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The National Post reported that Ontario Tory leadership hopeful Christine Elliott (spouse of Federal Finance minister Jim Flaherty) is proposing to implement a “flat tax” for Ontario residents. Here’s how it would work: A tax rate of 8% will be applicable to all income over $18,000. So, an Ontario resident earning $50,000 would pay a flat tax of $2,560. The Post sees the proposal in a very positive light:

Implementing a “flat tax” would revolutionize Canada’s tax system by removing the current tax penalty on success and unleashing the efforts of hardworking and entrepreneurial Canadians.

If the flat tax is lower than every tax rate other than the current 6.05% rate levied on incomes of up to $36,000, how is the leadership-hopeful planning to deal with any revenue shortfall? Who is going to pay for education and health care? The plan seems to depend on rosy expectations that lowered income taxes will boost economic output and eventually bring in more tax revenue.

But, we’ve seen this movie before. The list of politicians who ran on lower taxes only to change their mind after getting elected is rather long. Hopefully, Ontarians will not fall into the same trap again and demand to see a plan with realistic expectations. It is one thing to demand lower taxes when times are flush; quite another to cut taxes when Governments are trying to boost economic growth through deficit spending.

This article has 52 comments

  1. As someone who’s in the 48.2% marginal tax bracket (combined federal and provincial; I live in Québec), I can’t say that income taxes have ever made me less “hardworking and entrepreneurial” despite the fact that I only get to keep about half of any additional money I make over my base salary.

    I find it hard to believe that tax rates are a serious disincentive for most people to try to earn more money. In fact, one could argue that a high marginal tax rate is an incentive to work even harder and be more productive, because you don’t bother chasing after small potatoes but instead spend your time pursuing projects that will bring in enough after-tax money to be worth your while. If someone offers me a freelance project for $1,000, I might not bother to take it on because in reality I’ll only make a little more than $500 for it. But if someone offers me a more ambitious freelance project for $5,000, I’d be more interested because I’d get to keep a little over $2,500.

  2. The last paragraph isn’t completely true. Mike Harris’ government ran on lower taxes and he certainly worked hard to implement his “common sense revolution” from his platform. Of course, being the only politician who didn’t lie about what he planned to do didn’t stop Ontarians from crucifying him. It only goes to show that if you try to please everybody, then nobody’s going to like it. For me, I certainly respected Harris for actually DOing what he SAID he would do during the campaign and feel we need more politicians like him. Then, at least, if they do something you don’t like, then at least you knew beforehand what he said that he was going to do and you have nobody to blame but yourself (the voting public, that is). I should add that I’m not a blind Conservative supporter because I also really liked Frank McKenna for doing exactly what he promised in his campaign in New Brunswick… I’m just saying we need fewer liars in the public offices.

  3. You leave out an important part of the plan. The flat tax proposal includes an end to all the special deductions and credits that make filing your taxes so much fun. No more sales tax credit , property tax credit, dividend tax credit, ‘research employee stock option’ (???) credit.

    I imagine some would survive, but overall the plan is that there would be one tax, and no credits or deductions.

    Progressive taxes sound, well, progressive. But the problem is that over time, politicians raise taxes on the rich during times of revenue shortfalls, and cut taxes for the poor during good times. Eventually you have 5% of the population paying for 90% of the services. There’s nothing progressive about that.

  4. Being a libertarian, I would love to see a flat tax, or at least taxes largely reduced and services reduced as well. But that doesnt’ seem viable here, unless we start to charge fees for government services, which I’m all for too.

    Smaller government please 🙂

  5. CC, you hit the nail on the head. The flat tax rate would have to be close to revenue-neutral for it to work without massive disruption. The 8% figure isn’t high enough.

    One commenter on the Financial Post article likes the flat tax because the resulting massive drop in revenue will break public unions. My guess is that most people who like this idea just see lower taxes for themselves, but it appears that some actually want a massive drop in government revenue to cause disruption.

  6. The flat tax is working for Alberta, no?

  7. I am not sure how a 8% flat tax could remotely support services for rich and poor alike. Hong Kong, land of the flat tax and no estate tax, has a flat tax of 15% but it has a very different context than North American economies (and a smaller citizen base to manage).

    Here’s the flip side of the argument no one ever discusses. In American states with low taxes, they get you on the back-end. Estates taxes are very high relative to Canada (which only has probate fees). So if you introduce a flat tax, are you know ok with a higher estate tax to level off the drop in revenue?

