An article on taxation. What would be the outcome if Canada eliminated personal and corporate income tax and used only the GST/HST or in more common terms a Valued added tax of VAT?
The one thing that government has done that Canadians love to hate most is the introduction of the GST and now in some provinces the HST or harmonized tax where provincial sales tax was combined with the GST. This tax is on top of our already punitive income tax rates both federal and provincial.
Of course the reason government needs these high taxes is that we have an expensive social system in Canada. Health care alone continues to consume a large portion of all revenue received by government. Canada Pension, Old Age Security and government employee pensions have never been addressed but with an aging population will become our Achilles heel in the very near future.
Not only do we pay a lot of tax but we have a significant deficit to boot. Finding a solution to these problems is going to require more than just politicians passing more legislation. It is going to require the collective effort of every Canadian. We will need to have strong intestinal fortitude to address the problem, and implement the solution. The solution is not to add more taxation. More tax tends to stifle growth and development, it’s a proven fact that punitive taxation such as in Sweden or Finland just adds more people to the welfare rolls. What is needed more than anything is more industry and commerce that will employ more people and thus generate more revenue and the only way that you can make that happen is to reduce taxes, to make it more attractive for industry to be established and for our work force to work.
Ironically we are not alone in our troubles, the United States has similar problems, increasing health care, an aging population putting a strain on social security to the extent that it may not be sustainable in a very short period of time and a deficit that could bankrupt the country. Getting back on a firm economic footing is essential to both countries future.
When the GST was introduced to replace the old cumbersome Federal Sales Tax on manufactured goods, it appeared they had made a mistake. They had created a more complex system that would eventually prove to be costly and not much more efficient than the old system. That has not been the case, the GST has generated a net revenue gain for the government and because it is a consumption tax it is paid by the end user only, therefore it is a Value Added Tax and the administration of the tax has not been as difficult as anticipated. The primary collector of the tax is the retailer who was already familiar with the provincial sales tax and how it was collected and required little training to add the GST.
Now the argument can be made that a Value Added Tax is a much more efficient form of taxation than the old FST or personal and corporate income tax. It is easier to administer and collect and it taxes only those who can afford to consume. The more you spend the more you pay in taxation. The problem isn’t the tax, the problem is that government did not eliminate income tax as it implemented the GST. If government had chosen to reduce the income tax rate to nil as the revenue from GST increased, rather than just assuming that the extra revenue could be used for more social programs we probably wouldn’t be in this predicament.
Before I go further with this argument let’s go back to the issue of what the real problem is. We have an aging population, we don’t have a birth rate like we had 25 or 30 years ago and we have come to rely on immigration for population growth. An aging population puts more strain on health care, old age security and pensions, both CPP and government employee pensions, which is an unfunded liability that politicians do not want to discuss.
These issues are unsustainable, we cannot survive if health care consumes 75% of the countries taxation revenue. Not dealing with the problem leads to deficit spending and the debt becomes too large to manage. The inevitable result is default and reduction of benefits. To understand what effect this will have one only need to look at Greece, Italy, Spain, Portugal, Ireland, France and Great Britain to see what effect it will have. Many of these countries are virtually bankrupt being propped up by the World Bank and having to deal with riots in the streets as angry citizens demand that their benefits not be cut. They want more from their governments, something they can no longer provide.
The only solution is to eliminate personal and corporate income tax altogether and increase the HST/GST sufficiently to replace the lost revenue. This is a concept supported by many others, recently former Secretary of State in the Bush administration Paul O’Neill commenting on CNN,suggested that the best way to solve the US economic crisis was to eliminate personal and corporate income tax and introduce a value added tax (GST/HST in Canada). All you need to do is Google “ Value added tax” and you will be amazed at how many articles have been written on the subject.
The rationale behind the argument is, by eliminating income tax, every citizen has more of their hard earned dollars to spend. Consumption means more revenue in GST/HST. The tax becomes a fair tax, only those who consume must pay. The tax rate would be higher than it is right now, however with more consumer dollars being spent and therefore taxed the increase in the tax rate will not be onerous. The proof of this is the increase in revenue that BC has enjoyed since the harmonizing of the GST and PST. The government has collected an additional 800 million, unfortunately they have yet to reduce income tax correspondingly.
No income tax means that individuals can put more money away for retirement, thus reducing the burden on government. They could afford to purchase supplemental health insurance allowing MSP to be reduced to the basic coverage and any other services covered by private health care plans. Even with these added costs the average family household income to provide the basics, food, clothing and shelter would be higher and the average Canadians lifestyle would improve.
A goods and services tax or VAT that is implemented properly would generate sufficient revenue for government to operate and eliminate the deficit, which is essential for the countries well being. We cannot keep on spending future generation’s inheritance; in fact future generations are going to rebel against the cost of paying for our shortsighted stupidity. If we all care about our country and our future we must agree to do something about it.
The proper use of the HST, to eliminate income tax and put the burden of government revenue on consumption, will increase productivity, put most of the population back to work in full employment, and over the next few years eliminate the deficit.
