Alberta PST discussion

[oilyfan]

Originally Posted by CaptainYooh

Taxes should not be punitive. Consumption tax is punitive.

Income tax is punitive, after you work you get only part of your paycheque.

Consumption taxes are not punitive. On a lot of your purchases you have discretion.

[Flash Walken]

Originally Posted by Slava

How are they punitive?

We're all capitalists here, right?

We want as much capital in the economy as we can, that means as much purchasing as possible.

If the end game is to be capitalists and have as much capital in play as possible, income taxes should be the highest priority, rather than taxes on commerce. By taxing consumption you encourage consumption reduction, which stifles the economy artificially.

By taxing income you encourage less hoarding of income in the form of savings. An individual can only spend so much money in their respective economy. You can only eat out so many days of the year, you can only go to so many concerts and buy so suits. Even the hyper rich can only buy so many houses and so many cars.

By reducing the amount of income that can be taken out of the commercial economy, the more vibrant and diverse commerce will be.

Taxing commerce, a consumption tax, artificially removes potential purchasing power disproportionately against those who simply have less purchasing power to begin with.

Tax Murray Edwards more and he still buys the same amount of coffees at starbucks per year. Tax someone more every time they buy at starbucks, Murray will still be buying the same amount per year, but Locke, Slava and crazy_eoj might start cutting back on their visits as they tighten their belts.

This isn't some class warfare manifesto, it's the historical perspective on what the conditions were when Canada and the United States were at their greatest heights. There is evidence of what works, and mounting evidence of what doesn't. I'm not saying a consumption tax can't work or be applicable, but it's definitely not what I would look at first.

[oilyfan]

This discussion is less about how much capital we want in the economy and more about how to raise revenues in the fairest way possible.

[oilyfan]

http://www.theglobeandmail.com/repor...rticle1381083/

Whenever the Goods and Services Tax (GST) appears in the news, it is invariably noted that it enjoys a broad consensus of support among economists. But explanations for why it is so popular with economists are relatively rare, so here is a short introduction to the theory and evidence on the relative merits of taxing consumption instead of income

[Slava]

Originally Posted by Flash Walken

We're all capitalists here, right?

We want as much capital in the economy as we can, that means as much purchasing as possible.

If the end game is to be capitalists and have as much capital in play as possible, income taxes should be the highest priority, rather than taxes on commerce. By taxing consumption you encourage consumption reduction, which stifles the economy artificially.

By taxing income you encourage less hoarding of income in the form of savings. An individual can only spend so much money in their respective economy. You can only eat out so many days of the year, you can only go to so many concerts and buy so suits. Even the hyper rich can only buy so many houses and so many cars.

By reducing the amount of income that can be taken out of the commercial economy, the more vibrant and diverse commerce will be.

Taxing commerce, a consumption tax, artificially removes potential purchasing power disproportionately against those who simply have less purchasing power to begin with.

Tax Murray Edwards more and he still buys the same amount of coffees at starbucks per year. Tax someone more every time they buy at starbucks, Murray will still be buying the same amount per year, but Locke, Slava and crazy_eoj might start cutting back on their visits as they tighten their belts.

This isn't some class warfare manifesto, it's the historical perspective on what the conditions were when Canada and the United States were at their greatest heights. There is evidence of what works, and mounting evidence of what doesn't. I'm not saying a consumption tax can't work or be applicable, but it's definitely not what I would look at first.

I understand what you're getting at, but the fact is that the consumption tax is no more punitive than income tax. Firstly, the overall amount of money collected in taxes from the system as a whole is the same; so the overall money in circulation shouldn't change in either system. I'm not advocating a tax hike here, I'm talking about collecting the same amount of taxes in a different manner. So rather than someone receiving their wage after taxes are withheld, they will receive all of their wage (we'll still have the EI, CPP and other such deductions of course), but everyone would retain more of their income. From there they can make the decision on how and where to spend. I would advocate that areas like food and other necessities are not taxed, so we're really talking about discretionary spending.

Second, and I think that this is critical to note, is that most people are not budgeted so tightly in terms of their spending habits that a consumption tax is going to cause them to buy or not to buy. I mean in all honesty, how many of us have traveled elsewhere and paid these taxes having no idea how much they were and what they applied to? In the US for example some counties have taxes and others don't. I know that when I have been there I basically have no idea, and frankly if I assume that the total should be about $50 if it turns out to be about $55 I'm not entirely shocked. Sure there are exceptions and certain cases where this would have an impact, (large purchases for example), but lets not forget that (a) other provinces and jurisdictions have significantly higher VATs and it works just fine and (b) you will take home 10% more on every pay cheque to begin with.