    BTW, that Post passage shows the editors know little about government policy. The current taxation system punishes high income EMPLOYEES; entrepreneurs have a myraid of tax planning methods to legally minimize taxes. If you really want to attack the issue of unleashing entrepreneurial energy, solve the payroll tax issue (a cash flow nightmare), extend the small business loan program, integrate highly-skilled immigrants into the main stream economy, stop raising the minimum wage, stream-line this bureaucratic nightmare of dealing with 3 levels of government etc. etc.

  8. David S – not really. According to the Calgary Herald (May 7), the Gov’t of Alberta is expecting to post a deficit of as much as $4.7 billion by the end of the 2009-10 fiscal year. There are many reasons for this beyond income tax revenue, of course, but it just goes to show that having a flat tax does not equate to perpetual good times for all.

    Slightly off topic, but these conversations usually come down to people identifying services they don’t use as waste that can be cut. As CC notes, the list of politicians sweeping to power on such promises is long, and they usually find there is little fat to cut.

    If you’re one of these people, I would suggest that you either run for office (and experience this dynamic first hand) or move to the Cayman Islands, where there is no direct taxation.

  9. Poppycock. We need govt. services, we need social nets, roads, schools and hospitals, pools and libraries. Anyone who doesn’t see this is poorly raised and probably missed that class in kindergarten about the importance of sharing.

  10. @Al R: Where do I sign up for your Cayman Islands option? 🙂

  11. Canadian Capitalist

    First of all, I should clarify that our household would pay much lower provincial taxes under a flat-tax regime. Much as I hate high taxes, I also realize that these taxes help pay for health care and education and all the rest that makes this a great country to live in.

    brad: That’s an interesting point of view. Personally, I’d be motivated to work more if more money stays in my pocket.

    Phil: I didn’t live in Ontario during the Mike Harris days (or involved enough in politics at that time). But some say that massive property tax hikes we are experiencing are due to Mike Harris downloading provincial services onto municipalities. So, we pay taxes one way or the other and it is worth asking how a flat-tax would be revenue neutral.

    Bemerson: The tax credits surely make our tax code bloated but I don’t think the Government loses much revenue through them. I don’t have the figures with me but a 1% change in the Federal tax rate has so much more effect on revenues than adding or eliminating one or two tax credits. What Ms. Elliott is proposing is a far-reaching overhaul of the tax system.

    Dividend Man: I’d love lower taxes too but I think we should be realistic about what Governments are best at providing (but will never the be the most efficient at) and what is best left to the free market. A smaller government is nice and there are many things we can argue that it should get out of (LCBO is one) but health care and education are the biggest provincial responsibilities and it is hard to see how the government can be smaller there.

    Michael: Ottawa residents must be familiar with this story because the current Mayor ran on, and got elected on a “zero means zero” pledge without explaining how he’ll get there. Sadly, I don’t think the voting public will learn from their mistakes.

    David: Alberta has (or at least had) other significant revenue streams: resource royalties. Ontario doesn’t. I haven’t looked at Alberta or New Brunswick to look at how their tax system is structured; it would be an interesting exercise.

  12. Phil S – aircanada.com 🙂

  13. CC, yes a 1% change in the income tax rate will have a far more reaching impact then one or two tax credits. However if you eliminate ALL tax credits, they might equate to a 1,2 or 3% change in income taxes. I don’t know the figures on that, but they are certainly substantial.

    This link shows all the current Ontario tax credits. Note that the flat tax proposal includes businesses, so we’re talking about eliminating everything:

    http://www.rev.gov.on.ca/english/credit/

    Although eliminating some of these credits might sound regressive (who isn’t for giving a tax credit for ‘Innovation’). The net effect of a simplified tax system should outweigh the downsides of eliminating worthwhile tax incentives.

    I know, for example, that my company spends countless man hours tracking costs on projects that might qualify for R&D tax credits. Those hours would be better spent actually doing R&D under a flat tax system.

  14. “The National Post reported”

    The National Post is a liberal propaganda mill. I am rapidly coming to the same conclusion about this blog.

    • Canadian Capitalist

      This is the first time I’m hearing The National Post referred to as a “liberal propaganda mill”. And for the record, I’m not partisan and I’ve voted mostly conservative in past elections, both provincial and federal (yes, despite my misgivings, I voted for John Tory). That doesn’t mean I have to blindly support every conservative person or policy out there. Same goes for Liberal personalities or policies.

