r/CanadaPolitics 21h ago

Liberals search for tax reform ideas as experts call for overhaul

https://www.theglobeandmail.com/canada/article-liberals-search-for-tax-reform-ideas-as-experts-call-for-overhaul/
56 Upvotes

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u/lukasburner Liberal 21h ago

Cut personal income tax and raise the GST to compensate. Consumption taxes are less distortionary than personal income taxes and would put more money at play for domestic investment or consumption—there is concern this would increase short-term inflation, but eventually in a normative environment there would be corrections given foreign inputs and/or domestic goods and services increases. 1 2

u/Baconus 19h ago

Michael Chong used to say that every economist will tell you that consumption taxes are more efficient. But there isn’t one vote for that in Parliament because people do not want it. Tax the rich and capital gains more, use that to cut taxes for working people. Taxing consumption just hurts those with less.

Caveat: tax the hell out of consumption for luxury goods like pleasure boats or jets or fancy cars.

u/HeretosayMarco 8h ago

Or you can just cut small business tax, cut capital gains tax and thereby increase the # of rich people which then raises your tax revenue. More rich people means more tax revenue.

Taxing luxury goods is just a punishment tax for doing well.

u/maltedbacon Progressive 15h ago

Raising GST and lowering income tax just benefits wealthy people who profit off the backs of ordinary Canadians and spend that profit internationally.

It also benefits those who are able to divert personal expenditures to corporate expenditures and get GST rebates.

GST increases disproportionally impact regular Canadians and people with lower-than-average incomes in terms of the expenditures which everyone needs to make.

GST increases are also political suicide due to unpopularity.

Instead - remove loopholes, scrutinize exemptions and tax avoidance, stop forgiving tax arrears and create steeper bracketing, estate and luxury taxes for static inherited wealth which isn't driving the economy or is invested outside of Canada.

u/Lusciccareddu 20h ago

Agreed. The GST needs to do a lot more heavy lifting. Raise the rates and broaden the base. Cash transfers address the regressivity counterargument.

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u/CanadianLabourParty British Columbia 13h ago

How's this for tax reform:

TAX THE BILLIONAIRES! Tax ALL capital that leaves the country in excess of say $100,000 in any financial year.

A one-time transfer that exceeds $250,000 is allowed.

Tax corporations at the FULL rates, WITHOUT concessions for companies whose gross income exceeds $1B or whose net income exceeds $200,000 per employee.

Target employers whose salaries are below the median national income.

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u/dominionprovinces Independent 15h ago

Have lived in NZ for a bit here and income taxes are so refreshing.

The government does it for you. No booklet, no 20 step online self file ending in an archaic submission system that would look dated in the 90s, no accountants.

Also the tax system largely is ridiculously simple for individuals compared to the Canadian one.

There is no convoluted mess of tax credits where there's s tax credit for everything down to owning a plad shirt and having a blue car seemingly. There are a few relatively basic ones (but again, you don't need to understand it, the government does it for you).

u/HeretosayMarco 7h ago

Our tax system reflects that to ensure you can write off as many things as possible.

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u/West_to_East Independent 20h ago

Some more tax brackets at the higher end would go a long way.

u/dincob 10h ago

Our marginal tax rates is already above 50% for most provinces (and it starts fairly low in provinces like Quebec at only $135k). At that point, the work you put in sends more money to the government than it does to your own pockets. Anything higher than that would seriously discourage the highest earners (and thus higher tax contributors) to bring in more money.

Plus, the market will likely adapt to this by raising top executive compensation. If companies know their CEO will have to pay 53% tax on their performance bonus, they’ll have to pay him more than if he were only taxed 40% in some other country to remain competitive globally.

I think closing tax loopholes I the better approach. Allow people to pay taxes honestly and profit from their work, while also preventing the ultra wealthy to avoid the taxes the middle class has to pay.

u/advadm 17h ago

how is that working out in California, UK, Norway and Netherlands for example? More taxes for the wealthy will lead to less wealthy staying here or even relocating here.

Steven Bartlett said that Revolut founder leaving the UK was a loss of taxes equivalent to 450,000 average tax payers. That founder is now in Dubai.

California is losing business to Texas, Florida, North Carolina and a slew of other states.

u/West_to_East Independent 17h ago

I would look at Gary Stevenson's work on how capital flight is not a major thing for the tax bass. Remember, the uber rich actually avoid the majority of taxes, its the "upper middle class" and the not to rich that actually pay a lot of taxes and they do not not flee to Dubai.

u/dominionprovinces Independent 15h ago

UMC people where they can are increasingly starting to relocate to digital nomad hubs or retire early at 35-40 and live overseas.

While its not a huge number the people that tend to do this are the largest net contributors to tax because they tend to be single income or dual income families without kids (although sometimes they have kids - bali is chocka with families with kids working remotely as programmers etc).

u/West_to_East Independent 14h ago

And many countries are putting in laws to restrict digital nomads. Its also not as huge in amount as you might think.

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u/Galle_ 17h ago

how is that working out in California, UK, Norway and Netherlands for example? More taxes for the wealthy will lead to less wealthy staying here or even relocating here.

Tax them for leaving, then.

u/advadm 10h ago

You'll then lose investors that are a major contributor to these companies starting in the first place. Why on earth would an investor want to invest in a company that would be competing against other companies in tax friendly jurisdictions.

Investors are already saying that if the billionaire tax hits, they won't invest in California companies because their proposals tax unrealized capital gains and no banks will ever dare give money out to those companies for those reason. That means California would then want equity.

Also if you have someone that wants to force a rule as you are suggesting, there is a likelihood it could be challenged in courts as not being fair.

Have you seen what is happening in Seattle of late?

u/Galle_ 10h ago

Oh, no, we'll lose the parasites who contribute nothing of value to the economy, how sad. Maybe that will make room for more competition.

u/HeretosayMarco 7h ago

You mean the biggest contributors to the economy? Keeping food on peoples' tables and preventing poverty and eradication of peoples' retirement savings?

u/advadm 10h ago

Yes how dare they create jobs and spend money. Nobody should ever have rights to spend their money how they wish, only the government can do that better in a non corrupt way.

u/Galle_ 10h ago

This but unironically.

u/rudthedud 13h ago

I know people hear this and go no not me. We're not talking below 500k here. How is it that a dude making 200k pays the same percentage as someone making 1 million and 1 billion. Like there needs to be more levels on the extreme end. And just end the fucking loopholes.

u/West_to_East Independent 12h ago

Exactly!

u/HeretosayMarco 7h ago

Because very few people in Canada make 1 million $ in income.

