Some Thoughts On Taxation

Elections are coming and tax talk is cheap.  Try not to get caught up in the nonsense.  In Ontario, our beloved and glorious leader, Ms. Wynne, likes to talk about “Revenue Tools.”  They are just a way for the government to get the money they need to do the things they wish to do.  A tax by any other name is still a tax.

Few governments in the world have spending under control so they are forced to tinker with taxation.  A tax is anything the government makes you pay.  Health surcharges, fees, tolls, sales taxes, income taxes, employment insurance, and property taxes are all the same thing. Calling the taking something other than a tax is just a way to fool the people.

There are hundreds of taxes.  Most are hidden.  In Ontario there is a 2% tax on life insurance premiums and an 8% sales tax on most casualty and group insurance premiums.  A liter of gas at $1.00 includes more than 35 cents of tax plus any taxes that the various governments took from the crude oil producers.  There are duties on goods brought into the country from outside the free trade zones.  Liquor store mark-up is arbitrary.  Lotteries are voluntary taxes.

Corporate tax, individual income tax and sales taxes generate most of the revenue, but the complexity of some others is astounding.

I recall taking a course on excise taxes and duties.  Depending on where they came from and what they were made of, there were six different rates of duty on artificial ears.  I have since relied on professionals in this area.

Politicians at election time talk about making tax more fair.  Their usual plan is to tax the rich more to benefit the others.  That of course is just a smoke screen.  Of course tax the rich, because who else has any money. It is like Willie Sutton saying that he robs banks because that’s where the money is.

There is no taxation solution to government spending problems.

People talk about the moral duty to pay taxes.  I have no issue with that.  I have a serious issue with the immorality of foolish spending by our elected representatives.  Solving non-problems to make them look like they are doing something offends me.  Continuing to pay for programs that are no longer useful is irresponsible.  Creating programs that encourage people to behave in counter-productive ways harms us all.

Governments can do things that no one else can do because they have resources and the ability to overcome obstacles.  If they confined themselves to doing things that are necessary like courts, police, national security and large infrastructure projects, and ignored things that are nice,  it would work better.

Ultimately all the money the government spends is the people’s money.  If the government unbalances your budget by taking too much, so they can spend on things that are unneeded or too expensive, you have a duty to call them on it. 

That is what the ballot box is for.

Subscribe to the daily MoneyFYI article at moneyfyi.wordpress.com, Follow on Twitter @DonShaughnessy or Contact: don@moneyfyi.com  

Don Shaughnessy is a retired partner in an international public accounting firm and is now with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

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