Income tax, has served its purpose but it has become onerous, it stifles growth and productivity and is costly to collect and administer. The tax act has become so large and cumbersome it is about to collapse from its own weight. This is a tax that was implemented on a temporary basis at the beginning of the First World War to pay for the costs of going to war, it’s time that the temporary status is recognized and the tax eliminated. The phenomenon of the 21st Century is that change is an everyday common occurrence, what we thought was an established way of doing things yesterday is redundant today. One only needs to examine the newspaper industry or the music industry to see how rapidly change can effect institutions that we have taken for granted and are now disappearing due to change.
Change is so prevalent that this year’s census is being conducted by internet, leaders of political parties have been elected by internet ballot and virtually everything we need can be purchased over the internet. Continuing to allow the politicians to add more taxation and ignore the problems puts our nation in peril. It is time for everyone to stand up and tell them to address these issues, listen to those who are suggesting solutions such as eliminating personal and corporate income tax and using the HST as it should be used. It’s time for politicians to listen before they start to tell us what we think. No longer is it acceptable for government to make choices based on the suggestions of opinion polls. It’s time for all of us to make our views heard and have a say in what the future should be.
We cannot allow anarchy and protest to take root as it has in the UK and Greece. But if we continue on the road we are on that is a distinct possibility. Government social programs will be in peril, health care and pensions and many other services that we take for granted will be reduced or eliminated as governments try to balance the budget. They cannot expect to achieve their goals with more tax, the goose has been plucked there are few feathers left.
Changing our taxation system to a consumption tax may not solve all the problems, however it is a start and it is about the only way that we as a nation can encourage growth and development and make it fashionable to succeed rather than take the handout and do little or nothing. We owe it to our children and grandchildren to implement a solution that will lift the burden of our folly from their shoulders. What worked in 1900 is not working in the 21st century and radical change is the only way that we are going to make improvements.
With a calculator and the facts, i.e. what government collects from income tax it would not be difficult to figure out what the HST rate would have to be to replace income tax, but that is not the issue. The issue is that politicians in this country from all parties are going to be faced with very difficult unpopular decisions when it comes to dealing with the cost of health care and the unfunded liability of government employee pensions and all the other social benefits that government provide. Current growth in spending on health care alone suggests that there won’t be enough cash to pay the bills and pay off deficit in the not too distant future. That is without even considering the cost of other services that are now considered to be our divine right to receive such as CPP and Old Age Security.
If you are a politician which decision would you prefer? Increase taxes, cut benefits face the collective ire of the whole nation or reduce taxes, reform the taxation system, put the emphasis on consumption instead of income, increase productivity and full employment and make 90% of the population really happy. This is what the politicians were elected for, to do the right thing. Now is the time to hold them accountable and make them address these issues, they cannot expect to be paid handsomely for being our elected officials and receive a nice fat pension for doing so and not take the heat.
A number of recent events only demonstrate that change is inevitable and that radical idea like the elimination of corporate and personal income tax has merit. First was the Royal wedding, the event of the century, ABC announced during the broadcast that they were getting 10,000 tweets a minute to their Twitter account. That is incredible, almost as if everyone in the world has a Twitter account on their Smartphone.
Next our Federal election , several teenagers and college students were elected to Parliament, some defeating long term members of the House. Wow, Facebook , Twitter, Smartphone’s and I Pads just moved into the House of Commons, talk about a sudden change in how politicians function. They think television made a difference they haven’t seen anything yet. The ones who are sitting around waiting for their pension better sit up and take notice, no longer are they immune to what the real world is up to.
The next event to occur was that Microsoft announced they had purchase Skype for 8 plus billion dollars. This is an internet based phone company that allows you to have a conversation with anyone in the world, voice and video for free. The stuff of Mavel comics in the 50’s is reality in the 21st century and we haven’t even begun yet. The same week a group of researchers at Queens University introduced a computer with the thickness and properties of a piece of paper.
Recently I received an email with an invitation to participate in an Alberta province wide town hall meeting with one of the conservative leadership candidates. This is a town hall meeting on the internet, anyone can join in, I don’t live in Alberta but if I was interested I can join in. It could very well be that by the time this country goes to the polls to elect another federal government in five years the whole election campaign will be internet based including voting. If we can do the census by the internet why couldn’t we elect politicians on the internet?
This pace of change in just a few short weeks emphasizes how critical it is that we as a nation address the issue of deficits and out of control government spending. No longer can we go along blithely spending more than we earn. Now is the time for change, if we do not take these steps we will suffer the consequences as a nation and it may lead to unrest and anarchy. Instead of being the great nation of the future we will be relegated to the backwater.
It’s time to take a stand, if you agree with me pass it on, if you don’t then I challenge you to come up with another solution. The only thing that I know for sure is that doing nothing is not an option for any of us, citizen or politician.
Write to your MP and MLA, use the social media to get their attention, they all have a facebook account an email account and probably are on Twitter, make them aware that they need to learn more about this concept and help them to understand that they have a responsibility to take action. Your voice is important, politicians do not get to sit in their comfortable seat for years on end without accountability. If we can elect them with the internet we can take away their franchise just as easily with the same method.