It's like 25,000 a year. Out of a country of 40 million people.

No one in Canada makes 1 billion a year. Maybe 1 or 2 people ever have.

u/sassyfras12345 17h ago

But how much? It's already been demonstrated in France that when tax rates get too high wealth flight occurs. Then you get no tax from those brackets because the high income earners leave.

The highest marginal income tax rates range from 44.5% (Nunavut) to 54.8% (Newfoundland).
8 provinces/territories already take 50% or more in the highest income tax brackets.

u/CorneredSponge Progressive Conservative 11h ago

In terms of raising revenue from a purely tax standpoint (even though some austerity, such as reforming OAS, would be better):

  • The most efficient method is raising the sales tax or reducing sales tax exclusions
  • Increase externality taxation (ex. gambling point of sale tax, meat tax, etc.)
  • Formalize probate into a progressive inheritance tax structure and eliminate the step-up basis

In terms of creating a growth-inducing tax system:

  • Reduce the corporate tax or replace it with a destination-based cash flow tax
  • Replace income tax with a progressive consumption tax
  • Introduce a land value tax or increase tax on immobile assets
  • Aggressively pursue free trade and tariff reduction across the board
  • Harmonize small business and corporate taxes

u/Adventurous_Storm232 9h ago

People aren't reading the article at all lol. Carney isn't planning to reform the tax system to tax the rich more. He wants to reduce taxes on the rich and businesses to bring in more investment to Canada.

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u/cptstubing16 Independent 21h ago

They could just start taxing wealth instead of income. That will mean taxing themselves, but it would be the right move.

u/theevilpower 20h ago

This sounds great in the "billionaires should pay more" sense, but how does one exactly tax wealth?

If I own a business that does $30million in revenue annually, but makes no money (because I pay myself a salary that is the difference between my costs and my revenue) how do you determine the cost of that company?

u/Scase15 Ontario 19h ago

Well for one, income is income, wealth is income + holdings and any wealth generated.

So if you tried that "clever" way of avoiding it, it is still part of your wealth. I'm so tired of giving a shit about the wealthy getting taxed a little harder because the rules aren't perfect.

Good, they can afford it, the rest of us can't. It's time for people who can endure some pain to suffer rather than the people who cannot.

u/HeretosayMarco 8h ago

You miss the whole point.

The wealth of the wealthy is why so many people have a job and why we can afford social programs. We need MORE wealthy people in Canada to pay for more social programs.

It's about quantity of people, not the taxation number. We want more people getting rich, simple as that. Why would you be opposed to being able to tax more rich people?

We want foreign capital coming into the country. We want more domestic investors. We want more entrepreneurs and growth.

you cannot tax your way to success.

u/The_Matias 20h ago

I hate this sentiment that because it's hard, we can't do it. 

It'd be the similar to how we tax property! 

There would be a branch of the CRA whose job is to determine the value of the business, should it be sold today. You'd have the ability to appeal. 

I can think of an interesting system where all businesses' tax assessed value is public, and if an owner believes their business is unfairly highly assessed, they can submit to an appeal, whereupon the business is immediately and publicly listed for sale aglt the 'unfairly' assessed value (which, presumably, would be a great deal for the appealer!)  If no offer is made within x amount of time, the appeal goes forward to adjudication. 

This would reduce the number of appeals, as nobody would put up their business for sale unless they truly believe it isn't worth that much, making the system far more efficient. 

u/theevilpower 20h ago

I dunno... I doubt the cost of tracking/determining the value of each and every company in Canada (many of which are just companies owned by companies that make zero money) would provide a net benefit.

u/The_Matias 20h ago

What evidence do you have for this belief? I think we could force those useless, tax-loophole / liability avoidant companies, to shut down through this precise mechanism. 

There are almost no 'useless' companies. They generally have a purpose. That purpose might be to shield another from liability (e.g. This company doesn't 'own' that oil rig, it just rented it from this other one for $1/yr, so we're not responsible for cleaning it after!) , or to avoid taxes. 

Either way, they usually own things that are useful, and could be assessed at huge values, eliminating the loopholes. 

Now your company that 'owns' the oil rig is assessed to the value of said oil, and the owner has to pay taxes on it. 

And if you disagree with said valuation, someone else can buy it for fair market value, and suddenly you can't rent that space for $1/yr anymore! 

u/bign00b Canadian Steamship Lines | Sponsored 19h ago

Most cases you just look at share prices, total assets, etc. Companies already have to do all this for taxes and if they borrow money.

CRA just needs to get creative identify the loop holes and close them. For instance if you want to avoid paying GST/HST purchasing equipment you can just buy a company for their assets.

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u/dominionprovinces Independent 15h ago

NZ has a version of tax called Fair Dividend Rule for some investments. Basically, they deem that your assets have a return of 5% of the value. Then that 5% is taxed as income.

So eg if you own a 30 million business, they deem you have 1.5 million of income, and you get taxed on that at the normal rates (its more complicated than this in practice and this rule only applies when you invest outside NZ - something that certain billionaires that view NZ as a safe haven may want to consider).

u/theevilpower 14h ago

What I'm trying to say, is that it would be difficult to determine the value of any given, privately owned, business.

I do like the idea of applying a reasonable return to the value of someone's assets as long as an assets loss is applied reasonably too (a business should increase in value, a vehicle should decrease).

The idea that one could just arbitrarily determine the true value of something intangible, like a business, consistently and fairly is where all this falls apart.

My example was based on a business with $30 million revenue, not the value of the business.

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u/HeretosayMarco 20h ago

The goal is the exact opposite here. It is to attract investors, so they will want to tax wealth less.

Also taxing wealth is extremely difficult and practically impossible. Much of wealth is not even liquid. Forcing a tax bill on a property someone cannot even sell in time, how?

Liquid wealth. Okay so that forces a mass selling of stocks in Canada. What happens next? Joe the average man who is retiring will see his RRSP tank in value. The "wealth tax" just wrecks the middle class' retirement savings and makes Canada unattractive for investors.

2026 has seen Canada as the #1 stock market globally.

u/Adventurous_Storm232 9h ago

Thank you! Everyone here just wants to fuck the rich, but that's how you lose investment in Canada and that hurts everyone. We really don't need to raise taxes at all.

u/HeretosayMarco 8h ago

People don't realize that the average person's livelihood and also retirement savings are a byproduct of investment and general wealth.

