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Opinion

Middle Class

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The Middle Class

The middle class.

This phrase is shrouded in mystery but typically refers to ones occupation, income, education and social status in relation to others.

Depending on the political party using the term, the underlying definition can change.

The Liberal Party has an entire section of it’s 2019 election platform dedicated to the middle class and people working hard to join it.

Unfortunately, the Minister of Middle-Class Prosperity has had difficulties defining the characteristics of the people she was elected to represent.

Excuse me if I’m a little concerned that the middle class might be forgotten as a result.

Tax Free

Making Life More Affordable

Any claims of government giving anything to citizens “tax free” should be met with scrutiny.

All government funding ultimately comes from taxpayers so to suggest that government can give you tax free funds is simply not accurate. Someone is being taxed in order to provide the benefits.

Effective for 2016 tax filings, the Liberal Government lowered the tax rate on income in the 2nd tax bracket by 1.5%. This bracket currently applies to income between $48,535 to $97,069. All other brackets have either remained the same or increased since that time.

For those earning up to the maximum of $97,069, this results in tax savings of $1,456.

In conjunction with the 1.5% tax drop, the Liberal Government removed the Family Tax Cut (FTC). This allowed families with children to notionally transfer income from the spouse with higher annual income to the other spouse.

Depending on your situation, this could result in a tax credit of up to $2,000.

Effective in 2019, the Liberal Government implemented an increase in the Canada Pension Plan annual rates. By 2023, this will result in additional annual employee contributions of $1,107 for those earning above the annual ceiling of $65,700.

The employer portion would increase in proportion, putting further pressure on small business cash flows.

While the Liberal Government may claim that they are “making life more affordable”, the numbers above paint a different picture.

Income Tax Act

What should the government do?

The Canadian Income Tax Act (ITA) has not seen a major review since the late 1960’s. It is now a patchwork of legislation that is difficult for even seasoned Chartered Professional Accountants to apply into practice.

Complexities within the ITA result in a significant added administrative burdens. Instead of focusing on growing your business, creating jobs or planning for retirement, significant time is lost navigating the ITA.

The government should immediately engage in a full scale review of the ITA. The review must consult the private sector and address all major industries across Canada. The revisions should be made in such a way as to allow for amendments in future as the economy continues to evolve.

Key areas that should be the focus of a review:

  1. Simplify: The tax system needs to be fair, efficient and competitive.

  2. Modernize: Tax policy needs to be able to keep up with the digital economy.

  3. Be Supportive: Changes to Canada Revenue Agency (CRA) policies that will ease compliance for taxpayers.

Keep it Simple

Simple:

In Alberta, there are now nine personal tax brackets, a patch work of credits and numerous complexities to navigate in complying with regulations relating to owner-operator business.

Serious consideration should be given to shift away from taxing income and toward taxing consumption instead. It is far more beneficial to tax activities that reduce the wealth of society, ie. consumption, rather than tax the creation of wealth.

The simplest way to make the shift to a consumption based tax system would be to increase the rate of federal GST. This would be offset with reductions in personal tax rates. The personal tax rate drops could be implemented in a manner that preserves the progressive tax regime, but with significantly fewer tax brackets.

For those in the lower tax brackets, the majority of their annual income is spent on non-GST’able expenditures such as groceries, rent and health care. Those with higher disposable incomes would contribute more to government revenues as a result. This preserves the progressive tax regime, protects the vulnerable and doesn’t penalize the creation of wealth.

More comprehensive reforms could also be analyzed to determine the best solution for Canadians.

Update

Modernize:

In recent months, there has been a growing call for government to implement a “wealth tax”. The New Democratic Party has suggested that a 1% on families with a net worth in excess of $20 million would generate net tax revenue of $5.6 billion in 2020-21.

As mentioned above, government should not introduce further tax on the creation of wealth. This tax policy will only further drive investment out of the country at a time that we can ill afford it.

Additionally, there have been calls to add an additional layer of tax on big tech companies, most notably Google, Amazon, Facebook and Apple. There is no doubt that these companies have seen record profits in 2020 but haphazardly implementing a 3% tax on the revenues of these companies will likely back fire.

The reason why large corporations are able to take advantage of low tax rates in foreign jurisdictions is due to varied rates across the globe. If one jurisdiction makes the decision to implement a tax increase, naturally, corporations will seek out lower tax jurisdictions.

If government is concerned with tech giants skirting federal taxes, they need to consult with all jurisdictions in which these companies operate. A unilateral tax will simply resulting in these corporations moving profits to lower tax jurisdictions.

Support

Be Supportive:

The Canada Revenue Agency is typically thought of with disdain by many Canadian taxpayers. Some of these feelings are self induced, others are not.

