiser, but she had municipal officials there, you know the mayors and the councillors, she had community groups, she had the schools and stuff like that. They’re getting settled in, they’re putting down roots. The same day I was at a corn roast for Helene LeBlanc and she had about 600 people and a lot of the cultural communities, so they’re setting down roots, they’re doing their fundraising, they’re getting well known in their communities, they’re in their local papers, so that part’s coming together.

Come this spring, we’re pivoting, right? We’re going to be entering the third year. And so the consolidation phase has to be finished. We’ve got to start the preparatory phase for the next campaign. Continue…

The royal commission on taxation you’ve been waiting for

By Aaron Wherry - Friday, December 14, 2012 at 12:56 PM - 0 Comments

The finance committee has released its report on its pre-budget consultations. Among the recommendations is a review of the tax system, including perhaps a royal commission.

That the federal government explore ways to simplify the Income Tax Act to reduce the complexity and inefficiency of its administration, including through the establishment of a royal commission to undertake a comprehensive review. Additionally, the government should ensure the timely assessment of income tax returns and explore the possibility of permitting consolidated reporting.

That the federal government undertake a comprehensive review of the tax system and ensure its fairness as well as neutrality by continuing to close tax loopholes that allow select taxpayers to avoid paying their fair share of tax.

Scott Clark and Peter DeVries have proposed tax reform in the past. Given the recent use of tax credits and the politics around the GST, a debate about the tax system could get interesting.

The Commons: In praise of the simple question

By Aaron Wherry - Monday, December 3, 2012 at 4:54 PM - 0 Comments

The Scene. Thomas Mulcair charged into the afternoon with a litany of concerns.

“Mr. Speaker, last quarter, Canadian economic growth slowed to a rate of just six-tenths of one per cent,” he reported. “Conservatives have now missed their own economic growth targets three quarters in a row. They have had to downgrade their economic growth forecast for 2012 by nearly a third and it is now widely expected that the Bank of Canada will have to downgrade its own economic forecast as well. The Minister of Finance announced new economic numbers just three weeks ago. Does the minister still stand by those numbers today, or will we have to downgrade his economic projections yet again?”

The Minister of Finance was not in the House, so John Baird stood to handle this one. But first, a nod to the expectant royal couple.

“Mr. Speaker, I would be remiss if I did not first stand up and extend our congratulations to the Duke and Duchess of Cambridge on the announcement coming from Burn’s House earlier today,” enthused the Minister of Foreign Affairs.

The Conservatives duly applauded.

At the far end of the room, Bob Rae leaned forward and put his head in his hands. Ralph Goodale patted him on the shoulder.

A mostly—particularly—dull and witless afternoon proceeded with little or no progress to report on much of anything. There was though at least one reasonable question. Continue…

Everything is a tax now

By Aaron Wherry - Tuesday, November 6, 2012 at 8:00 AM - 0 Comments

The idea of what constitutes a tax has expanded somewhat over the last few weeks to include measures that create government revenue and measures that raise costs. On that note, here is the statement the NDP’s Pat Martin presented yesterday before Question Period.

Mr. Speaker, a recent report shows the Conservatives collected over $8 billion in government user fees last year alone. In fact, since 2000, user fees have more than doubled, while corporate taxes have been cut in half, shifting the tax burden once again onto the back of the beleaguered Canadian taxpayer. They are not finished yet. Even though Canadians are still struggling from a devastating recession, the Conservatives are hitting them right in the pocketbook with a vast array of new taxes on everything under the sun. Passport fees have gone up, fees for nautical charts and maps, fees imposed on new Canadians, even fees for international youth exchanges. Add it all together and it amounts to a great big fat Conservative tax grab. Canadian taxpayers are sick of bankrolling the Conservatives’ obsequious tithing to their corporate puppet masters. Gouging Canadians for exorbitant service fees is no way to balance the budget.

The difference between a user fee and a tax is something John Baird asserted two years ago when he announced an increase in the air traveller security charge.

‘It is a tax because it will raise costs’

By Aaron Wherry - Tuesday, October 30, 2012 at 12:37 PM - 0 Comments

In protesting the NDP’s cap-and-trade proposal, Vic Toews adds to the definition of a tax.