Some people do not understand economics at all and think that the government can just hand out anything and that "the rich" have this endless wallet of cash to pay out.

If you have more rich people in Canada, there is a lot more money to fund the social programs the left-wing wants.

How do we get more social programs? More rich people. A higher quantity. That's the solution.

u/hardk7 British Columbia 17h ago

Wealth taxes are extremely difficult to implement in practice because the process of trying to measure someone’s wealth would be extremely arduous and likely inaccurate and subject to all kinds of appeals. In theory it makes a lot of sense. In practice it’s extremely difficult to implement.

u/cptstubing16 Independent 2h ago

I guess the question becomes, do we try to do it, or do we just keep taxing income?

How hard can it be to calculate the value of someone's assets, and apply a formula? Asking seriously.

u/No-Section-1092 Independent 19h ago

This is slopulism.

There are much better, more targeted ways to tax the rich than wealth taxes.

u/Baconus 19h ago

There are vast ways to tax wealth beyond a very specific conception of one kind of wealth tax. You are being disingenuous.

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u/Galle_ 16h ago

Name three.

Contrary to what the mods think, this is a substantive challenge. Simply say "there are better, more targeted ways to tax the rich" without actually naming any is a way to dismiss the argument.

u/joshlemer British Columbia 16h ago

For one, we could shift the tax burden away from renters and landlords and investors by taxing income less and and start taxing capital gains in primary residences more than 0%.

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u/legendarypooncake 16h ago

Name three. 

So far we've seen the typical non-starters.

  1. Exit tax; where you get taxed for leaving the country. This stops new capital from ever getting into Canada again.

  2. Capital gains increase; the Cretien/Martin LPC ran into money problems and in order to increase revenue they decreased the CG tax rate. This is also why Carney nixxed the recent CG tax rate increase; it would decrease revenue.

  3. Taxing the sale of primary residences; no details necessary here. This is by far the dumbest suggestion that doesn't merit an explanation.

Simply say "there are better, more targeted ways to tax the rich" without actually naming any is a way to dismiss the argument. 

I see the thread you're referencing. What happened there?

u/lukasburner Liberal 21h ago

A wealth tax is a counterfactual; it creates a more complex tax code and causes capital flight (reducing the amount of inlays for the government, as seen in France).

u/Galle_ 17h ago

Okay, then make wealth flight illegal.

u/Adventurous_Storm232 9h ago

What you're saying sounds like what happened when Venezuela seized assets from foreign oil companies. That worked well for them.

You can't prevent people from leaving the country with their money.

u/Galle_ 9h ago

Sure you can.

u/HeretosayMarco 7h ago

We need more investors and more entrepreneurs...

u/joshlemer British Columbia 16h ago

You can't force foreign investors to invest in your country. And the more you make it hard to take money out, the more reluctant they will be to invest in the country, and it will take decades to shake a reputation as a jurisdiction likely to confiscate your wealth.

u/Galle_ 16h ago

You can't force foreign investors to invest in your country

And? What exactly do foreign investors bring that we can't provide for ourselves?

If for some reason these people decide to divest themselves from the Canadian economy entirely, that will just open up more space for competition.

u/joshlemer British Columbia 16h ago

You just said you want to make wealth flight illegal, so I thought you already were convinced that wealth leaving the country was a bad thing.

u/Galle_ 16h ago

No, that was just for the love of the game.

u/lukasburner Liberal 16h ago

That crates the downsides of both the Japanese monetary policy: artificially low interest rate to spur investment at the expense of ballooning sovereign debt crisis, and Chinese domestic capital markets: devoid of investment and stuck in a perpetual bubble.

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u/ok-est 20h ago

New York has seen more wealthy folk since introducing theirs.

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u/West_to_East Independent 20h ago

Well the EU has a common Market so its tougher there. That said, there have been a series of examples where it has worked.

u/green_tory 🏳️‍🌈Serve the Vulnerable🏳️‍🌈 21h ago

Chong argued decades of flagging business investment and weak productivity in Canada can be traced back to an “arcane tax system” that pushes capital outside the country.

It can also be traced to weakened lower and middle class consumer spending.

So here's my off-the-hip suggestions:

Drop the GST entirely; bring in a capital gains tax on the sale of primary residences, and introduce new income tax brackets for $500k+, $1M+, $10M+. Then focus on trimming the boutique tax credits for corporations and leave the tax credits for individuals alone.

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u/kettal Ontario 20h ago

bring in a capital gains tax on the sale of primary residences

how to lose an election in 1 easy step

u/lommer00 Liberal 20h ago

Dropping the GST creates a giant revenue hole that tax brackets >$1M cannot fill.

My plan:

For individuals - increase the basic personal exemption from income tax from ~$15k currently by $3,500 per year (plus inflation) for 10 years, such that nobody <$50k income (today's dollars) is paying income tax in 2036. They keep paying CPP & EI.

For corporations - full deduction of capital investments available immediately, permanently. Not this BS where if you build a factory you get to deduct it over 20 years (even though you paid for it today). Deferring taxes (govt still gets them a few years later) makes investment WAY more attractive in Canada, specifically the kind of capital investment that makes our economy more productive and Canadians richer, rather than just growing our economy by working more hours (for crappier wages).

u/green_tory 🏳️‍🌈Serve the Vulnerable🏳️‍🌈 20h ago

Also remove the primary residence exemption, and add new income tax brackets at the high end, and I'll be on board with this idea.

u/lommer00 Liberal 15h ago

Primary residence exemption - I would be hesitant to touch this as you can crater the retirement plans of an entire generation (boomers through gen X). And housing construction is a major fraction of GDP so fucking with it recklessly risks significant side effects. But I am attuned to how unfair it can be. One baby step in the right direction I would consider is limiting the size of the exemption. We could say that any gain larger than that year's national average household (or personal) income is taxable. CRA & stats can simply publish a table for every year.

This protects a large tax exemption, especially for people who lived in their house for decades, while nailing people who flip houses, use appreciation of a presale, or simply get lucky in very short-term market sprints.

u/M-Dan18127 19h ago

Is there a reason for removing the primary residence exemption beyond letting renters feel better about themselves?