Thursday, May 26, 2011
Sunday, May 22, 2011
Snap East Kootenay article on Life Insurance
My Advice on life insurance.
Term Insurance - Buy as much as you can, as early as you can. Insurance premiums, up to age 40 for a million dollars of 10-year term are about, $600.00 per year. Your car insurance is more expensive. You are more valuable than your car? Right!
Today life expectancies are increasing and naturally insured people live longer, because insurance companies only insure the healthy people. Therefore, the really important feature of every term policy is that it is convertible to permanent insurance without evidence of insurability later in life.
Permanent insurance - This is the insurance you have been told is a lousy investment. That may have been true when interest rates were 7% but when they are 1.0% the tax exempt status of a permanent insurance policy earning 4.5% may be the best investment you ever made. Permanent insurance is also called whole life, or Universal Life, it should be called Versatile Insurance because of all the things it can do. The key is that it will remain in force to age 100, and if you live that long the company will write you a cheque for the face amount of the policy.
Don’t depend on your group insurance. Group insurance has a nasty habit of running out 30 days after you leave an employer. The last thing you are thinking about when you change jobs is whether or not your new employers group benefits will be available to you.
Don’t buy bank mortgage insurance. Mortgage insurance pays the bank not your beneficiary. Bank mortgage insurance is group insurance and doesn’t have the same protective clauses that an individual policy has. You may think you have coverage but the company may challenge the validity of the claim and delay payment.
Why play roulette with your family when you can take control and probably save money in the process. A policy that you own and control in the long run it will be cheaper, more secure and in force when it is needed.
Get together with a financial advisor who is an insurance broker and get the facts.
Term Insurance - Buy as much as you can, as early as you can. Insurance premiums, up to age 40 for a million dollars of 10-year term are about, $600.00 per year. Your car insurance is more expensive. You are more valuable than your car? Right!
Today life expectancies are increasing and naturally insured people live longer, because insurance companies only insure the healthy people. Therefore, the really important feature of every term policy is that it is convertible to permanent insurance without evidence of insurability later in life.
Permanent insurance - This is the insurance you have been told is a lousy investment. That may have been true when interest rates were 7% but when they are 1.0% the tax exempt status of a permanent insurance policy earning 4.5% may be the best investment you ever made. Permanent insurance is also called whole life, or Universal Life, it should be called Versatile Insurance because of all the things it can do. The key is that it will remain in force to age 100, and if you live that long the company will write you a cheque for the face amount of the policy.
Don’t depend on your group insurance. Group insurance has a nasty habit of running out 30 days after you leave an employer. The last thing you are thinking about when you change jobs is whether or not your new employers group benefits will be available to you.
Don’t buy bank mortgage insurance. Mortgage insurance pays the bank not your beneficiary. Bank mortgage insurance is group insurance and doesn’t have the same protective clauses that an individual policy has. You may think you have coverage but the company may challenge the validity of the claim and delay payment.
Why play roulette with your family when you can take control and probably save money in the process. A policy that you own and control in the long run it will be cheaper, more secure and in force when it is needed.
Get together with a financial advisor who is an insurance broker and get the facts.
Going on a Debt Diet - Article Published in Snap East Kootenay
Managing personal debt – going on a debt diet
For many Canadians debt-freedom has become a top priority. A recent survey indicated that debt reduction was a goal of 76 percent of the respondents. Now is a good time to address this issue; as interest rates rise, which is inevitable, debt becomes harder to support.
The survey also indicated that only 43 percent of respondents were able to stick to the budget they set a year earlier. Setting a budget and having the discipline to follow it are two different things. For many what is needed is professional help, particularly in the area of cash management.
Getting out of debt begins with sticking to purchases that can only be made with available cash, no credit cards or financing purchases. Second is to reduce the high interest debt of credit cards. If possible debt consolidation and cutting up the credit cards is critical to any action plan.
There are several types of mortgage vehicles available to home owners that can help to control and manage debt. A variable rate mortgage that charges interest on the daily balance and that has the ability to be the only bank account has the advantage of reducing the interest paid whenever there is a deposit made. In other words you can use your monthly income to reduce your debt, even if it is only for a short period of time the reduced interest charge will make a difference. A debt that is amortized over 25 year term could be reduced as much as 15 years. That does not mean that it is the be all and end all to debt reduction; success of any debt reduction plan requires learning restraint. However if you can reduce the amount of high interest credit card debt to a more manageable level and use the savings to further decrease debt achieving a debt free goal will be a lot easier.
If you are serious about debt reduction consult a financial advisor the have the tools and access to the right vehicles to help you achieve your goal.
For many Canadians debt-freedom has become a top priority. A recent survey indicated that debt reduction was a goal of 76 percent of the respondents. Now is a good time to address this issue; as interest rates rise, which is inevitable, debt becomes harder to support.