They can call it whatever they want, but the NDP plan to make carbon a commodity will raise prices on consumer costs for Canadians. It is a tax because it will raise costs.

The Conservatives have already posited that “carbon pricing in any form is a carbon tax,” which would seem to cover the cap-and-trade and carbon-pricing policies they used to advocate for. But if anything that increases costs is also a tax, then seemingly even the Harper government’s current regulatory approach could be described as a tax.

The Commons: PM Harper explains why his 2008 platform was written in blue ink

By Aaron Wherry - Wednesday, September 26, 2012 at 5:27 PM - 0 Comments

The Scene. The day’s prize for Inventiveness in Partisanship goes to Joyce Bateman, the Conservative MP for Winnipeg-South Centre, who, in standing to ask the Foreign Affairs Minister about the appointment of a new ambassador to China, somehow managed to accuse the NDP of proposing a “job-killing carbon tax.”

Any backbencher, having been duly awarded one of the highest honours a group of voting-age citizens can bestow on another, can stand and publicly proclaim the party line. But only the truly exceptional can do so in reference to something completely unrelated. Bravo Madame. You have established an impressive standard that will be difficult to match. Not that we should underestimate your colleagues. Especially when they might have three years to match or exceed your accomplishment.

For sure, you should probably settle in because this joke is probably going to take at least that long to tell (or, put another way, it will probably be for at least that long that the Conservatives will continue telling it). Continue…

Idea alert

By Aaron Wherry - Tuesday, August 21, 2012 at 11:56 AM - 0 Comments

Mike Moffatt considers a pop tax.

Placing a general tax on junk food proves problematic, because one kid’s treat may be another child’s dinner (ask two people to define junk food, and you will likely get two different answers). But before you cry “nanny state,” consider this: soft drinks provide little to no nutrition, so it is easier to implement a specific tax on them than on all junk food. A tax on pop would more closely resemble the sin taxes on alcohol and tobacco. For instance, the federal government taxes beer at 31 cents a litre, and it could place a similar per-litre surcharge on soft drinks. A 2010 study in the American Journal of Public Health found that a 10 percent across-the-board increase in the price of sweetened soft drinks would lower consumption by 4 to 11 percent; therefore, even a modest tax could have a big impact.

The goal, however, is not to control pop sales but to reduce obesity. All else being equal, a 10 percent reduction in pop consumption would cut roughly 6,500 calories per year from the average American male’s diet, resulting in slower weight gain or a loss of nearly two pounds per year. This may seem insignificant, but taken over several years and across a large population segment, the weight loss adds up.

The trouble with tax-free savings accounts

By Aaron Wherry - Wednesday, August 1, 2012 at 2:51 PM - 0 Comments

Daniel Tencer reviews two new studies into the public policy implications of tax-free savings accounts, which were introduced by the Harper government in 2008.

While one in three British taxpayers now have a tax-free account, that drops to as low as one in 20 among low-income earners, the study found. “The introduction of ISAs has done little, if anything, to break down the barriers to saving faced by low-income individuals,” the study says. Not surprisingly, the main reason for not participating in the accounts was a lack of money to put in them…

Meanwhile a study from UBC economics professor Kevin Milligan, also published at the CTF, estimates that the government could have a hard time raising revenue as TFSAs grow older and larger. Milligan notes that, because TFSAs accumulate over time, eventually Canadians will have a large portion — if not all — of their assets sheltered from taxation altogether.

The current issue of the Canadian Tax Journal includes two other papers on TFSAs: one from Jonathan Rhys Kesselman on possible reforms and one from Finn Poschmann on reasons for expanding TFSAs.

Buried treasure

By Aaron Wherry - Thursday, July 26, 2012 at 1:21 PM - 0 Comments

The New York Times’ Adam Davidson used a Canadian company to setup an offshore bank account in Belize.

One often-overlooked lesson of the financial crisis is that shenanigans don’t happen in the absence of regulation; they happen when regulations are exceedingly complex and involve confusing, overlapping regulatory authorities. Collateralized debt obligations and credit-default swaps were designed to squeeze through a labyrinth of laws, rules and taxes. And most of these toxic assets were formed in offshore jurisdictions, far from prying eyes and stricter reporting requirements. When Lehman Brothers collapsed, it took regulators and creditors more than a year to find out that the company comprised nearly 3,000 legal entities spread across 50 countries.

