Canadian Federal Politics Thread v5

[belsarius]

Originally Posted by Slava

That's why things like the GST credit and exemptions exist. A high GST means a higher GST credit, and reduced income taxes mean that for lower income people they pay less tax as well.

This is a really good point. One of the best things of GST as a consumption tax is they have tried to make it as progressive as possible by excluding a lot of basic necessities. Things that low income people will spend the bulk of their money on is already exempt.

I wouldn't mind seeing it go even further towards a luxury tax, where the GST % scales with the size of the purchase. A $15,000 civic can be taxed differently than a $70,000 Sienna.

There are lots of options to move our taxation system to a consumption based over income based while still ensuring the bottom rung isn't punished.

[Superflyer]

https://twitter.com/user/status/1648444828362100739

Article was probably written by someone on the 31% of CBC that is not paid off by the government.

[Ozy_Flame]

Originally Posted by belsarius

There are lots of options to move our taxation system to a consumption based over income based while still ensuring the bottom rung isn't punished.

Would love to see this also paired with stronger "right to repair" laws in Canada.

[PepsiFree]

Originally Posted by Fuzz

They don't need to lose their jobs, they can then go on to dealing with all those things they don't have time to, like going after creative accounting and offshore accounts attempting to skirt paying taxes. As long as they can bring in more tax dollars than they cost, keep them on.

It would be significantly cheaper and bring in significantly more $$$ for the government to pursue tax reform and close many of those loopholes and opportunities for “creative accounting.”

[iggy_oi]

Originally Posted by Slava

That's why things like the GST credit and exemptions exist. A high GST means a higher GST credit, and reduced income taxes mean that for lower income people they pay less tax as well.

Even the ones who don’t pay any income tax because they earn below the minimum income required? I’m gonna give you the benefit of doubt and assume you forgot about them before making that comment, otherwise we’ll have to start questioning how good the financial advice you give people for a living really is

[GGG]

Originally Posted by iggy_oi

Even the ones who don’t pay any income tax because they earn below the minimum income required? I’m gonna give you the benefit of doubt and assume you forgot about them before making that comment, otherwise we’ll have to start questioning how good the financial advice you give people for a living really is

What % of income do you think those making 14000 or less in income are spending on non-exempt goods?

[belsarius]

Originally Posted by Fuzz

They don't need to lose their jobs, they can then go on to dealing with all those things they don't have time to, like going after creative accounting and offshore accounts attempting to skirt paying taxes. As long as they can bring in more tax dollars than they cost, keep them on.

This is precisely how it should work.

Just anecdotally but I brought in a new AP automation to my accounting team last year. Just simple document scanning and matching AI program that ended up removing 80% of the data entry the team was doing. My boss was wondering how many positions it would save, but instead of replacing people, it allowed the team to focus on those 20% of invoices that had issues. In the past they would sit on a desk for weeks or months before getting dealt with because of time constraints, and many times ended up becoming a loss for the company due to not dealing with it. Now we get all of these issues cleaned up promptly because we are using the automation where we can and I am having a lot less fights with vendors over issues that no one really remembers.

[opendoor]

I suspect there's a reason that there isn't a single (correct me if I'm wrong) industrialized country that relies primarily on consumption/excise taxes for revenue.

Portugal and New Zealand are the highest (38-39% of tax revenue), but Canada is already at about 23-24%, so getting to that level would only replace about 1/3rd of personal income tax revenue.

[iggy_oi]

Originally Posted by PepsiFree

I am definitely 100% on the side people banding together to push for better incomes and better outcomes, but this really does seem like a terrible scenario for the CRA. If there’s one job that is on the razor’s edge of being made obsolete, it’s any who deals primarily with tax filing.

In 5-10 years they will likely need 5-10% of their current staff level. I would be more focused are fighting for some sense of long term job security than I would be for higher wages.

If you think that your job is going to be made obsolete you’re probably better off maximizing what you can make while you still have the job since you can’t really force an employer to create jobs, no?

I’m reasonably confident that their collective agreement likely already has some language in it that would protect them from being terminated if other jobs they can do exist at the time when their job is obsolete.

Jobs like these are going to make UBI necessary sooner rather than later.

I really can’t get on board with UBI, too many long term problems with it. Also I think the estimates people are making regarding job elimination at the CRA as a result of AI are pretty high.

[iggy_oi]

Originally Posted by GGG

What % of income do you think those making 14000 or less in income are spending on non-exempt goods?

It really doesn’t matter in the context of what I’m saying.

How much do you think they spend on non-exempt goods though? Utilities, cell phones, clothing, hygiene products, etc. It all adds up, especially if you double the GST.

[Fuzz]

But then you double the rebate. Currently, at $14000 income, that's a $467 rebate, which would cover $9340 of non exempt spending. Because you don't pay GST on rent, that sure sounds like you'd be "winning" most of the time.

[Slava]

Originally Posted by opendoor

I suspect there's a reason that there isn't a single (correct me if I'm wrong) industrialized country that relies primarily on consumption/excise taxes for revenue.

Portugal and New Zealand are the highest (38-39% of tax revenue), but Canada is already at about 23-24%, so getting to that level would only replace about 1/3rd of personal income tax revenue.