The survey also indicated that only 43 percent of respondents were able to stick to the budget they set a year earlier. Setting a budget and having the discipline to follow it are two different things. For many what is needed is professional help, particularly in the area of cash management.
Getting out of debt begins with sticking to purchases that can only be made with available cash, no credit cards or financing purchases. Second is to reduce the high interest debt of credit cards. If possible debt consolidation and cutting up the credit cards is critical to any action plan.
There are several types of mortgage vehicles available to home owners that can help to control and manage debt. A variable rate mortgage that charges interest on the daily balance and that has the ability to be the only bank account has the advantage of reducing the interest paid whenever there is a deposit made. In other words you can use your monthly income to reduce your debt, even if it is only for a short period of time the reduced interest charge will make a difference. A debt that is amortized over 25 year term could be reduced as much as 15 years. That does not mean that it is the be all and end all to debt reduction; success of any debt reduction plan requires learning restraint. However if you can reduce the amount of high interest credit card debt to a more manageable level and use the savings to further decrease debt achieving a debt free goal will be a lot easier.
If you are serious about debt reduction consult a financial advisor the have the tools and access to the right vehicles to help you achieve your goal.
Article published in Snap East Kooteany's fist issue
This short story was written by Laura Bankston, she suggests sharing it with friends, I hope you enjoy it.
A professor stood before his philosophy class with several items on the desk in from front of him. When the class began, he wordlessly picked up a very large empty mayonnaise jar and proceeded to fill it with golf balls. “Is the jar, in your opinion full?” He asked the class. “Yes!” was their reply.
The professor then added a box of pebbles, giving the jar a gently shake to settle them. The pebbles rolled into the open areas between the golf balls. He then asked again, “ Is the jar full?” They agreed it was now full.
The professor next poured the contents of a box of sand into the jar with the golf balls. “Is the jar now full?” once again he asked the class. Their answer was, “Yes!”
The professor then produced two cups of coffee and proceeded to pour the entire contents into the jar, effectively filling all the empty space between the sand. The students laughed.
“Now,” said the professor as the laughter subsided, “I want you to recognize that this jar represents your life. The golf balls are the important things --- your family, your wife and children, your health, your friends your passions --- and if everything else was lost and only they remained, your life would still be full.”
He went on to say, “The pebbles are the other things that matter like your job, your house and your car. The sand is everything else --- the small stuff.”
“If you put the sand in the jar first,” he continued, “there is no room for the pebbles or the golf balls. The same goes for life,. If you spend all your time and energy on the small stuff you will never have room for the things that are important to you.”
“Pay attention to the things that are critical to your happiness. Play with your children, take you wife to dinner, have a medical checkup. Play another 18 holes of golf. There will always be time to clean the house or fix the broken faucet or mow the lawn. Take care of the golf balls first --- the things that really matter. Set your priorities. The rest is just sand.”
One of the students raised her hand and inquired what the coffee represented. The professor smiled. “I’m glad you asked.” He said, “ It just goes to show you that no matter how full your life may seem, there is always room for a couple of cups of coffee with a friend.”
To learn more about Laura go to her website http://www.homeschoolcookbook.com
A professor stood before his philosophy class with several items on the desk in from front of him. When the class began, he wordlessly picked up a very large empty mayonnaise jar and proceeded to fill it with golf balls. “Is the jar, in your opinion full?” He asked the class. “Yes!” was their reply.
The professor then added a box of pebbles, giving the jar a gently shake to settle them. The pebbles rolled into the open areas between the golf balls. He then asked again, “ Is the jar full?” They agreed it was now full.
The professor next poured the contents of a box of sand into the jar with the golf balls. “Is the jar now full?” once again he asked the class. Their answer was, “Yes!”
The professor then produced two cups of coffee and proceeded to pour the entire contents into the jar, effectively filling all the empty space between the sand. The students laughed.
“Now,” said the professor as the laughter subsided, “I want you to recognize that this jar represents your life. The golf balls are the important things --- your family, your wife and children, your health, your friends your passions --- and if everything else was lost and only they remained, your life would still be full.”
He went on to say, “The pebbles are the other things that matter like your job, your house and your car. The sand is everything else --- the small stuff.”
“If you put the sand in the jar first,” he continued, “there is no room for the pebbles or the golf balls. The same goes for life,. If you spend all your time and energy on the small stuff you will never have room for the things that are important to you.”
“Pay attention to the things that are critical to your happiness. Play with your children, take you wife to dinner, have a medical checkup. Play another 18 holes of golf. There will always be time to clean the house or fix the broken faucet or mow the lawn. Take care of the golf balls first --- the things that really matter. Set your priorities. The rest is just sand.”
One of the students raised her hand and inquired what the coffee represented. The professor smiled. “I’m glad you asked.” He said, “ It just goes to show you that no matter how full your life may seem, there is always room for a couple of cups of coffee with a friend.”
To learn more about Laura go to her website http://www.homeschoolcookbook.com
Thursday, May 19, 2011
Value Added Tax versus Income Tax
An article on taxation. What would be the outcome if Canada eliminated personal and corporate income tax and used only the GST/HST or in more common terms a Valued added tax of VAT?