I actually would put forth the idea that people would spend as much or more with this idea just based on their pay cheque being that much larger to begin with. If you give a family say $10k a year (based on $100k household income and them keeping that 10%), I have a hard time seeing everyone make the decision to just increase their bank account by 10%. Maybe that money gets invested (good for the economy for sure), maybe it gets spent the same way as today, or maybe it gets frittered away on little things here and there over the course of a year. Regardless though, this seems like a net positive for the province and economy as a whole.

[CliffFletcher]

The issue with consumption taxes is the poor and middle class devote a greater proportion of their earnings to buying stuff than the wealthy, who make so much money that they can squirrel much of it away.

[killer_carlson]

let me ask this question:

StatsCan estimated it to be $40 BILLION in unreported or underreported transactions in 2011.

For those who are advocating for a sales tax, would you be in support of greater enforcement and investigation of those businesses and persons involved in a "cash" industry? What are you prepared to do to help?

http://www.statcan.gc.ca/daily-quoti...40130c-eng.htm


"In 2011, the four most significant industries in terms of underground economy activity were construction (28%), finance, insurance, real estate, rental and leasing and holding companies (13%), retail trade (12%) and accommodation and food services (12%). These four industries together accounted for almost 65% of the total underground economy value added."

[darklord700]

Originally Posted by killer_carlson

"In 2011, the four most significant industries in terms of underground economy activity were construction (28%), finance, insurance, real estate, rental and leasing and holding companies (13%),

I don't see how you can have an underground finance, insurance or real estate industry.

[oilyfan]

Originally Posted by CliffFletcher

The issue with consumption taxes is the poor and middle class devote a greater proportion of their earnings to buying stuff than the wealthy, who make so much money that they can squirrel much of it away.

Raise the personal deduction, implement a PST

[Flash Walken]

Originally Posted by Slava

I understand what you're getting at, but the fact is that the consumption tax is no more punitive than income tax. Firstly, the overall amount of money collected in taxes from the system as a whole is the same; so the overall money in circulation shouldn't change in either system. I'm not advocating a tax hike here, I'm talking about collecting the same amount of taxes in a different manner. So rather than someone receiving their wage after taxes are withheld, they will receive all of their wage (we'll still have the EI, CPP and other such deductions of course), but everyone would retain more of their income. From there they can make the decision on how and where to spend. I would advocate that areas like food and other necessities are not taxed, so we're really talking about discretionary spending.

Second, and I think that this is critical to note, is that most people are not budgeted so tightly in terms of their spending habits that a consumption tax is going to cause them to buy or not to buy. I mean in all honesty, how many of us have traveled elsewhere and paid these taxes having no idea how much they were and what they applied to? In the US for example some counties have taxes and others don't. I know that when I have been there I basically have no idea, and frankly if I assume that the total should be about $50 if it turns out to be about $55 I'm not entirely shocked. Sure there are exceptions and certain cases where this would have an impact, (large purchases for example), but lets not forget that (a) other provinces and jurisdictions have significantly higher VATs and it works just fine and (b) you will take home 10% more on every pay cheque to begin with.

I actually would put forth the idea that people would spend as much or more with this idea just based on their pay cheque being that much larger to begin with. If you give a family say $10k a year (based on $100k household income and them keeping that 10%), I have a hard time seeing everyone make the decision to just increase their bank account by 10%. Maybe that money gets invested (good for the economy for sure), maybe it gets spent the same way as today, or maybe it gets frittered away on little things here and there over the course of a year. Regardless though, this seems like a net positive for the province and economy as a whole.

I think this is somewhat out of touch with the realities in Alberta.

As of 2012, about 143,200 children in Alberta lived in poverty — about 28,670 more children than in 1989, says the report.

The provincial government promised a poverty reduction strategy last spring, but that’s been delayed until 2015, said Lori Sigurdson of Alberta Association of Social Workers.

Sigurdson recommended Alberta start its own child tax credit similar to the federal one that funnels about $100 a month to families with children.

Children are poor because their moms are poor, as there are more women in low-paying jobs than men, said Sigurdson.