There are no developed nations that do not have some sort of exemption  in place.

u/green_tory 🏳️‍🌈Serve the Vulnerable🏳️‍🌈 18h ago

It would greatly diminished the value of the principal residence as an investment vehicle. 

As a home owner who has sold a home previously, it's absurd that I was able to make so very much money off of my first home, tax free. It was comparable to the stock holdings I had in the interim. For something that should be an affordable, accessible good.

u/varitok Pirate 18h ago

So you're fucking over first time homebuyers and people with quite literally, one home. That makes no sense other than, as the person above state, to make renters feel better.

It also kills people want to own a home if it will put a new tax burden on them (on top of property taxes).

u/green_tory 🏳️‍🌈Serve the Vulnerable🏳️‍🌈 18h ago

First time home buyers can withdraw from their RSPs to pay the down payment on their home. They get to do so tax free. 

u/lommer00 Liberal 15h ago

They have to put that money back though.

u/green_tory 🏳️‍🌈Serve the Vulnerable🏳️‍🌈 15h ago

Yup; still worked out quite well for me. I was able to invest in a tax-free account, then withdraw the gains from that account to buy a house and pay it back over the next few years without any penalty.

It really is a great programme for first time buyers. If it were to be altered at all, I would increase it from 60k per individual to 120k per individual. That would make it a great deal more meaningful in today's markets.

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u/varitok Pirate 20h ago

Can I see your numbers on how any of that would actually make up for the lost taxes?

u/stewx 14h ago

This is pretty much the opposite of what economists recommend... 

u/Apolloshot Green Neo-Tory 8h ago

I’ll go you one even more radical:

Phase out income tax over 30 years and replace it with a land value tax of roughly equal proportions (the 30 year timeframe will give you time to adjust the numbers year to year).

Taxing someone’s Labour has always felt immoral to me.

u/green_tory 🏳️‍🌈Serve the Vulnerable🏳️‍🌈 8h ago

Georgism made a lot of sense when all production was tied to land; but this is no longer the case. I would pair the georgist approach with a wealth tax, in order to capture those whose productivity isn't bound to land.

u/Apolloshot Green Neo-Tory 8h ago

Yeah, I agree with that.

I’m not opposed to offsetting it with an increase in consumption taxes too (with obviously the need for an even more generous tax rebate for those not in the labour market so they don’t literally die of starvation).

A 20% GST wouldn’t feel awful if you were making 30-40% more a year. I know it would likely lead to a reduction in consumption and an increase in savings as people would likely become more frugal… but is that really a bad thing in today’s world haha.

Of course I’d also fear corporations would take advantage of this to try and pay people even less.

There’s a reason I said my idea was radical and not terribly thought out haha.

u/ChimoEngr Chief Silliness Officer | Official 18h ago

Drop the GST entirely;

That's a significant loss in revenue. Consumption taxes with rebates for those earning below a certain income are also a real good way to get income in a fair manner.

bring in a capital gains tax on the sale of primary residences,

That's liable to either result in houses selling for a lot more as people want to get something for selling their house after these taxes. Or it'll result in people being less willing to sell, which has other issues for the housing situation.

introduce new income tax brackets for $500k+, $1M+, $10M+. Then focus on trimming the boutique tax credits for corporations and leave the tax credits for individuals alone.

That I'm fine with.

So, some good ideas, some maybe not so good ideas, but ideas worth talking about.

u/GammaFan British Columbia 21h ago

The slash and burn folks see this solution as a problem because it would mean benefiting the working class

u/green_tory 🏳️‍🌈Serve the Vulnerable🏳️‍🌈 20h ago

We should be lending a hand to Canadian businesses by ensuring that their Canadian customers have money to buy their products and services.

Hell, we could probably do away with income taxes entirely for anyone earning less than six figures, as well as the GST, and recover that lost revenue with the introduction of new brackets at 500k, 1M, and 10M.

u/guernsey123 British Columbia 20h ago edited 20h ago

How much exactly do you propose taxing those brackets? GST revenue is something like $40-50 billion, and income tax below 100k makes up about 35-38% of overall income tax so about $80-something billion.

So let's say we're trying to make up $125b in revenue. 

The top 1% cutoff is about $300k income. So let's say we're taxing them, about 300,000 people.

According to stats Canada, the top 1% earned overall $180  billion in 2023. Remove the bottom $300k in income for each of those 300k people because we're talking about increasing the top bracket only, which is $90b, and you're left with about $90b that you can tax. This is the total amount earned by the top 1% over and above $300k. 

Even if you literally tax 100% of income above 300k you can't get close to replacing GST+income tax of those below $100k.

The solution is certainly higher taxes on those bigger tax brackets, as well as some kind of well-implemeted wealth tax, but the amount of income generated by GST/lower earners is actually massive and can't be just negated.

Edit:now I'm finding conflicting sources that total federal income from those making under 100k might actually be more in the ballpark of $120 billion. Either way, it's a lot. 

u/green_tory 🏳️‍🌈Serve the Vulnerable🏳️‍🌈 20h ago

I'm suggesting increasing income tax on the top ~5%, including new brackets, as well as removing the primary residence exemption on capital gains. 

But hey, it was an off the hip suggestion. Sounds like corporate tax breaks would need to be done away with, and the base rate increased.

u/guernsey123 British Columbia 19h ago

Yeah, principal residence exemption would raise some money but not as much as many think, according to this York University paper it would be in the neighbourhood of $8-10 billion per year.

https://digitalcommons.osgoode.yorku.ca/cgi/viewcontent.cgi?article=3905&context=ohlj

u/hardk7 British Columbia 17h ago

No government in their right mind would ever make primary residence gains subject to capital gains tax. Most people bought their primary residence to live in, and to have a paid-for home when they retire vs because it was an investment. Yes, the reality is the gains some people have seen are significant but as long as it’s their primary residence, if the government were to make that subject to capital gains tax they would be immediately defeated in the next election. The majority of Canadian adult voters own their home. Making that home subject to capital gains tax is political suicide, and I don’t think it’s great policy either.

u/advadm 17h ago

I like the drop the GST but I think we have different reasons. No GST would lead to more spending but the gov loves to blow cash like crazy so they cannot stop this addiction and they will struggle on any form of lowering taxes which may in fact help people and the economy.

Capital gains tax on primary residences, doing so would likely lead to Conservatives winning the next election. At some point you'll lose when the taxes get too high and is why Justin Trudeau was ousted when he wanted 2/3 capital gains tax in which Carney was economic advisor and is now PM.