Probably the one thing that government has done that Canadians love to hate most is the introduction of the GST and now in some provinces the HST or harmonized tax where provincial sales tax was combined with the GST.
This tax is on top of our already punitive income tax rates both federal and provincial. Of course the reason government needs these high taxes is that we have an expensive social system in Canada. Health care alone continues to consume a large portion of all revenue received by government. Canada Pension, Old Age Security and government employee pensions have never been addressed but with an aging population will become our Achilles heel in the very near future.
Not only do we pay a lot of tax but we have a significant deficit to boot. Finding a solution to these problems is going to require more than just politicians passing more legislation. It is going to require the collective effort of every Canadian. We will need to have strong intestinal fortitude to address the problem, and implement the solution. The solution is not to add more taxation. More tax tends to stifle growth and development, it’s a proven fact that punitive taxation such as in Sweden or Finland just adds more people to the welfare rolls. What is needed more than anything is more industry and commerce that will employ more people and thus generate more revenue and the only way that you can make that happen is to reduce taxes, to make it more attractive for industry to be established and for our work force to work.
Ironically we are not alone in our troubles, the United States has similar problems, increasing health care, an aging population putting a strain on social security to the extent that it may not be sustainable in a very short period of time and a deficit that could bankrupt the country. Getting back on a firm economic footing is essential to both countries future.
When the GST was introduced to replace the old cumbersome Federal Sales Tax on manufactured goods, it appeared they had made a mistake. They had created a more complex system that would eventually prove to be costly and not much more efficient than the old system. That has not been the case, the GST has generated a net revenue gain for the government and because it is a consumption tax it is paid by the end user only, therefore it is a Value Added Tax and the administration of the tax has not been as difficult as anticipated. The primary collector of the tax is the retailer who was already familiar with the provincial sales tax and how it was collected and required little training to add the GST.
Now the argument can be made that a Value Added Tax is a much more efficient form of taxation than the old FST or personal and corporate income tax. It is easier to administer and collect and it taxes only those who can afford to consume. The more you spend the more you pay in taxation. The problem isn’t the tax, the problem is that government did not eliminate income tax as it implemented the GST. If government had chosen to reduce the income tax rate to nil as the revenue from GST increased, rather than just assuming that the extra revenue could be used for more social programs we probably wouldn’t be in this predicament.
Before I go further with this argument let’s go back to the issue of what the real problem is. We have an aging population, we don’t have a birth rate like we had 25 or 30 years ago and we have come to rely on immigration for population growth. An aging population puts more strain on health care, old age security and pensions, both CPP and government employee pensions, which is an unfunded liability that politicians do not want to discuss.
These issues are unsustainable, we cannot survive if health care consumes 75% of the countries taxation revenue. Not dealing with the problem leads to deficit spending and the debt becomes too large to manage. The inevitable result is default and reduction of benefits. To understand what effect this will have one only need to look at Greece, Italy, Spain, Portugal, Ireland, France and Great Britain to see what effect it will have. Many of these countries are virtually bankrupt being propped up by the World Bank and having to deal with riots in the streets as angry citizens demand that their benefits not be cut. They want more from their governments, something they can no longer provide.
The only solution is to eliminate personal and corporate income tax altogether and increase the GST sufficiently to replace the lost revenue. This is a concept supported by many others, recently former Secretary of State in the Bush administration Paul O’Neill commented on CNN that the best way to solve the US economic crisis was to eliminate personal and corporate income tax and introduce a value added tax (GST/HST in Canada). All you need to do is Google “ Value added tax” and you will be amazed at how many articles have been written on the subject.
The rationale behind the argument is, by eliminating income tax, every citizen has more of their hard earned dollars to spend. Consumption means more revenue in GST/HST. The tax becomes a fair tax, only those who consume must pay. The tax rate would be higher than it is right now, however with more consumer dollars being spent and therefore taxed the increase in the tax rate will not be onerous. The proof of this is the increase in revenue that BC has enjoyed since the harmonizing of the GST and PST. The government has collected an additional 800 million, unfortunately they have yet to reduce income tax correspondingly.
No income tax means that individuals can put more money away for retirement, thus reducing the burden on government. They could afford to purchase supplemental health insurance allowing MSP to be reduced to the basic coverage and any other services covered by private health care plans. Even with these added costs the average family household income to provide the basics, food, clothing and shelter would be higher and the average Canadians lifestyle would improve.
A goods and services tax or VAT that is implemented properly would generate sufficient revenue for government to operate and eliminate the deficit, which is essential for the countries well being. We cannot keep on spending future generation’s inheritance; in fact future generations are going to rebel against the cost of paying for our shortsighted stupidity. If we all care about our country and our future we must agree to do something about it.
The proper use of the HST to eliminate income tax and put the burden of government revenue on consumption will increase productivity, put most of the population back to work in full employment, and over the next few years eliminate the deficit.
