Idea alert

by Aaron Wherry

Jack Mintz, an economist whose expertise the Harper government values very, very, very, very, very, very, very, very, very, very much, has co-authored a report calling for the elimination of various GST exemptions.

By eliminating the set-asides such as medicines, books, financial services and especially food, governments could reap an additional $39 billion in revenue annually — about 60 per cent higher than current levels. That cash bonanza could be used to cut income taxes, fund social services, or both, or even to cut almost in half the 12-to 15 per cent Canadians pay in harmonized sales taxes in most provinces,

“In reality, Canada’s VAT (value-added tax) is riddled with exemptions, rebates and reduced ratings that seriously damage its effectiveness,” Smart writes in an update of a paper he delivered to a conference in Calgary last fall …  ”This paper makes the case for an ideal VAT. Taxing consumer commodities at a single rate reduces opportunities for tax evasion, keeps revenues steady and drastically simplifies compliances for businesses.”




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Idea alert

  1. Increase GST refunds to compensate and send them out monthly and I’ll agree with you.

    Otherwise you’re simply increasing taxes and hardship on the people who can afford it least.

    • Paying up front and waiting for the rebate still imposes an unrealistic hardship on those who can least afford it. A combination of lowering the overall rate and significantly raising the basic exemption level for income tax (so the money to pay the tax is already in the hands of the people paying it – no rebate cheques; less bureaucracy) makes more sense.

      But politically, it’s easier to gain/retain votes if you can say “Do you like that rebate cheque you get from us? Aren’t we nice to bribe you with your own money?”

      • No, it doesn’t make more sense because those who get hit worst with this kind of thing are already under the basic exemption limit. So increasing it does absolutely nothing to help them.

        So if you increase the number of things GST is on, they see a tax hike. If you increase the basic exemption level, they see no tax decrease. The only way they see their situation improve is if we actually give them the extra money back that they had to pay.

        Currently we do this through GST rebates now, but only quarterly. If we pay out monthly instead, then they’ll get back the money they pay on GST every day in a timely fashion.. at least timely enough to keep bill collectors mollified, unlike today where a payment every 90 days isn’t generally enough to keep a collector from tacking on extra fees.

        • Note the part of my response where I said “A combination of lowering the overall rate…” – you conveniently ignored that part. If the increase in terms of number of items taxed is carefully balanced with a lower overall rate could potentially negate the need for the rebate cheques.

          If not, though, I agree that the cheques should be delivered monthly.

          • Ah. My mistake, I thought when you were speaking about lowering the overall rate, you were talking about lowering the overall rate of income tax, not GST.

            However, I submit to you that since most things the people who are very poor purchase now are currently GST exempt, even a lower rate on everything would still be higher than they were paying before.

      • Nonsense. Send it at the beginning of the month and they can pay the increased GST out of the refund they pre-received. If you think about it, there’s not much difference after the first month.

        • They’re issued quarterly at the moment. 

          • Of course. I was extending Thwim’s original point.

          • Sorry - I was going down the emails in reverse order to save time and missed the whole conversation.

  2. If Harper so much as breathes a word about taxing food and medicine,  I’m going to lay in a huge stock of popcorn…..and marshmallows.

    • Popcorn and beer for me! I haven’t been able to afford my usual supply since I lost my beer…umm… chlidcare allowance when my kids passed 6 yrs of age.

    •  Marshmallows are already taxed.  Popcorn is if it’s the one you buy already popped.  Unpopped popcorn has the 0% rate.

      • The firestorm that would erupt if Harp announced any such thing would pop the corn, toast the marshmallows, and even allow for a weenie roast.  LOL

  3. A tax on everything!!! 

    • But not necessarily a tax.

      • A ‘Fairness Initiative’.  That ought to sell it. 

    • Ads will feature blotchy the food stain.

    • Permanent!

  4. Regardless of the economic merits of the proposal, I doubt that increasing revenues in the interests of financing government activity is consistent with this neo-con crowd’s ideology. I’d suggest they are less interested in repairing the nation’s structural debt than they are in using it as an excuse to shrink the scope of government.

    • You can use all the proceeds to reduce less efficient taxes.

  5. Canada needs more Mintz like it needs more Racknine.

  6. Harper agrees so much with Jack Mintz that he argued in favour of a Carbon tax in the 2008 election.  Oh wait, that wasn’t Stephen Harper …

  7. Not only do I think an across the board tax is more efficient and desirable, but I would prefer to see municipalities also have the right to raise a portion of that VAT.

    Of course, with the caveat that some means testing could provide rebates to low income families.

  8. In some quarters, when one person speaks it’s regarded as a consensus.

  9. I’m trying to decide if this idea was floated today to a) show the Conservatives as compassionate when they refuse to implement it on Monday (leaving us all to be needlessly up in arms over the idea all weekend), or b) whether it was floated today to get us off the robocalls?

  10. I like the idea of keeping the GST as simple as possible, but also as small as possible.  I don’t think groceries should be taxed. I do like the idea of reducing exemptions on other items in order to reduce the GST overall.

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