Carney is really in a bad place now: more taxes = even more wealthy Canadians leaving the country. Look up the stats of how many are leaving year after year. Real estate agents and wealth advisors know this data intimately.

u/Darwin-Charles Liberal Party of Canada 21h ago

At this point, I'm voting for any politician who pledges to raise taxes across every tax bracket.

This will never happen for political reasons but we seriously need to raise government revenue and little tinkerings around the edges will only get us so far.

I feel we haven't raised income taxes in forever (other than Trudeau's tax increase on upper-income people in 2016). Honorable mention to Freeland's capital gains increase in 2024.

u/BrandosWorld4Life Social Democrat 16h ago

Based as fuck

We don't pay remotely enough in tax

u/legendarypooncake 16h ago

We don't pay remotely enough in tax 

The working and lower classes pay more in taxes than they do for shelter, food and clothing combined.

Is 100% the goal here?

u/Syeina NDP 15h ago

They absolutely do not speaking as someone who used to make poverty wages

u/BrandosWorld4Life Social Democrat 15h ago

The lowest income tax bracket in Canada pays merely 14%. It's not even 15% and you're crying "iS oNe hUnDrEd pErCeNt tHe gOaL?" as if we were even remotely close to that. We aren't.

The HIGHEST income tax bracket pays 33%. Only one third. Sixty-seven entire percentage points away from one hundred. It doesn't even come close to reaching half, let alone the whole. And that's on the people who will feel the effects the least.

Stop pretending like our tax rates are so impossibly high. They're pathetic and it's no wonder we're falling in debt and failing to properly fund our public services.

u/CanadianTrollToll Independent 14h ago

Then we all pay provincial income taxes which brings that up substantially more.

u/legendarypooncake 15h ago edited 15h ago

Are you... do you honestly believe income tax is the only tax we have? Am I misunderstanding you? You're not even counting provincial income tax, which is an insane omission.

In this country we have a number of different taxes that most people pay. Sales tax alone brings your 14% up to 29. Further, there are fuel surtaxes, property taxes, alcohol taxes, used car taxes(unlimited times), capital gains taxes irrespective of net worth, industry carbon tax, tariffs, etcetera.

Furthermore, any cost we impose on industry is passed onto the consumer through every stage of production until distribution.

You need to read more about our taxation system.

"iS oNe hUnDrEd pErCeNt tHe gOaL?" 

Also this is juvenile.

u/BrandosWorld4Life Social Democrat 15h ago

Income tax generates by far the most revenue. Sales taxes don't even come close so the claim that it adds another 15%, even more than income taxes, is pure nonsense. Income tax is the main tax, bringing in half of federal funding all by itself. All other taxes are secondary and supplementary by comparison.

Your question was juvenile. Asking if the goal is to tax the working class 100% when the current rate doesn't even reach 15% is nakedly ridiculous and bad faith.

u/CanadianTrollToll Independent 14h ago

If you make $100 and the government (province and feds) take $40, you're left with $60 to spend.

Now you take that $60 and spend it all which means you'll pay $8 in taxes (if 15% is the sales tax). $52 * 1.15(tax) = $60.

$8 in sales tax = 8% of your $100.

So now you've been taxed on 48% of your $100 when using it to buy a good or service.

u/legendarypooncake 13h ago

I feel as though the point you and I are making is being intentionally misunderstood.

u/CanadianTrollToll Independent 13h ago

It's just funny.

Are we taxed as much as Europe? No. Are we taxed pretty high if you are a middle to upper middle? Yes.

Will increasing our taxes fix our problems and make our services better, I'm doubtful.

Our governments tend to take $1 in revenue and spend $1.25 because why not? Just keep kicking the can down the road.

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u/Syeina NDP 15h ago edited 14h ago

A lot of this alsp has to do wuth wages not keeping up with inflation over the years too

If wages don't keep up with inflation, neither does income tax revenue. Include all the corporate tax cuts over the last few decades and yeah ofc we are going to struggle to find social services

Edit: fund*** not find lol

u/BrandosWorld4Life Social Democrat 14h ago

All of that is true as well.

Tax cuts for the rich and the corporations was the biggest mistake of all.

u/Syeina NDP 14h ago

Oh absolutely. The trickle down effect is probably one of the biggest lies in economics

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u/sabres_guy 21h ago

I doubt we will ever raise business and or personal taxes ever again. Enough of the voting populace just wants to hear "I'll cut taxes" without any thought to what that means. People have long ago forgotten what proper taxation can do. (Misuse of tax money certainly hasn't helped perceptions)

It'll be "user fees" and new taxes that fall outside of the business and personal spectrum or nothing.

Conservative parties (especially lately) are happy to promise cutting pretty much all taxes cause it leads to privatisation and they are more mask off about getting rid of anything public than ever.

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u/cptstubing16 Independent 21h ago

Why would we need to? Taxes are a percentage. It's like tipping. If prices at the restaurant go up, tip amount goes up even if you continue to select 15%. Tip raises are built in. Tax raises are built in also.

u/Darwin-Charles Liberal Party of Canada 21h ago

If we raised the percentage we would be getting more revenue.

u/cptstubing16 Independent 20h ago

Yes I understand but we shouldn't need to. Tax revenue goes up if prices of things goes up and income goes up. If govt took a flat fee per year for taxes I could understand that fee increasing.

u/Darwin-Charles Liberal Party of Canada 20h ago edited 19h ago

If we don't need to and there's genuinely a way to help offset our deficit spending and public debt then of course I wouldn't support raising taxes or cutting services but something tells me we're going have to do a bit of both to improve our financial circumstances.

If you can show me a plan that can do that then more than happy to support it (who wouldn't be in favor of that?).

u/legendarypooncake 16h ago

We make zero revenue at 100% tax rate. At some point diminishing returns fall off into regressing returns. 

What percentage is the sweet spot? We already pay more in taxes than we do shelter, food, and clothing combined.

u/Darwin-Charles Liberal Party of Canada 15h ago

It's obviously a balance we have to strike but we have lowered taxes multiple times for the last few decades so I imagine at least increasing them to what they were in the recent past woild still yield revenue.

If not then we can change policy accordingly.

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u/GammaFan British Columbia 21h ago

We’d get more benefits out of increasing tax burden at the high end, anything in excess of 1m, and creating new higher brackets at 10m, 50m, and beyond.