Income tax, has served its purpose but it has become onerous, it stifles growth and productivity and is costly to collect and administer. The tax act has become so large and cumbersome it is about to collapse from its own weight. This is a tax that was implemented on a temporary basis at the beginning of the First World War to pay for the costs of going to war, it’s time that the temporary status is recognized and the tax eliminated. The phenomenon of the 21st Century is that change is an everyday common occurrence, what we thought was an established way of doing things yesterday is redundant today. One only needs to examine the newspaper industry or the music industry to see how rapidly change can effect institutions that we have taken for granted and are now disappearing due to change.
Change is so prevalent that this year’s census is being conducted by internet, leaders of political parties have been elected by internet ballot and virtually everything we need can be purchased over the internet. Continuing to allow the politicians to add more taxation and ignore the problems puts our nation in peril. It is time for everyone to stand up and tell them to address these issues, listen to those who are suggesting solutions such as eliminating personal and corporate income tax and using the HST as it should be used. It’s time for politicians to listen before they start to tell us what we think. No longer is it acceptable for government to make choices based on the suggestions of opinion polls. It’s time for all of us to make our views heard and have a say in what the future should be.
We cannot allow anarchy and protest to take root as it has in the UK and Greece. But if we continue on the road we are on that is a distinct possibility. Government social programs will be in peril, health care and pensions and many other services that we take for granted will be reduced or eliminated as governments try to balance the budget. They cannot expect to achieve their goals with more tax, the goose has been plucked there are few feathers left.
Changing our taxation system to a consumption tax may not solve all the problems, however it is a start and it is about the only way that we as a nation can encourage growth and development and make it fashionable to succeed rather than take the handout out and do little or nothing. We owe it to our children and grandchildren to implement a solution that will lift the burden of our folly from their shoulders. What worked in 1900 is not working in the 21st century and radical change is the only way that we are going to make improvements.
With a calculator and the facts, i.e. what government collects from income tax it would not be difficult to figure out what the HST rate would have to be to replace income tax, but that is not the issue. The issue is that politicians in this country from all parties are going to be faced with very difficult unpopular decisions when it comes to dealing with the cost of health care and the unfunded liability of government employee pensions and all the other social benefits that government provide. Current growth in spending on health care alone suggests that there won’t be enough cash to pay the bills and pay off deficit in the not too distant future. That is without even considering the cost of other services that are now considered to be our divine right to receive such as CPP and Old Age Security.
If you are a politician which decision would you prefer? Increase taxes, cut benefits face the collective ire of the whole nation or reduce taxes, reform the taxation system, put the emphasis on consumption instead of income, increase productivity and full employment and make 90% of the population really happy. This is what the politicians were elected for, to the right thing, now is the time to hold them accountable and make them address these issues, they cannot expect to be paid handsomely for being our elected officials and receive a nice fat pension for doing so and not take the heat.
A number of recent events only demonstrate that change is inevitable and that radical idea like the elimination of corporate and personal income tax has merit. First was the Royal wedding, the event of the century; ABC announced during the broadcast that they were getting 10,000 tweets a minute to their Twitter account. That is incredible, almost as if everyone in the world has a Twitter account on their Smartphone.
Next our Federal election occured, several teenagers and college students were elected to Parliament, some defeating long term members of the house. Wow, Facebook , Twitter, Smartphone’s and I Pads just moved into the House of Commons, talk about a sudden change in how politicians function. They think television made a difference they haven’t seen anything yet. The ones who are sitting around waiting for their pension better sit up and take notice, no longer are they immune to what the real world is up to.
The next event to occur was that Microsoft announced they had purchase Skype for 8 plus billion dollars. This is an internet based phone company that allows you to have a conversation with anyone in the world, voice and video for free. The stuff of Mavel comics in the 50’s is reality in the 21st century and we haven’t even begun yet. The same week a group of researchers at Queens University introduced a computer with the thickness and properties of a piece of paper.
Recently I received an email with an invitation to participate in an Alberta province wide town hall meeting with one of the conservative leadership candidates. This is a town hall meeting on the internet, anyone can join in, I don’t live in Alberta but if I was interested I can join in. It could very well be that by the time this country goes to the polls to elect another federal government in five years the whole election campaign will be internet based including voting. If we can do the census by the internet why couldn’t we elect politicians on the internet?
This pace of change in just a few short weeks emphasizes how critical it is that we as a nation address the issue of deficits and out of control government spending. No longer can we go along blithely spending more than we earn. Now is the time for change, if we do not take these steps we will suffer the consequences as a nation and it may lead to unrest and anarchy. Instead of being the great nation of the future we will be relegated to the backwater.
It’s time to take a stand, if you agree with me pass it on, if you don’t then I challenge you to come up with another solution. The only thing that I know for sure is that doing nothing is not an option for any of us, citizen or politician.
Write to your MP and MLA, use the social media to get their attention, they all have a facebook account an email account and probably are on Twitter, make them aware that they need to learn more about this concept and help them to understand that they have a responsibility to take action. Your voice is important, politicians do not get to sit in their comfortable seat for years on end without accountability. If we can elect them with the internet we can take away their franchise just as easily with the same method.