Almost a quarter of Alberta’s workers are paid $16 or less an hour, about two-thirds are women and the majority are over 25.

Income inequality is getting worse in Alberta and at a rate faster than the national average, the report notes.

“After adjusting for inflation, the top one per cent of tax filers saw a 65 per cent increase in their real after-tax incomes compared to only a 5.5 per cent gain for the bottom 99 per cent of tax filers over the period from 1982 to 2011,” says the report.

The richest Albertans have by far benefited the most. The top 0.1 per cent of tax filers saw real incomes rise by 136 per cent, compared to a rise of only 3.4 per cent in the real incomes of the bottom 50 per cent of tax filers, says the report.

The government should return to progressive income tax, Sigurdson said. It could raise $1 billion to fund anti-poverty programs with a modest increase on taxes on the very rich — from the current flat 10-per-cent rate to 13 per cent, she said.

Alberta has the richest rich and the poorest poor in the country; the most unequal populace in the country. Giving tax breaks or excluding things like groceries doesn't address that the province needs to elevate more people out of the category of 'poor' to improve the economy. Instead of eeking out a living, these people need to be buying ipads, vehicles etc., rather than generic Mac and cheese.

any way you slice it, the least impactful method of increasing tax revenue is by doing it on the absolute highest income earners. Taxing business and consumption creates artificial drags on the economy. I am not even suggesting raising income tax on anyone who earns less than 300k a year. It impacts essentially no one in the province, but vastly improves the provincial budget situation.

[OMG!WTF!]

Originally Posted by darklord700

I don't see how you can have an underground finance, insurance or real estate industry.

I assume underground finance includes Hell's Angels like lenders but mostly people claiming capital gains/losses when not appropriate. For example, you trade all year long, live off the income and try to pay capital gains instead of income tax. That's not going to fly.

Insurance I have no idea other than people reporting losses in income when it was actually covered by insurance...for example you rent a car for a week and write it off as a business expense when a portion of your insurance claim was suppsoed to cover car rentals.

Real estate is probably mostly landlords taking cash for rent and not reporting it. As well as all the common scams like replacing the shingles on your house and using the receipt as a write off against the rental income from another property. Also claiming capital improvements as maintenance on your rental property. Lots of scams out there.

If everyone actually paid their fair share we'd be flush.

PST? Most of those in favor of it (Jack Mintz et al) are also in favor of adjusting income tax and creating a revenue neutral change. When Prentice says he wants to hear everyone's thoughts on the matter, does he know that thoughts on the matter include the lowering income tax part of the equation? If not, we're all a bunch of suckers.

[#-3]

I think it is essentially unconscionable to institute a consumption tax while the flat income tax is in place. Economic disparity is becoming too great in our society, two working full time parents with two kids need to be able to live comfortably at any education or wage level. There are just too many people who are not in that position, and to tax them more without first taxing those who can afford it is wrong.

Because of the distribution of wealth in North America Tiered tax systems are need.

[Slava]

Originally Posted by Flash Walken

I think this is somewhat out of touch with the realities in Alberta.



Alberta has the richest rich and the poorest poor in the country; the most unequal populace in the country. Giving tax breaks or excluding things like groceries doesn't address that the province needs to elevate more people out of the category of 'poor' to improve the economy. Instead of eeking out a living, these people need to be buying ipads, vehicles etc., rather than generic Mac and cheese.

any way you slice it, the least impactful method of increasing tax revenue is by doing it on the absolute highest income earners. Taxing business and consumption creates artificial drags on the economy. I am not even suggesting raising income tax on anyone who earns less than 300k a year. It impacts essentially no one in the province, but vastly improves the provincial budget situation.

I guess this is where we differ. I'm pretty sure that I disagree that people who are struggling to make ends meet should be out buying vehicles and iPads. I mean we might have differing views on the working poor, but buying a bunch of depreciating crap is exactly what should be taxed. These are luxury items (no matter how commonplace they are today).

[Flash Walken]

Originally Posted by Slava

I guess this is where we differ. I'm pretty sure that I disagree that people who are struggling to make ends meet should be out buying vehicles and iPads. I mean we might have differing views on the working poor, but buying a bunch of depreciating crap is exactly what should be taxed. These are luxury items (no matter how commonplace they are today).

The point, slava, is that they shouldn't be struggling to make ends meet, because if they are, they are a drag on the economy.