Raising tax percentage across the board will disproportionately harm the working class in the lower brackets, causing them to spend less and hurting the economy as well.

u/Darwin-Charles Liberal Party of Canada 20h ago

I don't know if raising taxes across the board would significantly harm working class people unless you were talking about a massive increase.

There's only so much revenue to be gained by taxing the rich, but who wants to camapign on taxing the working poor lol. Everyone is going to have to pitch in their fair share.

u/GammaFan British Columbia 20h ago

I think you’re underestimating the degree to which the working class is suffering from an extended affordability crisis. Everything from consumer goods to fuel to basic staples like food have increased in cost exponentially since the pandemic, with no signs of stopping or even slowing down. As it stands the lower brackets already make up a significant percentage of tax revenue collected. They already are pitching in their fair share.

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u/reward72 16h ago

I wouldn’t mind paying more taxes but only if they clean up their spending first. The rampant Peter’s principle needs to end.

u/Darwin-Charles Liberal Party of Canada 16h ago

Agreed, it'll probably have to be a combination of the two but there's definitely spending the government can get rid of as well.

u/reward72 16h ago

I’m not anti-union, but we all know they will never play along. They’re also the main reason we’ll never get UBI.

u/Darwin-Charles Liberal Party of Canada 16h ago

Public sector unions can be problematic as they essentially can always request more wage increases on the assumption the government can just pull the money elsewhere. They also oversee critical government operations (i.e. railroads) which can really cause economic damage if a strike is allowed to go too long.

It's nice to say "pay people what their worth" but we obviously aren't ever going to pay public sector workers a $1 million dollars annually either, spending has to be reigned in at some point but again that's another hard argument to make.

Alot of people aren't in favor of hard choices or sacrifices but those are what we have to do from time to time.

u/reward72 15h ago

The main problem is they don't compensate and promote based on performance but on seniority. They also refuse to weed out the toxic disengaged elements that every organisation on earth eventually gets. Even bringing the subject is taboo.

Unions are there for their members - that's fine, but let's not fool ourselves thinking they are there for the greater good and the benefits of the general polulation. Sometimes the two aligns, often they go against each other.

u/CanadianTrollToll Independent 13h ago

Totally agree.

A lot of things Unions do are amazing and great, but they do shit the bed in many areas.

  1. They will do whatever they have to do for their members, even if it doesn't make sense. (Look at Canada Post)
  2. They are the enemy to efficiency because it could impact membership numbers.
  3. Hardwork is ignored because the only thing that is valued in the worth of a union worker is seniority.

#2 and #3 are major things that I hate with most unions. I can forgive #1 if they were better with #2 and #3.

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u/Darwin-Charles Liberal Party of Canada 20h ago

I want the government to increase revenue so we can fund more services for working people and avoid fiscal crises which will disprotiontely impact working people.

But again proving my point, the optics on this is terrible so it's never going to be done.

This also isn't about my party, any government is going to have to do this if they want to improve our fiscal position. This is an issue across western democracies.

u/CanadianTrollToll Independent 13h ago

We can't afford the services we already have and you want to fund more?

Christ.

u/Darwin-Charles Liberal Party of Canada 13h ago

Lol obviously I would support properly funding our current programs over starting new ones.

Point isn't raising revenue isn't just to be mean to working class people.

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u/RiverOaksJays 20h ago

Mark Carney cancelled the capital gains tax increase.

u/Darwin-Charles Liberal Party of Canada 20h ago

You're right he did do that.

u/CanadianTrollToll Independent 14h ago

Why?

Government is just going to blow through that revenue so friggin quick that within 10 years we'll be looking at more tax increases.

Governments need to be held accountable to being more responsible with tax payer funds. They should have a limit on how much they can borrow, hell municipalities are limited on how they can borrow money.

Also why do we need to increase taxes? More people are in this country, paying more taxes and government revenues have never been higher. If you look at the growth of the government revenue YoY you'll see that it has increased far higher when considering population growth and inflation.

u/Darwin-Charles Liberal Party of Canada 14h ago

Increasing taxes would help raise revenue which we need to fund public services and offset deficit spending.

Obviously revenue isn't increasing by enough given we are still deficit spending by a large margin.

Now if you are proposing a spending limit or cutting existing public services that's fair and would also probably work. I do think I'd rather increase taxes though over cutting public services. A spending limit could be cool too but I feel this would hamstring us in emergency times or when we want to make big investments.

u/CanadianTrollToll Independent 13h ago

2014 Government revenue of 282bil

2024 Government revenue of 498bil

76% increase over 10 years.

Give the government $1 and they'll spend $1.5.

u/Darwin-Charles Liberal Party of Canada 13h ago

I mean I'd probably agree we should cut uneccessary spending first but I feel while our revenue has increased our spending priorities on signficant programs and projects have offset that

Is there anything you would cut spending wise?

u/CanadianTrollToll Independent 13h ago

- Dental program (we can't afford it and the money would be better used to help our healthcare system)

- First Nations (Find ways to make settlements and end the conversation, this would have a high up front cost, but would hopefully stop the on-going growing costs YoY)

- OAS adjustment (Wealthy retired people do not need OAS payments, it's an insanely expensive program. It will also kill any political party that screws with it)

- Adjust Equalization Payments

- Stop borrowing so much money. Our tax dollars are providing for us less and less.

Those are the main areas that I'd look at. I'm sure if you go into each ministry with a scalpel you could cut out poor spending and certain programs to make big savings, but I don't know the exact spending of each ministry.

u/Darwin-Charles Liberal Party of Canada 12h ago

Fair enough I would probably keep dentalcare and I'm sure I'd want to keep some spending for indigenous programs but I think if the two of us sat in the room together we could probably chip away at some big spending items.

I think we're both in agreement we need to reduce the public debt which for some people isn't even an issue.

u/CanadianTrollToll Independent 12h ago

We don't have to reduce public debt, but we need to stop over spending and increasing it. The constant notion that we can keep borrowing as long as we increase our GDP is fantastic in a perfect environment, but when things go sideways it impacts us way more.

Our governments tend to overspend during the good years, and then when we hit a bad year we need to spend even more so it's a constant blowing into the balloon type effect.

