By Jack Mintz, May 4, 2022
With revenues pouring into federal and provincial coffers, it’s time for Canadians to tell their governments they’ve had enough with high taxes. With so much meddling in the economy, inefficient governments can’t even deliver good service with the money they have on hand. Medical wait times are longer than ever. Math and literacy scores are falling. Protected businesses are subsidized rather than pushed by competition to innovate. Even (Dis-)Service Canada can’t provide passports on time for travelling Canadians.
Lower taxes and less reliance on inefficient government are a good place to start. Based on recent federal and provincial budgets, the April IMF Fiscal Monitor forecasts that Canadian governments will collect 41.2 per cent of GDP in taxes and non-tax revenues in 2022. If governments were just a tad smaller at 38.5 per cent of GDP (where they were in 2015), we could be paying $70 billion less in taxes. That is $2000 per person or, for a family of four, $8000. That could be a reasonable objective.
In ancient times, taxation often involved conscripting people to work on temples or public works. Today taxes are taken off our pay cheques or raise the price of goods and services we buy at stores. But the effect is the same: conscripting our labour.
Personal tax rates have not been so high since the early 1990s. Rates for top incomes are over 50 per cent in most provinces and clawback rates applied to child and elderly benefits push effective marginal tax rates to over 70 per cent for those earning modest incomes. After deductions for income and payroll taxes, pay cheques have to cover federal-provincial sales taxes that have risen to 15 per cent in the Atlantic provinces and Quebec. (Ontario is at 13 per cent and Alberta, with no provincial sales tax, is lowest in the country at five per cent). Vacationing Canadians get socked by excise taxes or fees on fuel, air transportation, hotels and entertainment. Homeowners are gouged by development charges, property taxes and land transfer levies, never mind higher electricity and heating costs subject to carbon and sales taxes.