Our lifestyle is built on the buying and selling of depreciating crap. That's what makes our cruddy oil so valuable.

We can have a discussion on the merits of building a society around the economics of buying and selling depreciating crap, but as long as we are actually doing it, we might as well go for the gold.

Our modern standard of living is based on crap like TVs and toasters. Now they are flatscreens and toaster ovens, but the principle is the same: the more of that crud people can buy, the more jobs and higher wages which creates more consumption and in turn more jobs and higher wages. There is a historical precedent for this in our society, and going the other way hasn't exactly yielded positive results.

[oilyfan]

Originally Posted by Flash Walken

I think this is somewhat out of touch with the realities in Alberta.



Alberta has the richest rich and the poorest poor in the country; the most unequal populace in the country. Giving tax breaks or excluding things like groceries doesn't address that the province needs to elevate more people out of the category of 'poor' to improve the economy. Instead of eeking out a living, these people need to be buying ipads, vehicles etc., rather than generic Mac and cheese.

any way you slice it, the least impactful method of increasing tax revenue is by doing it on the absolute highest income earners. Taxing business and consumption creates artificial drags on the economy. I am not even suggesting raising income tax on anyone who earns less than 300k a year. It impacts essentially no one in the province, but vastly improves the provincial budget situation.

So I guess this is the class warfare manifesto?

[Flash Walken]

Originally Posted by oilyfan

So I guess this is the class warfare manifesto?

If raising taxes on someone who earns a million dollars a year by 3% is war fare, I guess so....

[chemgear]

Originally Posted by Flash Walken

If raising taxes on someone who earns a million dollars a year by 3% is war fare, I guess so....

Then all us CPer's would have to leave the province.

[Slava]

Originally Posted by Flash Walken

The point, slava, is that they shouldn't be struggling to make ends meet, because if they are, they are a drag on the economy.

Our lifestyle is built on the buying and selling of depreciating crap. That's what makes our cruddy oil so valuable.

We can have a discussion on the merits of building a society around the economics of buying and selling depreciating crap, but as long as we are actually doing it, we might as well go for the gold.

Our modern standard of living is based on crap like TVs and toasters. Now they are flatscreens and toaster ovens, but the principle is the same: the more of that crud people can buy, the more jobs and higher wages which creates more consumption and in turn more jobs and higher wages. There is a historical precedent for this in our society, and going the other way hasn't exactly yielded positive results.

I do understand what you're saying, but the fact is people buying luxury goods is totally taxable. These aren't necessary items and they're a lot of "nice to have" things. I see your argument that the tax might cause some decrease in sales, but then how do you juxtapose that with the sales in say BC of these items? They have higher taxes, and seemingly little issue selling iPads and such in Vancouver.

[Flash Walken]

Originally Posted by Slava

I do understand what you're saying, but the fact is people buying luxury goods is totally taxable. These aren't necessary items and they're a lot of "nice to have" things. I see your argument that the tax might cause some decrease in sales, but then how do you juxtapose that with the sales in say BC of these items? They have higher taxes, and seemingly little issue selling iPads and such in Vancouver.

Well, again, this is highly anecdotal.

The fact is, Vancouver and BC have undergone a big change in the last 15 years or so. The answer is, debt:

If you look at the numbers, Vancouverites are simply too poor to afford real estate. In some areas, it’s astonishing that we even try.

The average income in Metro Vancouver in 2009, was only $41,176, according to Canada Revenue Agency statistics. In Vancouver proper, we are getting by on $43,911. However, Richmond residents are barely scraping by at $33,350 a year — the lowest average income in the region, followed by Burnaby, with an average of $34,961.

Only 0.56 per cent of British Columbians declared incomes higher than $250,000, says Andrew Romlo, executive director of Urban Futures, which studies demographics. That’s less than the proverbial 1 per cent that owns everything.

With the average selling price of a detached house in Vancouver at $1.116-million, the incomes do not jibe – even if we are the most indebted province, according to a recent TD Bank report. B.C.’s income-to-debt ratio is the highest, with Albertans a close second. But they’ve got lower house prices and high-paying jobs.

http://www.theglobeandmail.com/life/...ticle12436288/

An Equifax report in December revealed that per-capita consumer debt in Vancouver is $23,570 — higher than the national average, but lower than in either Calgary or Edmonton. And liability levels have been declining in almost every quarter since the third quarter of 2012, when average Vancouver consumer debt was at an all-time high of $24,205.