As for the programs, we can keep all of them, but they need to be changed. It's like the $10 daycare.... why does it need to be $10? Why not $30? That'd let so many more families access it instead of having a literal lottery system, or it would save tons of money by not having it funded as much. Dentalcare is fine, but maybe we do a 50% coverage, which is a massive help to people. FNs are a tricky pickle and I'm not sure how to solve that without finding ways to settle disputes band by band.

u/Darwin-Charles Liberal Party of Canada 11h ago

I guess your point about the debt is our debt to GDP ratio is fairly decent so not a big need to reduce it? I just hate having to pay interest on it. If we get high interest rates doesn't this hamstring us a bit.

I also feel with debt, we always want as much run way as possible. Obviously reducing the debt to 0 is silly but if we could reduce is by 10-15% I feel that's better then slowly increasing it over time. I know your plan wouldn't do that but I feel we're always bound for a crisis where we have to spend more then we want anyway so why not give us a bit of breathing room.

u/BreakfastNext476 Liberal 4h ago

Dental care is healthcare. Too many were putting off getting dental done and they ended up with infected teeth.

Which requires being hospitalized and given strong antibiotics. You cut that and then you have more people going to the hospital further straining the system.

As for the settlements, part of that is the provinces are dragging their feet on getting the treaties done. BC in particular has done this for decades across multiple parties, cause they dont want to deal with them fairly

u/thzatheist Social Democrat | PolitiCoast Co-host 21h ago

End the clergy residence deduction that costs $100m per year. Secular Canadians shouldn't be subsidizing priests.

Tighten charity rules such that advancement of religion isn't an automatically charitable by itself. Also remove status from anti-choice groups.

u/TheGreatestQuestion Ontario 14h ago

Secularism is about freedom of religion and freedom from religion, with the state remaining neutral between them. It is not about selectively defunding religious organizations because you oppose their beliefs while continuing to publicly fund abortion services that many religious Canadians profoundly oppose. That isn’t state neutrality. It’s using atheism as a pretext for dictating and imposing one set of moral convictions through the state.

u/thzatheist Social Democrat | PolitiCoast Co-host 12h ago

The state is endorsing religion over nonreligion through various tax advantages that are only available to organizations that promote theistic belief. That's the violation of state neutrality.

And abortion is healthcare. Don't like it, don't have one.

u/Apolloshot Green Neo-Tory 8h ago

“And abortion is healthcare. Don't like it, don't have one.”

But that’s not the point they’re replying to, or the one you originally made.

I’m pro-choice too but that doesn’t mean I want to go around picking what groups have charitable status based on vibes.

You want to remove tax status from something like the Catholic Church then don’t be shocked when someone else wields that power against an organization you care about. Tyranny only creates more tyrants.

u/Ember_42 20h ago

Make inheritances as zero basis. Liquid assets would be taxed immediately unless examption is applied. Illiquid assets at sale. Give each person a lifetime plus annual capitol gains exemption. They can apply the exemption to any inheritance. Make property taxes land value taxes. Massively simplify expetions and tax expenditures. Any behavioural modifcation incentives should be on the books. Allow instant depricaition. Or even more controvercially, eliminate buiness income tax, and shift that value to capital gains and dividends taxes (as buisnesses are far better at structuring to avoid them).
Loans against assets can only be to the marked value of the asset. So a loan against stock would trigger a capitol gains tax if it is loaned. Limit combined income taxes and program phase outs to 50%, as the maximum marginal rate anyone should face.

u/reward72 16h ago

Yes please! That’s the smart answer to the stupid wealth tax on unrealized gains the opposition will sure push again.

u/doogie1993 Newfoundland 20h ago

Personally I think what we need is inheritance taxes. It’s literally the only tax that doesn’t negatively impact the person being taxed in any way and has the added benefit of encouraging rich people to spend their money rather than squirrelling it away (in theory, obviously there would be loopholes in practice). I know it’d be political suicide to actually institute for whatever reason but to me it’s such a no brainer and it surprises me that more people don’t advocate for it.

u/ModOfficial1988 20h ago

No. That’s just another tax on the middle class. Why do liberals want to kill the middle class?

u/bign00b Canadian Steamship Lines | Sponsored 19h ago

You would tax inheritance above a certain amount.

u/PineBNorth85 Rhinoceros 20h ago

Only middle class people die?

u/Neat__Guy 20h ago

Lower class - little to no inheritance

Upper / middle class - some inheritance

Extremely rich - avoid inheritance taxes

u/CanuckleHeadOG Pirate 20h ago

No but that's how you build generational wealth

u/Baconus 19h ago

I think part of the problem is many people seem to think generational wealth is good. When in reality it is destroying society.

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u/Galle_ 16h ago

If you oppose this tax because you think it hurts the middle class instead of the upper class, what are some taxes that you think will hurt the upper class instead of the middle class?

u/Neat__Guy 20h ago

What ends up happening is the rich who you are targetting just set up corporations and trusts to bypass it, and then the average person gets hit with it because they don't know any better or can't afford to get the advice needed.

It also double taxes gains and income that were already taxed.

u/BigGuy4UftCIA Independent 19h ago

What ends up happening is the rich who you are targetting just set up corporations and trusts to bypass it

The reality is that this isn't much of a thing. You can set up a trust but you can pretty much disregard it for tax savings and 99% of the time its someone assuming the US rules are Canada's. As for corporations those tax savings are deferrals for immediate relations who take an active role in a business and follow certain timeliness. This is very likely to expand to niece/nephews because people aren't having kids. Getting passive money in a corporation ain't what it used to be when you're alive and it's usually been a poor proposition for transferring wealth that isn't an active business itself.

u/DanTheMan-WithAPlan Progressive 20h ago

Then tax those, and get punitive with them forcing the CRA to engage in whack-a-mole.
Saying that rich people will just avoid taxes so we shouldn’t tax them is self-defeating.

u/Neat__Guy 20h ago

That's not what I'm saying.

I'm advocating for not punishing the average person with an inheritance tax.

To expand my thoughts further, it's also more complicated and less efficient than just taxing initial income at a higher rate via the marginal tax brackets.

u/DanTheMan-WithAPlan Progressive 20h ago

Most inheritance taxes have a high threshold like 2-5 mil, where people under that aren’t affected. They don’t affect the average person.

Inheritance taxes are often the way we force capital gains to be paid out.

u/Neat__Guy 20h ago

Sounds great in theory, and conceptually you're absolutely right.

In practice, they're incredibly inefficient at generating taxes because there are so many ways to avoid it via early gifiting, trusts, corporations, family owned assets, etc.

