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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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Anger towards Trudeau government reaches new high among Canadians: poll

Published on

From LifeSiteNews

By Clare Marie Merkowsky

Canadians’ anger towards Prime Minister Justin Trudeau and his Liberal government has reached a record high, according to a new poll.   

According to a national survey published by Nanos Research this month, 31% of Canadians feel anger and pessimism towards the Trudeau government, which marks an all-time low in satisfaction for government leadership.  

“Which of the following feelings best describes your views of the federal government in Ottawa?” the poll questioned.  

In addition to the 31% feeling angry and pessimistic respectively, 11% feel uninterested, while only 1% and 10% feel satisfaction and optimism, respectively. 6% were unsure of their feelings towards the Trudeau government.  

“Feelings of anger toward the federal government have increased or held steady in every region, with the largest increases among residents of Quebec (December: 12%; March: 24%) and Atlantic Canada (December: 21%; March: 38%). Pessimism and anger remain the top emotions Canadians say best describe their views of the federal government in Ottawa,” the research found.  

In recent months, Trudeau’s popularity has plummeted, with polls projecting a massive Conservative victory in the upcoming election.   

Trudeau’s popularity has been falling and his government has been embroiled in scandal after  scandal, one of the latest being a federal court ruling that the prime minister’s use of the Emergencies Act to end the 2022 Freedom Convoy was “not justified.”    

Even top Liberal party stalwarts have called for him to resign.    

Indeed, Canadians anger and dissatisfaction with Trudeau has become a topic of conversation on many social media platforms, with Canadians detailing how the Trudeau government has made their life less affordable.   

Numerous videos are being uploaded to social media by Canadians explaining that they struggling to make ends meet amid the rising cost of living and Trudeau’s ever-increasing carbon tax, while many immigrants are telling others not to come to Canada.  

 

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Frontier Centre for Public Policy

Budget 2024 as the eve of 1984 in Canada

Published on

From the Frontier Centre for Public Policy

By Michael Melanson

Those who claim there are unmarked burials have painted themselves into a corner. If there are unmarked burials, there have had to be murders because why else would anyone attempt to conceal the deaths?

The Federal Government released its Budget 2024 last week. In addition to hailing a 181% increase in spending on Indigenous priorities since 2016, “Budget 2024 also proposes to provide $5 million over three years, starting in 2025-26, to Crown-Indigenous Relations and Northern Affairs Canada to establish a program to combat Residential School denialism.” Earlier this spring, the government proclaimed:

The government anticipates the Special Interlocutor’s final report and recommendations in spring 2024. This report will support further action towards addressing the harmful legacy of residential schools through a framework relating to federal laws, regulations, policies, and practices surrounding unmarked graves and burials at former residential schools and associated sites. This will include addressing residential school denialism.

Like “Reconciliation,” the exact definition of what the Federal government means by “residential school denialism” is not clear. In this vague definition, there is, of course, a potential for legislating vindictiveness.

What further action is needed to address “the harmful legacy of residential schools” except to enforce a particular narrative about the schools as being only harmful? Is it denialism to point out that many students, such as Tomson Highway and Len Marchand, had positive experiences at the schools and that their successful careers were, in part, made possible by their time in residential school? If the study of history is subordinated to promoting a particular political narrative, is it still history or has it become venal propaganda?

Since the sensational May 27, 2021, claim that 215 children’s remains had been found in a Kamloops orchard, the Trudeau government has been chasing shibboleths. The Kamloops claim remains unsubstantiated to this day in two glaring ways: no names of children missing from the Kamloops IRS (Indian Residential Schools) have been presented and no human remains have been uncovered. For anyone daring to point out this absence of evidence, their reward is being the target of a witch hunt. As we recently witnessed in Quesnel, B.C., to be labeled as a residential school denialist is to be drummed out of civil society.

If we must accept a particular political narrative of the IRS as the history of the IRS, does our freedom of conscience and speech have any meaning?

To the discredit of the Truth and Reconciliation Commission, fictions of missing and murdered children circulating long before the Commission’s inception were subsumed by the TRC (Truth and Reconciliation Commission). Unmarked graves and burials were incorporated into the TRC’s work as probable evidence of foul play. In the end, the TRC found no evidence of any murders committed by any staff against any students throughout the entirety history of the residential schools. Unmarked graves are explained as formerly marked and lawful graves that had since become lost due to neglect and abandonment. Unmarked burials, if they existed, could be construed as evidence of criminal acts, but such burials associated with the schools have never been proven to exist.

Those who claim there are unmarked burials have painted themselves into a corner. If there are unmarked burials, there have had to be murders because why else would anyone attempt to conceal the deaths? If there are thousands of unmarked burials, there are thousands of children who went missing from residential schools. How could thousands of children go missing from schools without even one parent, one teacher, or one Chief coming forward to complain?

There are, of course, neither any missing children nor unmarked burials and the Special Interlocutor told the Senate Committee on Indigenous People: “The children aren’t missing; they’re buried in the cemeteries. They’re missing because the families were never told where they’re buried.”

Is it denialism to repeat or emphasize what the Special Interlocutor testified before a Senate Committee? Is combating residential school denialism really an exercise in policing wrongthink? Like the beleaguered Winston in Orwell’s 1984, it is impossible to keep up with the state’s continual revision of the past, even the recent past.

For instance, the TRC’s massive report contains a chapter on the “Warm Memories” of the IRS. Drawing attention to those positive recollections is now considered “minimizing the harms of residential schools.”

In 1984, the state sought to preserve itself through historical revision and the enforcement of those revisions. In the Trudeau government’s efforts to enforce a revision of the IRS historical record, the state is not being preserved. How could it be if the IRS is now considered to be a colossal genocide? The intent is to preserve the party in government and if it means sending Canada irretrievably down a memory hole as a genocidaire, so be it.

Michael Melanson is a writer and tradesperson in Winnipeg.

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