Well it could be that a pure consumption tax is unrealistic, but there are plenty of examples of countries that rely on higher consumption taxes for their funding.

Originally Posted by iggy_oi

Even the ones who don’t pay any income tax because they earn below the minimum income required? I’m gonna give you the benefit of doubt and assume you forgot about them before making that comment, otherwise we’ll have to start questioning how good the financial advice you give people for a living really is

This post is a great example of why I ignore 95% of your drivel.

[iggy_oi]

Originally Posted by Slava

This post is a great example of why I ignore 95% of your drivel.

I’ll make a note that statements directed at you that are clearly made in jest are your kryptonite. But I’m glad to see you still can’t resist reading 5% of what I post.

Based on what I’ve read on this forum you’re obviously very knowledgeable about investments, perhaps I wrongly assumed you would pick up on the fact that I was only kidding. Pals?

[bizaro86]

Originally Posted by iggy_oi

I’ll make a note that statements directed at you that are clearly made in jest are your kryptonite. But I’m glad to see you still can’t resist reading 5% of what I post.

Based on what I’ve read on this forum you’re obviously very knowledgeable about investments, perhaps I wrongly assumed you would pick up on the fact that I was only kidding. Pals?

Ah, the classic "I've been proven quantitatively wrong, but actually I was only kidding, psych!" Well played.

[iggy_oi]

Originally Posted by Fuzz

But then you double the rebate. Currently, at $14000 income, that's a $467 rebate, which would cover $9340 of non exempt spending. Because you don't pay GST on rent, that sure sounds like you'd be "winning" most of the time.

The problem is that under the current format low income earners still have to cover those costs before receiving a their rebate. So if they’re already having to go into debt in the interim the increased interest payments on additional borrowing start eating away at that increased rebate and they’re further behind.

[bizaro86]

Originally Posted by Fuzz

They don't need to lose their jobs, they can then go on to dealing with all those things they don't have time to, like going after creative accounting and offshore accounts attempting to skirt paying taxes. As long as they can bring in more tax dollars than they cost, keep them on.

I think the potential problem with this plan is a lot of the CRA employees are basically data entry/fact checker types. I'm doubtful they'd be much use in trying to untangle the transfer pricing between Galen Weston's offshore entities.

[iggy_oi]

Originally Posted by bizaro86

Ah, the classic "I've been proven quantitatively wrong, but actually I was only kidding, psych!" Well played.

What are you taking about? I was clarifying that the tongue in cheek comment I made was in jest, I stand by the other part of what I said. Read my response to Fuzz.

Sorry if your “gotcha” post didn’t turn out as you had intended, but I have faith that you’ll bounce back from this.

[opendoor]

Originally Posted by Slava

Well it could be that a pure consumption tax is unrealistic, but there are plenty of examples of countries that rely on higher consumption taxes for their funding.

But then what does that really achieve? You still have the administrative burden of running an income tax system, while having high consumption taxes which can depress domestic consumption.

And such a move would penalize older people without a proper (and expensive) transition plan. They've saved after-tax money for retirement on the premise that their tax burden will be lower in retirement with their lower income, but now all of the sudden their consumption would get significantly more expensive. And the same would apply to any low-saving demographic (generally lower-to-middle income) whose tax burden would likely increase.

That's not to say that increasing VATs can't be a good idea, but a wholesale change to the tax system is likely to introduce more problems than it solves.

[Fuzz]

Originally Posted by iggy_oi

The problem is that under the current format low income earners still have to cover those costs before receiving a their rebate. So if they’re already having to go into debt in the interim the increased interest payments on additional borrowing start eating away at that increased rebate and they’re further behind.

That's the same line dragged out by people against the carbon tax rebate, even though it is pre-paid. But it's paid out quarterly as well, so I find this argument kind of silly. You qualify at 19, and maybe start getting it then. I'm sure most people do. As you earn more, you stop qualifying. If you earn less, you qualify. So at times you are getting it while not deserving it. But I'd imagine in general those getting it have never not got it(other than retirees?) for the most part? The reality is, with the quarterly payment the worst you would ever be is out ~$116 over 3 months, but that would apply to very few people.

I don't think any working poor would be upset about getting a bigger rebate than they pay out, which is probably almost universally the case, unless you can show a financial illustration where it is not that would apply to more than 10 people.

[Slava]

Originally Posted by opendoor

But then what does that really achieve? You still have the administrative burden of running an income tax system, while having high consumption taxes which can depress domestic consumption.

And such a move would penalize older people without a proper (and expensive) transition plan. They've saved after-tax money for retirement on the premise that their tax burden will be lower in retirement with their lower income, but now all of the sudden their consumption would get significantly more expensive. And the same would apply to any low-saving demographic (generally lower-to-middle income) whose tax burden would likely increase.

That's not to say that increasing VATs can't be a good idea, but a wholesale change to the tax system is likely to introduce more problems than it solves.

Well I would suggest that most retired and elderly aren't spending as much on those items. I'm not saying there's no impact there, but it's not the same impact as say a family of four in their mid 30's.

And that after-tax amount would rise with this, because the tax rates could decline. Which means more money on an after-tax basis in the first place.