  15. The problem with a “progressive” tax system is that the rich do not really support the poor. The rich are smart enough to hire people to find ways to avoid the high taxes. Its the middle income people who actually support the majority of the tax income in the country.

    A flat tax system causes an immediete economic boost when applied due to increased spending. The longer term affects of this is that people are able to make money more easily, spend it more readily and create more jobs. Every time money is spent it can be taxed by the government which is why dropping taxes does not mean reducing government income.

    @Al R. Alberta’s so called “deficit” is covered by the fact that they, unlike the rest of Canada, have billions of dollars stored away for rainy years.

  16. @Cam Birch – “So-called” deficit? When you spend more than you receive in revenues, you run a deficit. Period. Net debt is a separate concept altogether.

    I believe the Gov’t of AB is still planning on borrowing over $1B to fund infrastructure projects. Besides, if you’re going to count the Heritage Fund, it lost billions due to the recent slide in equity markets.

    In any case, I believe that the majority of research has suggested that tax cuts do not pay for themselves.

  17. @brad – you just proved the disincentive in your post. Given your tax bracket, you would not take on the $1000 project because the after tax pay isn’t worth your time. Thus the $1000 project is not completed and the econonmy does not grow (in our simplistic example) However, in a flat tax environment, perhaps that $1000 project is completed and thus the economy is better off…

  18. CC, times of economic slowdown are exactly when you want to reduce taxes to stimulate spending. The opposite is true when economy does well.

    I also have a comment on the fear of government running into deficit if taxes are lowered. Government should be actively and continuously looking into how to cut spending. How do we know that they are not waisting money elsewhere right now while keeping taxes at the levels they are? Lowering taxes will force goverment to to start thinking where to save money.

  19. @Shank: nah, you misunderstood: instead of doing the $1,000 project, I go for the $5,000 project and the economy grows more. Plus, someone in a lower tax bracket would probably snap up the $1,000 project if I don’t take it.

    I am aware, though, that my “hourly rate” becomes an issue at my marginal tax bracket….it’s about half the rate I could take home per hour in a lower bracket, and that’s where the disincentive starts to creep in, as there are opportunity costs.

    The other issue for me is that interest on savings gets chopped nearly in half. Again, though, in my case rather than discouraging me from saving it actually causes me to save a lot more to meet my interest goals (I try to earn at least enough in savings interest every year to offset the cost of my bank fees, since no-fee banking is effectively unavailable to me in Québec).

  20. No mention yet that the “journalist” of this article is Niels Veldhuis of the Fraser Institute.

  21. Didn’t we just experience the fall of a so-called trickle-down economics?

    Oh wait. Are we talking about tax cuts withouth the pretense that this is somehow better for the poor?

  22. I’m in support of a flat tax and raise consumption taxes to fill in the gap. I’m in the 40%+ tax bracket and I don’t think I should be struggling to meet my financial goals. I shouldn’t be penalized because I earn more money. Get me when I spend it.

  23. If you (like me actually) are in the 40% tax bracket and are struggling to meet your financial goals, you might want to watch Till Debt Do Us Part or read Gail’s blog:
    http://gailvazoxlade.com/blog/

    This is not a tax problem, this is a gremlin problem.

  24. My struggles have nothing to do with debt….the issue has to do how does one buy a house in the city…put 20k a year away into an rrsp…save for non taxable account….pay for child care for 2 kids… retire at 55 and still maintain some sort of social life. One shouldn’t have to live like a miser to make their lives better.

    I’ve said this before but my fiance and eye have sat down and discussed how many children we could afford to have. We figured we could afford 2 and still meet our goals even though we would like more. I’m glad I’ll be subsidizing families of 5 or 6. we are going about things in a financially responsible manner and are being penalized for it. Is that fair ?

  25. Canadian Capitalist

    mfd: Fair enough. I think you don’t support a cut in services either; simply shifting taxes from income to consumption. My problem with this flat-tax plan is that it doesn’t appear revenue neutral at all. It assumes economic growth will catch up and increase tax revenues in the future. I’d like to see what support they have for such a claim.