Probably the one thing that government has done that Canadians love to hate most is the introduction of the GST and now in some provinces the HST or harmonized tax where provincial sales tax was combined with the GST.
This tax is on top of our already punitive income tax rates both federal and provincial. Of course the reason government needs these high taxes is that we have an expensive social system in Canada. Health care alone continues to consume a large portion of all revenue received by government. Canada Pension, Old Age Security and government employee pensions have never been addressed but with an aging population will become our Achilles heel in the very near future.
Not only do we pay a lot of tax but we have a significant deficit to boot. Finding a solution to these problems is going to require more than just politicians passing more legislation. It is going to require the collective effort of every Canadian. We will need to have strong intestinal fortitude to address the problem, and implement the solution. The solution is not to add more taxation. More tax tends to stifle growth and development, it’s a proven fact that punitive taxation such as in Sweden or Finland just adds more people to the welfare rolls. What is needed more than anything is more industry and commerce that will employ more people and thus generate more revenue and the only way that you can make that happen is to reduce taxes, to make it more attractive for industry to be established and for our work force to work.
Ironically we are not alone in our troubles, the United States has similar problems, increasing health care, an aging population putting a strain on social security to the extent that it may not be sustainable in a very short period of time and a deficit that could bankrupt the country. Getting back on a firm economic footing is essential to both countries future.
When the GST was introduced to replace the old cumbersome Federal Sales Tax on manufactured goods, it appeared they had made a mistake. They had created a more complex system that would eventually prove to be costly and not much more efficient than the old system. That has not been the case, the GST has generated a net revenue gain for the government and because it is a consumption tax it is paid by the end user only, therefore it is a Value Added Tax and the administration of the tax has not been as difficult as anticipated. The primary collector of the tax is the retailer who was already familiar with the provincial sales tax and how it was collected and required little training to add the GST.
Now the argument can be made that a Value Added Tax is a much more efficient form of taxation than the old FST or personal and corporate income tax. It is easier to administer and collect and it taxes only those who can afford to consume. The more you spend the more you pay in taxation. The problem isn’t the tax, the problem is that government did not eliminate income tax as it implemented the GST. If government had chosen to reduce the income tax rate to nil as the revenue from GST increased, rather than just assuming that the extra revenue could be used for more social programs we probably wouldn’t be in this predicament.
Before I go further with this argument let’s go back to the issue of what the real problem is. We have an aging population, we don’t have a birth rate like we had 25 or 30 years ago and we have come to rely on immigration for population growth. An aging population puts more strain on health care, old age security and pensions, both CPP and government employee pensions, which is an unfunded liability that politicians do not want to discuss.
These issues are unsustainable, we cannot survive if health care consumes 75% of the countries taxation revenue. Not dealing with the problem leads to deficit spending and the debt becomes too large to manage. The inevitable result is default and reduction of benefits. To understand what effect this will have one only need to look at Greece, Italy, Spain, Portugal, Ireland, France and Great Britain to see what effect it will have. Many of these countries are virtually bankrupt being propped up by the World Bank and having to deal with riots in the streets as angry citizens demand that their benefits not be cut. They want more from their governments, something they can no longer provide.
The only solution is to eliminate personal and corporate income tax altogether and increase the GST sufficiently to replace the lost revenue. This is a concept supported by many others, recently former Secretary of State in the Bush administration Paul O’Neill commented on CNN that the best way to solve the US economic crisis was to eliminate personal and corporate income tax and introduce a value added tax (GST/HST in Canada). All you need to do is Google “ Value added tax” and you will be amazed at how many articles have been written on the subject.
The rationale behind the argument is, by eliminating income tax, every citizen has more of their hard earned dollars to spend. Consumption means more revenue in GST/HST. The tax becomes a fair tax, only those who consume must pay. The tax rate would be higher than it is right now, however with more consumer dollars being spent and therefore taxed the increase in the tax rate will not be onerous. The proof of this is the increase in revenue that BC has enjoyed since the harmonizing of the GST and PST. The government has collected an additional 800 million, unfortunately they have yet to reduce income tax correspondingly.
No income tax means that individuals can put more money away for retirement, thus reducing the burden on government. They could afford to purchase supplemental health insurance allowing MSP to be reduced to the basic coverage and any other services covered by private health care plans. Even with these added costs the average family household income to provide the basics, food, clothing and shelter would be higher and the average Canadians lifestyle would improve.
A goods and services tax or VAT that is implemented properly would generate sufficient revenue for government to operate and eliminate the deficit, which is essential for the countries well being. We cannot keep on spending future generation’s inheritance; in fact future generations are going to rebel against the cost of paying for our shortsighted stupidity. If we all care about our country and our future we must agree to do something about it.
The proper use of the HST to eliminate income tax and put the burden of government revenue on consumption will increase productivity, put most of the population back to work in full employment, and over the next few years eliminate the deficit.
