As most of us have finished filing our taxes for another year, a painful experience that can only be compared to passing a gall stone.
Add to this the first phase of the new Harmonized Sales Tax (HST) being introduced this past weekend and it is hard to ignore the government’s hand reaching deeply into one’s pockets.
It seems these days, it is Canadian businesses who appear to be reaping the benefits of new tax structures as the burden for paying for government shift toward everyday people. The question arises as to whether our system is fair.
Canadian businesses were very successful in leading the charge to reduce its tax burden. Across all three levels of government, taxpayers watched helplessly as measures were taken to cut fees and slash rates of taxation.
In 2008, Canadian families earned an average income of $71,764, paying taxes of $31,353 or 44 per cent of its income, compared to 1961 when a Canadian family earned $5,000 and paid $1,675 in total taxes on average or 33.5 per cent of its income, according to the Fraser Institute.
More needs to be done to create equity in the system.
In May 2006, the fledgling government of Prime Minister Stephen Harper made tax cuts the centrepiece of the national agenda with a one per cent reduction in the GST. Businesses benefitted by the elimination of the federal capital tax, phasing out of the corporate surtax, lowering of main corporate tax rates from 21 per cent to 19 per cent by 2010, plus other measures.
The most obvious signal business is successfully reducing its tax burden is through increases in user-fees, one of the most regressive taxation systems because it punishes those without sufficient financial resources, such as the poor and working poor. Most of these services are not used by business.
But, where it hits the hardest is at the local level.
Municipalities end up truly getting the short straw. With only a single source – property taxes – politicians are left scrambling for creative ways to generate revenue. The trouble is the burden falls hardest on the citizenry.
But, while governments battle over taxes, it is still only one person who pays: us.
So, it would be nice to see working people get a few more breaks.
Things like the renovation tax credit was successful, but only those who can afford expensive renovations, or homeowners generally, reaped the rewards.
The $500 sports tax credit is also a good initiative, but also limited. It is certainly the right idea, since the break saves Mom and Dad money, while encouraging kids to be physically active.
But, that was introduced in 2006. It is now four years later and it is time to take the next step.
Harper should extend the tax credit to include music lessons, training for the arts and tutoring.
Our sports crazy culture certainly benefits from the sports tax credit. But, there is an inherent bias at work. Not everyone participates in sports. (Although the countless studies being released these days seems to indicate growing numbers of children are inactive).
By opening up the tax credit to arts training for kids, the Harper government would make another valuable contribution to families. He promised to create a tax credit for children’s artistic activities in the last election, but failed to implement it. The reason was intense criticism, especially in Quebec, where his government had just cut $45 million in federal funding to provincial arts.
Certainly, enough time has passed to allow this initiative to move forward.
As for tutoring, this would be highly valuable. For parents who seek additional assistance outside the classroom for their children, this kind of program would be highly beneficial.
Corporations benefitted from the first wave of tax reductions. It is not time for families to benefit in a meaningful way through these kinds of programs.
Originally published: May 5, 2010