    I mentioned the Ottawa Mayor in a comment before. He ran and got elected on a “zero means zero” pledge; meaning he will hold the property tax increases at 0% during his first term. He never offered any thing substantial on how he will achieve it other than a vague “I’ll run City Hall like a business” (he has a business background). Well, guess what? The joke’s on the citizens of Ottawa. It looks like the Mayor would have held the line on taxes in just one year of his entire tenure.

  26. And, of course, a tax on consumption, is a tax on the poor, simply because a higher proportion of their income is spent on consumption. While an individual with a higher income might SPEND more, and pay a greater dollar amount of taxes, it actually costs them less.

    As you rise from the point where every dollar is taxed due to consumption, through where only half your dollars are taxed to 1/4 and so on, it soon becomes clear that consumption taxes place a much greater burden on the poor than the rich.

    If you want some form of equality, you need to find a way to balance the tax issue.

    Flat taxes may also have an equality issue, especially if one group benefits more from the services of those taxes than another. For instance, if all of us pay equally into the highway system, but some derive greater benefit from it than others, is that really equitable? Should the low-income taxpayer pay an equal share for the road to the ski resort?

    The age old question of equity will not likely be fully resolved in our lifetimes.

    DAvid

  27. @Brad – I think you are mixing apples and oranges. Of course the $5k project is more enticing than the $1k project because it’s more money.

    I think to analyse the incentive you have to compare the same income under the two different tax rates:

    ie make $1,000 – keep $550 (current system) or keep $920. Alternatively for the bigger project you would make $5,000 and keep $2750 (current system) or keep $4,600.

    Looking at those numbers makes me think that reducing the tax by 37 percentage points would increase my motivation quite a bit.

    @MFD – If you are a high income earner and you are “struggling” to meet your goals then I suggest you alter your goals or don’t complain about it. Retiring at 55? Yah, that’s my goal too but if I have to struggle to get there…then that’s kind of my own doing since it’s a tough goal to reach.

  28. Has anyone out there actually moved to a different province because of income taxes? Seriously, folks. I’ve never bought into the idea that personal income taxes are a factor in deciding where to live in Canada. I live in B.C. but am considering moving to Quebec despite its higher taxes.

    Of the many things limiting my potential, the lack of a flat tax isn’t one of them.

  29. CC you are correct I do believe in a socialized system . There’s definitely a lot of questions about a flat tax but something needs to be done . I do know one thing and that the current system isn’t working. Its a big giant snow ball that’s getting bigger and faster and will eventually crush everyone.

    @david – how is a consumption tax a tax on the poor? Keep taxes low on necessities like food, water, heat and public transportation. Everything else has the more expensive tax and done. You want a TV then pay the taxes to get it. People have gone crazy on what they perceive the American dream is. First it started with a house, then one car, then two, cars, then a TV, then a TV in every room. That’s not the American dream. The American dream is the RIGHT to own those things not the entitlement to them.

    The saddest part is social services are being stretched so thin that the money isn’t effective in resolving any social issues but just maintaining the status quo. Sure kids have a crap roof over their head but they have very little chance to get out of that life style. If it was up to me I’d start cutting useless services and start putting the money into child education. I’m not talking about a token gesture but really fund kids programs and education all the way to post secondary.

    bah…I’m sure we can go on forever and not resolve anything

  30. @FP the point is I’m forced to make tough decisions that others don’t seem to be making because the system will provide for them. Where’s the equality in that?

  31. I get very frustrated with these kinds of things and in the end its not taxes I pay or the social services. Its frustration of handing over more money to idiots so they can mismanage it further. The thought that Ontario is a 160 billion is debt just astounds me. We are never going to pay that off. They will just keep accumulating the debt until everything comes crumbling down taking our savings with it ala Zimbabwe style.

  32. The other issue with flat tax proposals is that they are generally not “family-formation neutral.” That is, they provide incentives or disincentives for particular family structures to form. (Two spouses can shield $36,000 from provincial taxation in this current proposal, as opposed to a single person’s $18,000 exemption.)

    I’m still thinking my way through the implications of this one.

  33. Alberta has had a flat income tax of 10% for many years on all income above $17 000 (no provincial income tax on income below that level).
    Speaking as someone who arrived in Calgary 6 years ago after living in Vancouver and Ottawa, I have to report that the income tax rates together with no PST really does have a material impact on ones disposable income.
    Of course, the Alberta government has the best of both worlds- it can offer low taxation and high level services to the population because of resource revenues. Most home grown Albertans do not fully understand this….they consider themselves conservative, but then scream bloody murder if the schools, hospitals or roads are not maintained at a higher standard than everywhere else in the country.

