Issues with the Canadian Tax System

*By CWP intern Jen Russell.

An article by the Public Service Alliance of Canada raised an interesting question: ‘Why do we pay taxes?’ The article notes that “we pay taxes to support the public infrastructure, programs and services that support the common values that define us as a society.”

The Canadian tax system is a way in which we are able to each contribute by putting some money into the collective pot in order to pay for necessary services within our community which include; roads, court systems, fire services, healthcare, etc. Unfortunately we live in an unequal society, and therefore it is important that our tax dollars are also used for individual needs as a basic safety net for those who may be disadvantaged and need assistance, as well as all supporting services that benefit Canadians. Such programs include accessible public transportation and providing old age income supplements which has been shown to reduce poverty in seniors.

In recent years as part of the neo-liberal agenda that surfaced in the 1970s it has been suggested that we begin to cut taxes which result in more money in our own pockets, and supposed economic vitality. Looking at the bigger picture this has not been proven, nor is a solution. Tax cuts result in:

  • Increased wage gap
  • Higher percentage of people living below the poverty line
  • Gender inequality
  • Shorter life expectancy
  • Decreased educational standards
  • Increased drug and alcohol use
  • Higher crime rates
  • High infant mortality rate

According to studies, those in Nordic countries who pay higher tax levels ultimately live in a more beneficial and equal society compared to those in North America who pay lower tax levels. By reducing government revenues it creates an impact on the quality of social programs within the community.

As of July 2010 the Harmonized Sales Tax (HST) took effect in Ontario replacing the federal goods and services tax (GST) and the provincial sales tax (PST). This new tax exchange by the Canadian government strives to increase the number of jobs and economic growth however, this is not the solution to our tax debate.

In order to develop a fair system and increase equality, the answer is simple; a strong progressive tax system. We currently have a so-called progressive tax system although, it is not where it should be. Between 1990 and 2005 the Canadian tax system has dramatically grown less fair. In recent years the richest 1% of families pay less in taxes compared to 1990 while the poorest 20% pay more – significantly widening the gap between the rich and the rest of us.

In a strong progressive tax system everyone contributes their fair share based on their income. In other words – those with higher incomes are able to contribute more to society as opposed to those who are in low income. Regressive taxes, like sales tax and HST are not progressive – everyone pays the same, which means a low income person pays a larger portion of their earnings to cover the tax than a wealthier individual.

It is crucial that we all work together as a society and make issues such as these brought forward. As a community member what kind of world would you like to live in: a society of members only looking out for themselves, some may be filthy rich – others may be surviving day by day or a community that works together to improve life for all. Imagine what the world could be like – it is something to ponder. As the well known English rock bank The Beatles say, “I get by with a little help from my friends.”

A drop hitting water.
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