A bigger part of personal indebtedness in Vancouver, of course, is tied to mortgage debt. Nationally, nearly two thirds of debt is attributable to mortgages, and you can bet the proportion here is greater.

While some may wonder how people cope with Vancouver’s high housing costs, they do.

Possibly the best quote I recorded last year came from Cameron Muir, senior economist at the B.C. Real Estate Association, who asked this rhetorical question: “If nobody can afford to buy, how are people buying?”

His point hit home. Indeed, the typical price for a Metro Vancouver home last fall — accounting for all property types — was up nearly six per cent from a year earlier. And even in that circumstance, sales were up 8.4 per cent.

For the relatively small percentage of Vancouverites who cannot cope financially, there is either bankruptcy or a consumer proposal, the latter requiring agreement from a creditor to settle for a generally reduced payment from the borrower.

That is where Blake Elyea comes in. The senior vice-president and bankruptcy trustee at Grant Thorton tells me the biggest factor in debt loads is the “huge discrepancy in Vancouver between cost of living and income.”

With housing costs so high, “credit is becoming a necessary point of affording daily costs.” And some use their lower-interest lines of credit to pay down their higher-interest credit.

“What we’re seeing among the younger generations in particular is that it’s now normal and acceptable to carry credit card debt as a means of maintaining their lifestyle.”

Elyea says many make only minimum payments on outstanding balances and don’t get in a jam until a major life event like job loss or illness intervenes.

Seniors have the fastest-rising insolvency rate in Canada, “with B.C. higher than the Canadian average.

“Debt is the one dirty secret that individuals do not really want to talk about. When was the last time you overheard a conversation about how much debt someone was in?”

http://www.vancouversun.com/business...601/story.html

TORONTO - Canadian household debt hit a record high during the third quarter, as it grew at a faster pace than disposable income, according to the latest figures from Statistics Canada.

The total amount of credit market debt — which includes mortgages, non-mortgage loans and consumer credit — held by Canadian households increased to 162.6 per cent of disposable income during the quarter, from a revised 161.5 per cent in the previous quarter.

That means Canadians owed about $1.63 for every dollar of disposable income in the third quarter.

The previous record of 161.7 per cent was set in the third quarter of 2013.

http://www.theprovince.com/business/...139/story.html

While the average non-mortgage debt stands at nearly $27,000 for all of Canada – actually down two per cent from the end of last year – B.C. is the only province to increase, up almost four per cent at nearly $39,000.

“B.C. is actually increasing to the point we’re the most indebted citizens in all of Canada right now,” said Blair Mantin, trustee with Sands & Associates. “It’s really moving in the opposite direction to the rest of the country.”

While Mantin believes part of the reason is because other provinces, like Quebec and Ontario, have better awareness for dealing with debt, a major part is British Columbians “just aren’t dealing with their debts.”

“Normally it’s just that something happened – most of the time people are ticking along just fine and then they lose their job, or their relationship ends, or they get sick,” he said. “A lot of people are just one or two missed pay cheques away from having to be in a position where they can’t pay their debts any longer.”

http://globalnews.ca/news/615066/b-c...est-in-canada/

It's a really big problem.

[#-3]

Originally Posted by Slava

I do understand what you're saying, but the fact is people buying luxury goods is totally taxable. These aren't necessary items and they're a lot of "nice to have" things. I see your argument that the tax might cause some decrease in sales, but then how do you juxtapose that with the sales in say BC of these items? They have higher taxes, and seemingly little issue selling iPads and such in Vancouver.

The thing is in Calgary, a Computer, a Car or extra money to register in sports are not nice to haves they are needs if you want to raise your family in a healthy, active, and learning environment,

Anyone holding down a full time job should be able to provide these, a home, clothing, food, and probably a little bit of entertainment for themselves for themselves and 1 dependent. And the fact is anyone making less than $50,000/year in Calgary really cannot afford that. So to raise taxes on those people in any way, is taking people in a bad situation and making it worse, because of that the only solution is a tiered tax system like everywhere else in Canada.

The Fact is even if the rich contribute more to a sales tax, the working poor will be effected much more.

The only other solution is to pretty much double the minimum wage, but that will probably just inflame the problem because minimum wage earns would go up $20k/yr, so executives would feel it is only fair their salaries go up $100k/yr, causing inflation and putting us right back where we are. Huge income disparity,