  34. @CC. My earlier comment was more just addressing Mike Harris and Frank McKenna’s records of actually doing what they said they were going to do when they were on the campaign trail. It had nothing to do with their tax policies.

    @brad. If you pick and choose different contracts from different clients, then that would make you a contractor, not an employee. I don’t think a flat tax vs progressive tax would affect you so much as you pay less tax than any employee anyways.

  35. @Phil and Four Pillars: Wow, I guess I didn’t explain my examples very well. I didn’t mean to say that I’m a contractor: in fact I am a fulltime employee. But like many fulltime employees I occasionally do freelance work on the side when I have time.

    All I was trying to show in my example was that, because I’m in a high marginal tax bracket, the only freelance projects that make sense for me to take on are those that are going to give me a significant amount of money after taxes, and I was using the $5,000 versus $1,000 example to show that a high marginal tax bracket might actually encourage people to be more entreprenurial and work harder, because they’ve got to take on more ambitious projects. Little ones aren’t worth the effort because the after-tax return is so low.

    I was just trying to point out that high taxes don’t necessarily act as a brake on productivity and entrepreneurship; in fact they can motivate you to work harder than you would otherwise because so much of what you bring is going to go out in taxes.

  36. Sam writes:
    Has anyone out there actually moved to a different province because of income taxes? Seriously, folks.

    1960’s Saskatchewan population 1M, Alberta population 1.5M.
    2008 Saskatchewan population 1M, Alberta population 3.6M.

    Both provinces have energy and natural resources. The difference has been in the political flavour.

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  38. Well a flat tax would be great if there is a lot of money laundering and illegal activity, which the government tries to legalize in order to collect more revenues
    But I doubt there is any significant “black market economy” in Canada.

  39. @Andy – that’s overly simplistic. While I agree that many, many people have moved from SK (and other provinces) to AB, are you trying to say that everything is identical in the two provinces except for tax rates? While gov’t action (and inaction) explains some of the differences, there are other factors.

    By the way, Saskatchewan was almost forced to declare bankruptcy in the early 1990s due to the mismanagement of a PC government, while an NDP government put things back on track. And now, the SK party (conservative) seems to be managing things well. All of this is to say that “political flavour” isn’t a very good explanation.

  40. @mfd – I understand completely. I’m also struggling to pay for one child’s daycare – I posted this here previously – when my little one was in the infant room, that year I paid 18k on his daycare. We had to live on a shoe string. I got back 2000 from the gov’t because the tax credit went to our lower income earner. It sucked. I want 5 kids, and you’d think that I should be able to afford it, but no. Even with two kids, we will be struggling.

    However, compared to a lot of other families, we’re doing great. This is reality.

  41. “ioana // May 14, 2009 at 10:32 am
    Poppycock. We need govt. services, we need social nets, roads, schools and hospitals, pools and libraries. Anyone who doesn’t see this is poorly raised and probably missed that class in kindergarten about the importance of sharing.”

    You mean government run kindergarten classes didn’t teach that to everyone? So once again, government runs services failed. Failed to indoctrinate all of us to just shut up.
    Once you get past kindergarten you learn that we do not need government run pools, libraries and imaginary “social nets”. Sounds like most people missed the higher education classes on having the courage to allow others to live their lives as they want.

    “brad // May 14, 2009 at 9:18 am
    As someone who’s in the 48.2% marginal tax bracket , I can’t say that income taxes have ever made me less “hardworking and entrepreneurial””

    Yes it does, whether you consciously recognize it or not.

  42. Ioana, other people reduce expenses and have one spouse (usually the lower income earner) stay home with the kids if they want to have 5 kids. If you are paying 18K per child for child care, either you have some incredibly expensive tastes, or something else is wrong. Maybe it’s just the area, but my childcare bill comes to just over 7K for two kids.

    Also, why is it my job to support your 5 kids when I stopped at two? What about people who decide not to have kids, why do they have to support your kids just because you want 5?

    You already get the CCTB, UUCB, a deduction for child care if you earned income (which is a deduction, and not a credit), and the child tax credit (which can be claimed by either spouse, but it works out the same since it’s a credit so I don’t know why you mentioned it) . . . why are you complaining about all that?

