Wednesday, March 29, 2006

Taxes

It's tax season here. The end of year is Dec 31 (pension year end is Feb 28) so people are getting down to it. However, the Tory Federal Budget is on the way and the talk is that Jim Flaherty will be keeping the campaign promise of rolling back the Liberal income tax cut in favour of GST cuts and childcare allowances.

Flaherty should learn from Toronto and Ontario, both of whom have encountered money they didn't expect and are showing an unwillingness to reduce unpopular planned TTC hikes in the case of Toronto or reducing the province's deficit in the case of Ontario. Ontario is stashing money for the subway from York to nowhere rather than reducing the regressive health tax.

If there really is $1.6 billion beyond previous revenue estimates for 2005 and $3 billion this year, it would be utter foolishness to roll back the Liberal cut unless the Tories see themselves going to the country before July 1st, when the clawback is expected to begin. Any strategist who thinks someone isn't going to resent less money in his paycheck when the opportunity was there to avoid it should have his/her head examined, especially just as a way of sticking it to the Liberals.

The best incentive for work is to be able to keep most of what you earn, which is why reducing personal income taxes was a huge part of reducing Irish welfare rolls in the late 90s. However, taking people out of the tax net entirely (as opposed to a very low minimum tax) is unwise - when you're a direct taxpayer you have a visceral connection to government which getting a seeming free ride doesn't replicate.

It's even more so when as a non-citizen resident you pay taxes at all levels of government and have a vote in none of them, of course. I really understand what those people in Boston were so riled about now.
Post a Comment