My colleagues at NPR’s “Planet Money” recently polled several economists of all political stripes and found that while they disagreed on the right level of taxation, they generally agreed that the overly complex taxation of rich people and corporations was disastrous. It all but guarantees that those people and companies will spend an inordinate amount of money figuring out how to game the system rather than come up with new ideas that improve the economy. Economists generally agree that the best tax system would be simple and strict, offering little incentive to lobby for loopholes.

The Finance Minister pursued the issue several years ago, Paul Dewar campaigned on it during the NDP leadership race and the NDP pushed the finance committee earlier this year to study tax havens. Last year, the CBC used an NDP campaign pledge to consider the problem.

In 2007, the Harper government launched its “Anti-Tax Haven Initiative,” designed to crack down on “aggressive international tax planning and tax evasion.” The CRA boasted that it audited 1,251 cases and assessed $1.026 billion in federal tax in 2009-10. Sounds impressive. But there’s a big difference between tax assessed and tax collected, and the CRA doesn’t tell us how much it actually collected from these audits.

Michelle Gallant, who teaches law at the University of Manitoba, doubts that the CRA collected very much. She points out that most delinquent taxpayers wind up negotiating a settlement with the taxman for considerably less than the amount assessed, and that the negotiations and the appeal process can drag on for years. So the NDP plan to collect a billion dollars next year, and $3.2 billion by year four looks like a bit of wishful accounting.

A recent international report estimated the existence of trillions of dollars in global funds stashed in offshore accounts.

The popularity of taxing the rich

By Aaron Wherry - Friday, April 20, 2012 at 2:06 PM - 0 Comments

Further to this post last week, a new poll in Ontario finds massive support for a proposal of the province’s NDP.

Ontarians overwhelmingly favour NDP Leader Andrea Horwath’s proposal to raise taxes on people who earn more than $500,000 a year, a new poll suggests. Horwath has put forward the wealth surtax as one of her party’s conditions for supporting Liberal Premier Dalton McGuinty’s budget, which will be voted on next Tuesday.

More than three-quarters of people surveyed — 78 per cent — like her idea with only 17 per cent opposed and 5 per cent unsure, according to the Forum Research poll. “It’s hugely popular. You never see that — that’s huge,” Forum president Lorne Bozinoff said Wednesday.

Ms. Horwath would tax those earning more than $500,000 at a provincial rate of 13.16% (up from 11.6%).

There are no such proposals presently on offer at the federal level. During the NDP leadership race, Brian Topp proposed a tax rate of 35% for those earning over $250,000 and Nathan Cullen suggested a rate in the “low 30s” for anyone earning over $300,000 per year. Thomas Mulcair questioned the wisdom of those proposals.

Three years ago, the Bloc Quebecois suggested taxing those earning more than $150,000 an additional 1%.

Taxes, equality and what we’re prepared to do

By Aaron Wherry - Tuesday, April 10, 2012 at 1:42 PM - 0 Comments

An Environics survey commissioned by the Broadbent institute finds concern about inequality and interest in increasing taxes.

We asked: “Would you personally be very, somewhat, not very or not at all willing to pay slightly higher taxes if that’s what it would take to protect our social programs like health care, pensions and access to post-secondary education?” Two-thirds (64%) of Canadians said yes. Almost one-quarter (23%) are “very willing” to pay more  taxes to save social programs; 41% are “somewhat willing” to pay slightly more tax … 

An overwhelming majority of Canadians (83%) are in favour of increasing income taxes on the wealthiest and those at high-income levels are just as supportive of this proposal. Canada used to have an inheritance tax but it was scrapped in the 1980s. Our research shows that most Canadians (69%) support the introduction of a new 35% inheritance tax on any estate valued above $5 million. Finally, the majority of Canadians want corporate Canada to play its part too. Almost three-quarters (73%) of Canadians support gradually increasing corporate tax rates back to 2008 levels—even a majority of Conservative voters support this measure.

You can quibble with what these numbers really indicate, but the findings roughly match what Innovative Research found on a couple of questions last month. Continue…