Canada's tax system less fair than it used to be: study

Every time there is a tax cut it seems that the cut benefits the well off more than the less well off. Tax cuts also often mean that there are less funds for social services that benefit the least well off most. The whole political spectrum has moved to the right with the triumph of global capitalism. There is no existing alternative to the system since the disintegration of the USSR and the triumph of the "handful of capitalist roaders" as Mao called them in China. North Korea is a weird communist fiefdom of Kim Il Sung and Cuba is small and also changing somewhat. There is a trend to a more progressive and quasi-socialist system in Venezuela but it is rather early to say what the results will be. The system is dependent to a considerable extent on petro-dollars. Anyway this a bit off the topic of taxes.
Perhaps we should all go to Kuwait where there are no income taxes and there is free health care, free university education etc. However, you must be a citizen to gain all those benefits.


Canada's tax system less fair than it used to be, study says
Last Updated: Thursday, November 8, 2007 | 1:32 PM ET
CBC News
Fairness in the Canadian tax system has eroded to the point that the country's wealthiest citizens now pay a lower total rate than the poorest, a new study says.

The study — by the Canadian Centre for Policy Alternatives — looked at federal and provincial income taxes, GST, capital gains taxes, corporate taxes, sales taxes, payroll taxes, and fuel taxes paid by all income groups.

By the centre's calculations, the top one per cent of Canadian families — those earning at least $266,000 — paid 30.5 per cent of their income in taxes in 2005. That was less than any other income group — even the lowest.

The poorest 10 per cent — families earning less than $13,523 — paid 30.7 per cent of their income in various taxes and fees.

For rich Canadians, their total tax rate in 2005 was four percentage points lower than it was in 1990. For the poorest income segment, their total tax rate was five percentage points higher than it was 15 years earlier.

"Most Canadians will be surprised by these findings because they believe we have a progressive tax system," said the centre's senior economist, Marc Lee, who wrote the study.



Lee says tax cuts that have occurred since 1990 have provided more benefit to larger income families.

His study says the provinces have steadily introduced regressive tax changes. The federal government has chimed in with extensive tax cuts of its own — especially since 2000.

Lee's study found that the lowest income earners pay very little or no income tax, but they do spend a disproportionately high percentage of their income on taxes that are considered to be more regressive, such as sales taxes, property taxes and other government revenue generators such as licence fees, gaming and liquor sales.

He also notes that the two cuts in the capital gains tax rate since 1990 have provided more benefit to the wealthiest Canadians.

The study says there's plenty of room to make the tax system more progressive by raising income taxes on wealthy Canadians — either by adding new tax brackets at the top end or by increasing the top tax rate.

It also recommends that capital gains be taxed at the same rate as regular income, instead of at the current rate that exempts half of them from any tax.

The Canadian Centre for Policy Alternatives is an Ottawa-based social advocacy research organization.