Hst

[Rodri]

Shopkeepers are forced to become tax collectors and the added paper work and associated costs could actually cause them to delay employing more people.

These types of taxes do have a higher impact on low and fixed income earners. The other factor to be considered is that having a 10% sales tax (estimated tax figure) at the point of sale means that every time prices increase, for whatever reason, the tax take increases as well. We have a GST in Australia and I have never seen overall price reductions since it was introduced. Politicians will always try and tell you that you will be better off but I have yet to see that happen either.

[EDIT] Addendum:
If you ever ask a politician why they want to introduce a tax of this type, they will eventually admit that it is intended to "broaden the tax base". If you look at that phrase then you can see the reason why taxes of this type are more of a burden on the poor. Broaden the tax base, the base being the lowest income earners in the society and broadening that base means bringing into the tax-paying base those whose income is below the taxable threshold in regard to income tax. So a pensioner (for example) who spends 100% of their income on living expenses will now be included in the tax base and will be paying 10% of their income as tax. The same applies to all low income earners who live from paycheck to paycheck. On top of any other taxes that they are already paying they will also be paying 10% of their net income as sales tax. Meanwhile, a person with a high income, who only spends 50% of their income on living expenses will only be paying 5% of their net income as sales tax. These are also the people who can afford to pay tax accountants and lawyers to find ways to minimise the amount of income tax that they pay. That could mean that the % of their real net income that they spend on living expenses is even lower than 50%, so the amount of sales tax they pay would be even lower than 5% of their real net income.

(All numbers are example figures only as I don't know the actual rates being considered in Canada.)[/EDIT]

[abracax]

Rodri, from what I read about Canada's HST is that it is put in place to lesson the burden of taxes on lower incomes. As Lower incomes were paying out most of their income in taxes this now shifts those taxes to higher incomes as they are the ones with the major purchasing power.

[Rota]

Rodri, from what I read about Canada's HST is that it is put in place to lesson the burden of taxes on lower incomes. As Lower incomes were paying out most of their income in taxes this now shifts those taxes to higher incomes as they are the ones with the major purchasing power.

Any general sales tax will affect lower incomes more than it affects higher incomes, for the reasons I stated earlier in this thread.

There are sales taxes that affect higher incomes more, but as I understand it, the HST is not one of those kinds of sales taxes. For example, a luxury tax on high ticket items ONLY (not just "ALL retail goods") would primarily affect higher incomes. They buy more cars and exotic goods that cost thousands of dollars. These luxury taxes on jewelry, and automobiles, and whatnot do affect the rich more. I do not think the HST is a luxury tax, or am I misreading the info about it?

[Rodri]

I don't know what tax rates are in Canada and I don't know much about their tax laws. But one thing always seems to hold true in all capitalist economies and that is that the greatest proportional tax burden is always borne by low income earners, or as I prefer to think of them, ordinary working people. It's pretty basic really, if you have a capitalist system then you need to motivate people to get rich and if they do get rich, then you don't want to over-burden them with too much tax. That could be seen as putting barriers in the way of wealth creation. Whereas the minimum wage earners who make up the vast majority of the working population are an easy source of government revenue as there are so many of them.

If 1,000 people are forced to pay an extra $1,000 a week tax that is only $1,000,000 revenue but if 10,000,000 are forced to pay an extra $1 a week in tax, that is $10,000,000 revenue for very little pain on any one individual. So governments like a broad based tax scheme as it looks far more equitable and a small amount from each individual can become a very large amount in total.

The thing about broad based sales taxes is that they are simply a tool to gather revenue and nothing more. They do not encourage or discourage particular types of behaviour in ways that some other taxes or excises might. For example, a heavy tax on tobbaco may help to decrease the consumption of tobbaco products overall. But a general sales tax that is applied to most or all goods and services doesn't really change anything except the amount of money that you might have left after paying your bills.

High income earners may have to pay more tax under a GST/HST system but if they have any sort of savings or investments that they regularly contribute to then proportionally they will be paying less GST/HST tax as a percentage of their income than a low income earner who has to spend every cent they earn on living expenses.

I don't expect equity in tax laws in a capitalist system. That's not the way they work but I do wish politicians would stop trying to convince me how much better off I am now compared to any time in the past. It just isn't true.

[Rota]

The collapse of many nations has come when the classes were split too far. Policies that encourage the expansion of the wealth gap, only hasten the demise of a culture. England owned over 80% of the known world at one time. Now, it doesn't even own all of the British Isles. We all know what happened to French aristocracy during the French revolution. But, that's a conversation for another thread.

Rodri is totally correct. A blanket sales tax on nearly all goods does not influence buying behavior that much. And the politicians need to NOT try to sell it as a tax on the rich, it's a tax on EVERYONE!

[abracax]

The blanket sales tax brings in more tax dollars for more expensive items. If you are poor there is no way you should be buying a $6,000 plasma or a $7,000 gaming computer or $80,000 car. The rich spend more and spend more often, the tax affects those who spend and not those who don't.

[Rota]

The blanket sales tax brings in more tax dollars for more expensive items. If you are poor there is no way you should be buying a $6,000 plasma or a $7,000 gaming computer or $80,000 car. The rich spend more and spend more often, the tax affects those who spend and not those who don't.

Noone is denying that the rich pay more dollars in taxes.
The argument is that the poor pay "proportionally" more through a sales tax.

A citizen that makes $25,k and spends 1,k on the the sales tax has spent 4% of their income. A rich person making $400,k could spend 8k in sales taxes, which is 2% of their income. They spend EIGHT times as much as the poorer person, but only half as much income percentage.

[abracax]

It is my understanding that that is exactly the reason for implementing the HST, so that the proportion of pay towards sales tax becomes far more even than it was in the past.

[Rota]

It is my understanding that that is exactly the reason for implementing the HST, so that the proportion of pay towards sales tax becomes far more even than it was in the past.

That may be the line they are feeding the common public. But, unless there's something else in conjunction with the HST, a general sales tax will ALWAYS affect the poor far more than it affects the rich.

Is there a luxury tax, or a capital gains increase, or a property tax increase? Is there something else that is part of the "HST" package that would actually do what they are advertising? Just a general sales tax will not do it.

[Dawnseeker]

VAT taxes can be a good idea when they replace cascading taxes. Not so when they are just slapped on to the end.