  43. Traciatiam – reading comprehension?? I’m not complaining. Yes, I have expensive tastes, aka I live in Toronto and don’t qualify for sponsorship. Yes I’d like 5 kids but it’s not going to happen. Where do you see me complaining? I’m just stating some facts.

    Not complaining at all.

    Where the heck are those 7k daycares for two kids? I’d like to know. How does that work? Are you in Quebec?

    • Canadian Capitalist

      Traciatim: I’m surprised at $7,000 daycare for two kids. In the Ottawa area, it is more like $1,000 per month per child for toddlers and $800 for older kids.

  44. Yeah, seriously, Dhalla.

  45. I’m in New Brunswick, we pay two different sitters, one for after school care of our 7 year old, and one for all day care of our 4 year old. We also don’t qualify for assistance in child care payments. Both of our sitters are simply people who care for children in their home. It was 7 and change, I can’t remember the exact figure. Also, we have some family looking after them in the summer, so this would probably be close to 10K for 2 kids if we did all year. Of course, around here people can live on less since average home sales are running well under 3 times average home prices.

    ioana, I took the “We had to live on a shoe string. I got back 2000 from the gov’t because the tax credit went to our lower income earner. It sucked.” as complaining about the way taxes work for dual income families. I guess your ‘shoe string’ is probably a lot different than my shoe string considering the day care payment.

  46. Traciatim – I can say that it sucked without complaining.

    Especially when it’s wedged between :

    “We need govt. services, we need social nets, roads, schools and hospitals, pools and libraries.”

    and

    “However, compared to a lot of other families, we’re doing great. This is reality.”

  47. I for one would happily sign up for a flat tax as well as a privatized health care for which I could hopefully pay with my tax savings.

  48. My first question is how is this a flat tax? If the first $18K is exempt from tax, then anyone earning less than $18K would pay no taxes and have a 0% nominal or real tax rate ($18,000 – $18,000 * 8% / $18,000). Someone earning $40K would pay a 4.4% real tax rate ($40,000 – $18,000 *8% / $40,000). And further, someone earning $100K would have a 6.56% real tax rate ($100,000 – $18,000 *8% /$100,000). It sounds progressive to me.

    Second, how would we save money? If we all had a flat tax, with no deductions, how would a business be affected? They wouldn’t be able to deduct the cost of doing business (they are subject to the same flat tax). So if their operating costs were equal to 25% of their gross income, and they cannot claim those costs as deductions, how would they make up for the lost deductions. I would assume they would have to raise their prices by their operating cost, or 25%.

    A point was made about how this works in Alberta. First, Alberta doesn’t receive transfer payments like Ontario, so they are a “have” province. They are also very resource dependent where Ontario is dependent on manufacturing. Two very different industries that should be taxed very differently.

    Resources are finite and can be measured like a bond. If I know I have a billion barrels of oil in the ground and it takes me a year to take 100 million barrels out of the ground, I can assume I have 10 years of oil. Then, if I look at the costs of getting that oil out of the ground (infrastructure and people) I can project my costs over those 10 years and apply a straightforward flat tax to that resource. I have fixed costs and fixed resources. *(Of course, Alberta ran into problems because they found ways to separate sand and oil which changed all the projections….but that’s another topic. )

    With Ontario, a manufacturing and refining economy, we are not measurable. Our capacity is infinite and it also increases and decreases from year to year. Thus our revenues and expenses also fluctuate (infrastructure and people). We need a tax that makes sure it’s responsive in great economic times (when people make more money) and gentle in poor economic times (like now). If someone is making $100K in 2007, they should pay more tax so that in 2009 when they make only $40K we’ve stored some extra in reserves somewhere.

    Of course this is simplifying things and in reality both Ontario and Alberta have a progressive tax system. Alberta hides it’s system behind a 10% flat tax with an income exemption (which does create a real progressive tax) and Ontario has a progressive income tax but charges a flat tax on goods (the 8% provincial sales tax…which will soon be the 13%HST). And of course both these systems work within the progressive Federal tax system which negates any type of flat tax by redistributing wealth directly to lower and middle income families and indirectly through provincial funding and equalization payments.

    All this to say, unless all the taxation in Canada (federal, provincial, and municipal) and all the user fees in Canada (water, waste, toll roads, etc) are replaced by one single flat tax system, we will always be subject to some sort of tax system that is a blend of progressive and flat tax system.

    Have a good long weekend.

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