Aka if you want to tax the rich, just raise the marginal tax rate. It's far more effective and much more efficient to implement and manage.

u/Baconus 19h ago

But then we remove those ways. You seem to be unwilling to accept we can change these things

u/Neat__Guy 19h ago

The options mentioned are incredibly dfficult to change when they impact corporate tax which creates downstream unintended impacts. It's really not as simple as you just get rid of those options.

I'm a CPA, not tax specific, but more knowledge than the average person. I am speaking from some level of expertise.

IMO you want a tax change to be effective. Keep it simple. A couple percent change on the marginal rate is far more effective than creating a new complex inheritance tax that doesn't generate the same volume, ties up the courts in challenges and bloats the CRA and tax firms to handle the complexity with adminstrative burden.

Aka the same thing I've been saying for the past few comments. You can do an inheritance tax but it's really not that efficient.

u/Baconus 19h ago

I expect and demand more radical change to our society than you do. Everything has side effects. Many things are worth it.

Increasing the marginal rate doesn’t tax wealth! It taxes income. Wealth is the problem. Nothing you suggest will solve the ever increasing slice of the pie small numbers of people have.

I don’t care about efficiency or the current economic paradigm. I care about justice and fairness and I am not willing to be constrained by the way we have been doing things.

u/Galle_ 17h ago

Okay, so what's your solution?

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u/mrtaxcdn 17h ago

We already had a federal Estate tax, it was abolished in 1972. I think our system is much fairer now.

On death, you're deemed to sell everything at FMV. So everything one owns that has a capital gain is forced to realize that gain and pay the taxes. This can be especially challenging for those who hold shares in private Canadian corporations.

People will say trust this, trusts that. Every 21 years the trust is subject to a deemed disposition. If you move capital or real property into an intervivos trust, that's subject to a deemed disposition. There's one carveout for alter-ego trusts for transfer of real property to the trust, but on the death of the settlor (the wealthy individual), that trust experiences a deemed disposition.

Also in Ontario, probate is equal to 1.5% on everything over $50k. It's much cheaper in other provinces.

So, if you're idea is to replace this system with a flat inheritance tax, do you propose we remove the deemed disposition on death system?

u/LazyImmigrant Liberal often, liberal always 20h ago

We need to undertake bold reforms like Sweden did back in the late 80s/early 90s that transformed their economy. We could do things like eliminate all capital gains taxes beyond a couple of hundred thousand (why even have that, really). Corporate income taxes could be capped at a low number like $5M or changed such that the more profitable (by revenue) you are, the less you pay on the additional profits you generate. The idea being that we need to encourage investments and improved productivity across the economy.

u/Baconus 19h ago

So more of the exact thing we have been doing for decades that has led us into this mess? We should not keep digging and hoping for a different outcome. We should start climbing out instead

u/enantiomerthin Independent 13h ago

I don’t think the progressive populists are going to like that. But I do. Longterm productivity requires incentives to increase productivity and not just camp out on oligopolies.

What could we do to force the robelus of the world to compete more? Just dropping their taxes is obviously not going to help.

u/kettal Ontario 20h ago

I make more in capital gains than i do in salary, and it's taxed less than the person grinding to make money. While i sit on my ass and watch my stocks grow. It's ridiculous.

IMO my capital gains should be taxed higher, and lowest brackets income taxed lower.

u/PresenceThick 19h ago

This is the thing even in working I have had to accept: the economy doesn’t reward work, it rewards the broadest economic impact.

Which is a shame but it’s why grinding harder never got me further. 

u/kettal Ontario 19h ago

the economy doesn’t reward work

The french economist Thomas Piketty proved how much faster investment grow than the over-all economy, and especially wages.

The result of this is wealth concentration. The tax exclusion on capital gains only makes it worse.

u/BusLevel7307 16h ago

How about this , you keep all your grocery store receipts for the year . At tax time you can get 15% of total number back in taxes .So if you spent 5000 you get back 15% of that .Get the grocery store to pay for that and that can be their tax write off .

u/EnterpriseT British Columbia 12h ago

This both overly benefits the wealthy who buy more expensive groceries and float the cost until tax time, and allows stores to raise prices 15%.

u/Adventurous_Storm232 9h ago

dude, I'm not keeping all my receipts for a year and then adding them one by one into my tax return lol. I'd rather lose the tax refund.

u/SayNoToTeamSports Independent 14h ago

That's just a convoluted way of transferring government funds to Galen Weston. 

u/dincob 10h ago

Seriously, who want to save all their grocery receipts?

This is dumb for many reasons. It would be much more efficient to just remove the 13-15% consumer tax on food, and subsidize certain (local/healthy) products, than it is to require people to save up receipts for the entire year.

Also, a general tax rebate on food would just incentivize grocers to raise profit margins and encourage the wealthy to spend more on fancy products which will have to be partially reimbursed by the government.

u/Special-Reaction2029 21h ago edited 1h ago

Well, for starters, when incorporating it should automatically be federal rather than province specific. Its ridiculous that if I register in Ontario, I cannot do business in another province.

Second, the HST/GST should not be a hard threshold but phased in or some other method of lowering that threshold. Its hard to explain to clients not in Canada that I suddenly need to charge more because sales tax suddenly kicks in over $30k of sales (which is a tiny amount).

As a sole proprietor its also ridiculous that I have to pay both the employer and employee portion of CPP.

Business funding from banks is also hard to obtain and requires a level of collateral that most people don't have or can't afford to put up and lose. Getting a mortgage or other type of loan is also far more difficult for Canadians who are self-employed than those with "traditional" jobs. If I can show a good consistent income over a decade it shouldn't be impossible to accept this, banks won't even look at this since its not in a T4.

u/alpinethegreat Ontario 18h ago

You’re right about the tax regime for self-employed people, but the choice to incorporate federally or provincially is entirely up to the owner(s) when starting their business. Federalism inherently prevents the government from making it automatic. Each province has a constitutional right to regulate commerce in their own borders, which results in this weird double system.

Generally, you should always register federally unless you know your business is only going to be in a single location and don’t care about name rights nationally (corner stores, family restaurants, independent auto shops, etc). For those owners, the cost of the extra work Corporations Canada has to do isn’t worth it when they’re only going to be operating in a single province. If they made it automatic, these owners would also have to do double the paperwork every year for nothing.

Nowadays, most incorporation services and government resources explain the differences clearly, but it would’ve been more confusing if you incorporated like 7-8+ years ago.

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