Monday, November 12, 2007

Late Sunday thoughts on timely topics

This is something that has bothered me for some time on the GST debate. We always here that 'economists' like/support the GST, but nobody ever seems to go into why they like it so much.

It is pure and simple; the GST may be the 'perfect tax' when compared to all other taxes out there. If you were trying to design the perfect tax vehicle, I think the GST would fit the description perfectly. Think about it; for the most part the GST collects money that has already been taxed once, and no one escapes paying it. You get to tax money a second time, and everyone including both the wealthiest and the poorest of Canadians of every age group and ability has to pay it. What is not for an economist to love about this. Come to think of it, this might be why the Liberals love it so much as well.

The so called in and out non scandal has not been such a hot topic recently but some Liberals still feel that there is something in it for them to keep it going. Interesting; I think something is in it for them, but when it finally does arrive I doubt that they will be very happy about it. As a person who is much more in tune than myself to what is happening recently told me; Why do you think when the Liberals are done asking questions on this in question period, that the NDP and Bloc do not jump on board and ask their own questions on the subject to nail the government? Hmmm, why is that? More on this to come.

As promised.

Airbus. Why is everyone taking the word of Karlheinz Schreiber to be the gospel truth lately? If there is one person who stands to really gain anything from a long drawn out costly inquiry it is Karlheinz Schreiber. Does anyone else think that this guy might confess to having Jimmy Hoffa in his freezer if he thought it would keep him in this country longer than he should be? He has been fighting extradition to Germany for about 7 years now in an effort to keep German authorities from getting their hands on him and showing the world just how much of an upright citizen he really is. Half of what he says contradicts his own previous accounts, much of it before the courts, and the other half he has conveniently saved for just before he gets Das Boot right out of the country.

The latest is that Karlheinz Schreiber wrote a letter to the PMO possibly containing more details about the entire affair, the PMO denies this but the Liberals think they are on to something and are again outraged. I must say I am shocked as well. How can it be that the PM does not read each and every piece of mail he receives, especially letters from people who are about to get deported and have matters before the courts. I think the Libs must be confused with how things used to be done at the PMO that they forgot that there is now someone else in the big chair who does things a bit differently.

Not that it matters much but something else most seem to forget is the 2.1 million dollars that Mr. Mulroney won in that libel suit against the Liberal government was donated to charity.

I think the PM is doing the right thing by announcing a probe into this matter, and if there is indeed something more to all of it, I think it will be well handled in a responsible way.


DeeDee said...

It is pure and simple; the GST may be the 'perfect tax' when compared to all other taxes out there.

I am not so sure how "perfect" the GST is.

Consumption taxes are based on the fact that people are, well, consuming.

Any tax that allows a Millionare to keep all of their money in the bank and not pay ANY tax on it certainly isn't "perfect".

The assumption is always that the rich person buys a Porsche or Jag and ends up paying more taxes, but what if they don't buy anything? Or have their company buy it?

Ardvark said...

The money that the "millionare" (sic) has in the bank has, more than likely already been taxed, so to suggest otherwise is not accurate.

It sounds like you are proposing that personal savings sitting in the bank should be taxed? Another winning tax solution if I ever heard one.

Everyone 'consumes', everyone. The thousands who pay no income taxes what so ever get nailed with the GST, children, those on disability, pensioners,and anyone else you can think of. To suggest that the rich do not buy anything is silly and I am not sure you understand how companies are allowed to legally write off the GST as your Jag example suggests.

DeeDee said...

Another winning tax solution if I ever heard one.
Didn't mean to to get you upset ardvark(sic), and I guess I didn't explain myself very well.

According to economists the GST is a good tax and payroll taxes are bad taxes. And maximizing the good taxes while minimizing the bad taxes is the best possible thing to do.

So their logic is that it would be ok to increase the GST to such a level that payroll taxes are no longer required.

Hence, the Millionare (sic) would be allowed to earn his income and stick it in the bank and not pay one cent of tax.

Someone "could", emphasis on could, leave the vast majority of their income in the bank and withdrawing only the bare minimum of funds necessary to live and end up paying very little GST, and overall, very little taxes.

They could even get creative with loopholes and have a person from one of the groups that you mentioned buy their purchases for them and end up paying nothing for GST.

Companies are separate legal entities and can certainly own property and vehicles. Ever see a service van? Ever see a companies office in a house?

And I am not suggesting that the rich don't buy anything, but I am suggesting that the rich can choose to save as much of their money as they choose and buy as little as they choose.

Changing the percentage of GST alters the balance between the two extremes (All consumption tax, or no consumption tax, or somewhere in between).

But my whole point (without being nitpicky about spelling or questioning your understanding of corporate tax law ) is that consumption taxes enable people to not pay taxes by not consuming things.

Drive a 20 year old car and live in a 20 year old house and live off the bare essentials (that are mainly GST free) and you pay little if any taxes.

Hardly "perfect".

Right Hand Man said...

Actually he's been fighting extradition for 8 years.

As for the "letter". You're right when you say that he doesn't read every piece of letter. Especially those from an accused criminal facing deportation.

Why would the Prime Minister call an inquiry from an unsubstantiated allegation from someone in that situation. Things changed when he made the same allegations in the legal documents that were just filed in Ontario.

Ardvark said...

Been very busy so sorry about the late response.

deedee, I have also heard something like that suggested; Raise the GST to 30% and have no income tax. I don't know if it was intended or not, but your example shows just why the GST cut is a good move for the poor. The rich can avoid the tax while those poor enough not paying any tax now would be paying 30% more for everything. Not fair at all.

So how can the NDP and the Liberals say that the GST only helps the rich and not the poor?

RHM, does that mean that those scented letters that are sent to the PM from female correction facilities all over the country are not seen by him?

The ladies will be crushed to hear this.