Income tax, has served its purpose but it has become onerous, it stifles growth and productivity and is costly to collect and administer. The tax act has become so large and cumbersome it is about to collapse from its own weight. This is a tax that was implemented on a temporary basis at the beginning of the First World War to pay for the costs of going to war, it’s time that the temporary status is recognized and the tax eliminated. The phenomenon of the 21st Century is that change is an everyday common occurrence, what we thought was an established way of doing things yesterday is redundant today. One only needs to examine the newspaper industry or the music industry to see how rapidly change can effect institutions that we have taken for granted and are now disappearing due to change.
Change is so prevalent that this year’s census is being conducted by internet, leaders of political parties have been elected by internet ballot and virtually everything we need can be purchased over the internet. Continuing to allow the politicians to add more taxation and ignore the problems puts our nation in peril. It is time for everyone to stand up and tell them to address these issues, listen to those who are suggesting solutions such as eliminating personal and corporate income tax and using the HST as it should be used. It’s time for politicians to listen before they start to tell us what we think. No longer is it acceptable for government to make choices based on the suggestions of opinion polls. It’s time for all of us to make our views heard and have a say in what the future should be.
We cannot allow anarchy and protest to take root as it has in the UK and Greece. But if we continue on the road we are on that is a distinct possibility. Government social programs will be in peril, health care and pensions and many other services that we take for granted will be reduced or eliminated as governments try to balance the budget. They cannot expect to achieve their goals with more tax, the goose has been plucked there are few feathers left.
Changing our taxation system to a consumption tax may not solve all the problems, however it is a start and it is about the only way that we as a nation can encourage growth and development and make it fashionable to succeed rather than take the handout out and do little or nothing. We owe it to our children and grandchildren to implement a solution that will lift the burden of our folly from their shoulders. What worked in 1900 is not working in the 21st century and radical change is the only way that we are going to make improvements.
With a calculator and the facts, i.e. what government collects from income tax it would not be difficult to figure out what the HST rate would have to be to replace income tax, but that is not the issue. The issue is that politicians in this country from all parties are going to be faced with very difficult unpopular decisions when it comes to dealing with the cost of health care and the unfunded liability of government employee pensions and all the other social benefits that government provide. Current growth in spending on health care alone suggests that there won’t be enough cash to pay the bills and pay off deficit in the not too distant future. That is without even considering the cost of other services that are now considered to be our divine right to receive such as CPP and Old Age Security.
If you are a politician which decision would you prefer? Increase taxes, cut benefits face the collective ire of the whole nation or reduce taxes, reform the taxation system, put the emphasis on consumption instead of income, increase productivity and full employment and make 90% of the population really happy. This is what the politicians were elected for, to the right thing, now is the time to hold them accountable and make them address these issues, they cannot expect to be paid handsomely for being our elected officials and receive a nice fat pension for doing so and not take the heat.
A number of recent events only demonstrate that change is inevitable and that radical idea like the elimination of corporate and personal income tax has merit. First was the Royal wedding, the event of the century; ABC announced during the broadcast that they were getting 10,000 tweets a minute to their Twitter account. That is incredible, almost as if everyone in the world has a Twitter account on their Smartphone.
Next our Federal election occured, several teenagers and college students were elected to Parliament, some defeating long term members of the house. Wow, Facebook , Twitter, Smartphone’s and I Pads just moved into the House of Commons, talk about a sudden change in how politicians function. They think television made a difference they haven’t seen anything yet. The ones who are sitting around waiting for their pension better sit up and take notice, no longer are they immune to what the real world is up to.
The next event to occur was that Microsoft announced they had purchase Skype for 8 plus billion dollars. This is an internet based phone company that allows you to have a conversation with anyone in the world, voice and video for free. The stuff of Mavel comics in the 50’s is reality in the 21st century and we haven’t even begun yet. The same week a group of researchers at Queens University introduced a computer with the thickness and properties of a piece of paper.
Recently I received an email with an invitation to participate in an Alberta province wide town hall meeting with one of the conservative leadership candidates. This is a town hall meeting on the internet, anyone can join in, I don’t live in Alberta but if I was interested I can join in. It could very well be that by the time this country goes to the polls to elect another federal government in five years the whole election campaign will be internet based including voting. If we can do the census by the internet why couldn’t we elect politicians on the internet?
This pace of change in just a few short weeks emphasizes how critical it is that we as a nation address the issue of deficits and out of control government spending. No longer can we go along blithely spending more than we earn. Now is the time for change, if we do not take these steps we will suffer the consequences as a nation and it may lead to unrest and anarchy. Instead of being the great nation of the future we will be relegated to the backwater.
It’s time to take a stand, if you agree with me pass it on, if you don’t then I challenge you to come up with another solution. The only thing that I know for sure is that doing nothing is not an option for any of us, citizen or politician.
Write to your MP and MLA, use the social media to get their attention, they all have a facebook account an email account and probably are on Twitter, make them aware that they need to learn more about this concept and help them to understand that they have a responsibility to take action. Your voice is important, politicians do not get to sit in their comfortable seat for years on end without accountability. If we can elect them with the internet we can take away their franchise just as easily with the same method.
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