Much like the difficulties that individuals and businesses have in navigating the Income Tax Act (ITA), the same can be said for CRA agents. While the senior agents typically have specific training and field experience, the majority of front line CRA agents simply do not have the necessary training to effectively help taxpayers navigate the complexities of the ITA.

In order for the CRA to provide more supportive service to taxpayers, they too need to see a reform in the ITA. It simply is not fair to ask agents to be able to interpret the ITA and how it applies to each taxpayer they speak with.

Secondly, the CRA needs to revise audit training procedures for their agents that considers materiality of each case. Far too often I see audit cases that request significant amounts of supporting documentation in response to a taxpayers nominal expense claim. Some of these being less than $100.

This places a significant administrative burden on taxpayers, specifically small business owners. It also leads to a great deal of frustration, which further damages the relationship between this government agency and the general public.

 

Final Thoughts

Final Thoughts

Canada’s middle class has fallen on difficult times in recent years. This has only been exasperated by the impacts of COVID-19.

For far too long, Canada has lost investment and stymied growth due to its archaic tax regime.

The Liberal government has promised to “build back better” and create an economy that is just and equitable for all. Details of these plans remain to be seen.

Instead of grandiose plans stemming from pie-in-the-sky slogans, the government should immediately look to reform the tax system.

Focusing on simplicity, modernization and reducing administrative burden will give taxpayers the confidence to know that their hard work will translate into consistent after-tax earnings.

It’s time to unleash the power of the Canadian worker, supported by a competitive and modern tax regime. Future generations depend on it.

https://www.jaredpilon.com/

I have recently made the decision to seek nomination as a candidate in the federal electoral district of Red Deer - Mountain View. As a Chartered Professional Accountant (CPA), I directly see the negative impacts of government policy on business owners and most notably, their families. This has never been more evident than in 2020. Through a common sense focus and a passion for bringing people together on common ground, I will work to help bring prosperity to the riding of Red Deer – Mountain View and Canada. I am hoping to be able to share my election campaign with your viewers/readers. Feel free to touch base with me at the email listed below or at jaredpilon.com. Thanks.

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Alberta

WHAT HAPPENED TO THE GUY IN THE BLUE TRUCK?

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What happened to the guy in the blue truck

Open Letter to Premier Jason Kenney

February 23, 2021

FOR IMMEDIATE RELEASE

Red Deer – Mountain View, AB

On August 1, 2016 you began your “Unite Alberta Truck Tour” in a blue Ram 1500. Your mission: to consolidate conservative support by uniting the Tories with the Wildrose Party. We all know the results of the truck tour and how the tour carried over to the 2019 United Conservative election platform: “Getting Alberta Back to Work”.

It is now February 2021, four and half years after you launched the truck tour. Even though Albertans have suffered through the past year with COVID-19, the three pillars of your 2019 election platform are still of the utmost concern to Albertans: Jobs, Economy, Pipelines.

When the UCP government took office in 2019, no one could have foreseen the significant challenges that would be presented to both your government and Albertans just one year later. These challenges however, should be viewed a rallying point rather than a crutch.

Moving forward, Albertans are looking for strong leadership. We want to see drastic reductions in red tape. We want a government that champions our interests within Canada and to external markets. Simply put, we want jobs, a strong economy and pipelines. We are not interested in more panels and consultations. We do not want the ideological policies of those in Ottawa dictating our future or our children’s futures.

To secure our financial future, public sector bureaucrats, specifically those on Alberta’s “sunshine list”, need to share in the economic downturn that the private sector is currently facing. Alternative routes to get oil to market, not subject to the Canada Energy Regulator, need to be explored immediately. Small businesses need a concrete plan for reopening and a guarantee that no further lockdowns will be imposed.

Polls suggest that the conservative base is fragmented again. Albertans know what happened the last time this occurred. Premier, it is time to be the guy in blue truck again. Albertans are counting on you.

Sincerely,

 

Jared Pilon

Libertarian Party Candidate for Red Deer – Mountain View, AB

https://www.jaredpilon.com/

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Alberta

Freedom Pipeline

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Freedom Pipeline
Open Letter to Canadians
 
February 16, 2021
FOR IMMEDIATE RELEASE
Red Deer – Mountain View, AB
 
Hours after being sworn into office on January 20, 2021, U.S. President Biden signed an executive order to revoke the presidential permit, thus cancelling the Keystone XL pipeline expansion project.
 
Thousands of direct jobs on both sides of the Canada-U.S. border were immediately lost. While this is disappointing to many Albertans, it does not come as a surprise as the Obama administration, which Biden was vice-president in, took a similar stance.
 
Prior to cancellation, TC Energy committed to operate the pipeline with net zero emissions when it was placed into service in 2023. Although Keystone XL is cancelled, the demand for oil will continue. Instead of shipping oil via a zero emissions pipeline, alternatives such as truck and rail will be required. This results in higher emissions and increased safety concerns.
 
From recent polling data, there is very little support from Canadians to see the federal government engage with the Biden administration in an attempt to have the permit re-instated. The Alberta government and other supporters of the pipeline have called for retaliatory measures and sanctions against the United States in an effort to restart the permit negotiation process. Unfortunately, these calls will fall on deaf ears. Additionally, the sanctions that could be brought against the United States would likely have little impact or only serve to make the situation worse. It is evident that the current Liberal government will not be taking further action on this file based on their initial comments on the decision and their overall ideological stance regarding the Western Canadian energy industry.
 
As nations around the world shift to stronger nationalist positions in light of the COVID-19 pandemic, Canada too must look out for its own interests. We must stop relying on other countries in matters of national importance. Energy independence is a decision of national importance.
 
The United States will continue to be a major trading partner for Canada but we must take steps to become more self-reliant. This starts with understanding the regulatory and social environment that Alberta’s oil and gas industry currently operates in.
 
Bill C-69 (no more pipelines) and Bill C-48 (tanker ban) enacted by the current Liberal government have created a poor investment climate in the oil and gas industry. The cancellation of Energy East and Enbridge Northern Gateway were both tied to these Bills. Critics will state that neither project was economically viable. This however is false. Global oil demand continues to remain strong, and has rebounded quickly after a significant decline due to wide scale shutdowns due to COVID-19.
 
Energy infrastructure projects that cross provincial borders are subject to regulatory review by the Canada Energy Regulator. This process is time consuming and overbearing. Given the current regulatory environment, Canadians (specifically Western Canadians) have two options. Continue to complain about said regulatory environment or think outside of the box to develop a new solution to get our most important resource to market. This is where “Freedom Pipeline” comes into play.
 
Pipeline infrastructure currently exists to move Western Canadian oil from Fort McMurray, Alberta to Cromer, Manitoba. The “Freedom Pipeline” would build on this existing infrastructure and move oil from Cromer to Churchill, Manitoba. As this leg of the pipeline would be completed within Manitoba’s borders, it would not be subject the Canada Energy Regulator (CER). This is supported by the July 26, 2019 decision by the National Energy Board (now CER) in relation to the Coastal GasLink Pipeline in British Columbia.
 
In order to proceed with this pipeline, the National Coalition of Chiefs should be immediately consulted so as to maximize the opportunities for First Nations communities throughout Manitoba. This should include discussions around the inclusion of First Nations owned businesses in the construction of the pipeline as well as an ownership stake in order to defeat on-reserve poverty.
 
Modern technology should be used to construct, protect and operate the pipeline. These include:
  1. Pipeline leak detection and containment system.
  2. Equipping oil tankers, moving through the Hudson Bay, with double-hull tanks and with Small Modular Reactors (SMRs) for propulsion.
  3. Commitment to operate the pipeline with renewable resources within a reasonable timeline and when economically viable.
In addition to providing good paying jobs to First Nations communities along the pipeline route and to Western Canadian oilfield workers, this pipeline will bring significant benefits to other Canadians. Jobs within Ontario’s steel industry would be created. Refinery positions would be created on Canada’s east coast, a region that is desperately in need of private sector investment and growth. Engineering and other professional service positions would be created as well. All of these jobs provide the dignity of work to the individuals who secure them and hope for a brighter future for their children.
 
What happens if the Liberal government enacts legislation to ban tanker traffic in the Hudson Bay and ultimately the route to refineries on the east coast? If this were to occur, Western provinces would immediately need to make a decision about their ongoing position in Confederation. If a tanker ban was enacted, Western provinces should exercise all available actions to secure autonomy. This would include exploring provincial pensions and referendums on equalization payments. The next step would be to explore options for separation.
 
Western provinces cannot continually be expected to be a part of a Confederation that doesn’t allow their industries to get products to market, families to provide for their children and communities to support the vulnerable.
 
The COVID-19 pandemic has ravaged our economy. Governments have spent hundreds of billions in response. We are faced with difficult decisions on how to secure our future. The “Freedom Pipeline” provides a quality option to secure paycheques for thousands of Canadians and bring hope back to our great country. It’s time to get to work.
 
Sincerely,
 
Jared Pilon
Libertarian Party Candidate for Red Deer – Mountain View, AB
 
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february, 2021

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