Business
What if Canada’s Income Tax Rate Was Zero?
By David Clinton
It won’t happening. And perhaps it shouldn’t happen. But we can talk.
By reputation, income tax is an immutable fact of life. But perhaps we can push back against that popular assumption. Or, to put it a different way, thinking about how different things can be is actually loads of fun.
That’s not to suggest that accurately anticipating the full impact of blowing up central economic pillars is simple. But it’s worth a conversation.
First off, because they’ve been around so long, we can easily lose sight of the fact that income taxes cause real economic pain. The median Canadian household earns around $85,000 in a year. Of that, some 13 percent ($11,000) is lost to federal income tax. Provincial income tax and sales taxes, of course, drive that number a lot higher. If owning a house is out of reach for so many Canadians, that’s one of the biggest reasons why.
Having said that, the $200 billion or so in personal income taxes that Canada collects each year represents around 40 percent of federal spending. In fact, in the absence of other policy changes, eliminating federal personal income tax would probably lead to significant drops in business tax revenues too. (I could see many small businesses choosing to maximize employee salaries to reduce their corporate tax liability.)
So if we wanted to cut taxes without piling on even more debt, we’d need to replace that amount either by finding alternate revenue sources or by cutting spending. If you’ve been keeping up with The Audit, you’ve already seen where and how we might find some serious budget savings in previous posts.
But for fascinating reasons, some of that $200 billion (or, including corporate taxes, $300 billion) shortfall could be made up by wiping out income tax itself. How’s that?
For one thing, many government entitlements and payouts essentially exist to make up for income lost through taxes. For example, the federal government will spend around $26 billion on child tax credits (CCB) in 2025. Since those payments are indexed to income, eliminating federal income tax would, de facto, raise everyone’s income. That increase would drop CCB spending by as much as $15 billion. Naturally, we’d want to reset the program eligibility thresholds to ensure that low-income working families aren’t being hurt by the change, but the savings would still be significant.
There are more payment programs of that sort than you might imagine. Without income taxes to worry about:
- The $6.2 billion GST/HST credit would cost us around $3 billion less each year.
- The Canada Workers Benefit (CWB) could cost $1.5 billion dollars less.
- The Old Age Security (OAS) Clawback would likely generate an extra billion dollars each year in taxes.
- The Guaranteed Income Supplement for low-income OAS recipients could save $4 billion a year.
Even when factoring in for threshold recalculations to protect vulnerable families from unintended consequences, all those indirect consequences of a tax cut could easily add up to $20 billion in federal spending cuts. And don’t forget how the cost of administering and enforcing the income tax system would disappear. That’ll save us most of the $11 billion CRA costs us each year.
Nevertheless, last I heard, $30 billion (in savings) was a long, long way from $300 billion (in tax revenue shortfalls). No matter how hard we look, we’re not going to find $270 billion in government waste, fraud, and marginal programs to eliminate. And adding more government debt will benefit exactly no one (besides bond holders).
Ok then, let’s say we can find $100 billion in reasonable cuts (see The Audit for details). That would get us close to half way there. But it would also generate some serious economic turbulence.
On the one hand, such cuts would require dropping hundreds of thousands of workers off the federal payroll¹. It would also exert powerful downward pressure on our gross domestic product (GDP).
On the plus side however, a drop in government borrowing of this scale would likely reduce interest rates. That, in turn, could spark private investment activities that partially offset the GDP hit. If you add the personal wealth freed up by our income tax cuts to that mix, you’d likely see another nice GDP bump from sharp increases in household spending and investments.
Precisely predicting how a proposed change might affect all these moving parts is hard. Perhaps the ideal scenario would involve 20 percent or 50 percent cuts to taxes rather than 100 percent. Or maybe we’d be better off by playing around with sales tax rates. But I’m not convinced that anyone is even seriously and objectively thinking about our options right now.
One way or the other, the impact of such radical economic changes would be historic. I think it would be fascinating to develop data models to calculate and rank the macro economic consequences of applying various combinations of variables to the problem.
But taxation is a problem. And it’d be an important first step to recognize it as such.
Although on the bright side, as least they wouldn’t have to worry about delayed or incorrect Phoenix payments anymore.
From LifeSiteNews
Some departments failed to provide clear descriptions of how the taxpayer funds were used. For example, Prairies Economic Development Canada spent $190.1 million on projects related to diversity, equity and inclusion ventures but could not provide details.
Federal diversity, equity and inclusion programs have cost Canadian taxpayers more than $1 billion since 2016.
According to information published September 18 by Blacklock’s Reporter, diversity, equity and inclusion (DEI) government grants have totaled $1.049 billion since 2016, including grants for “cultural vegetables.”
A $25 million grant, one of the largest individual grants, was given to the Canadian Gay and Lesbian Chamber of Commerce to “strengthen Canada’s entrepreneurship ecosystem to be more accessible to LGBTQ small businesses.”
The government payouts were distributed among 29 departments, ranging from military to agricultural projects.
The Department of Agriculture spent $90,649 for “harvesting, processing and storage of cultural vegetables to strengthen food security in equity-deserving Black communities” in Ontario.
Some departments failed to provide clear descriptions of how the taxpayer funds were used. For example, Prairies Economic Development Canada spent $190.1 million on projects related to diversity, equity and inclusion ventures but could not provide details.
“PrairiesCan conducted a search in our grants and contributions management system using the keywords ‘equity,’ ‘diversity’ and ‘inclusion,’” the Inquiry said. “Certain projects were included where diversity, equity and inclusion were referenced but may not be the main focus of the project.”
DEI projects are presented as efforts by organizations to promote fair treatment, representation, and access to opportunities for people from varied backgrounds. However, the projects are often little more than LGBT propaganda campaigns funded by the Liberal government.
As LifeSiteNews reported, the University of British Columbia Vancouver campus posted an opening for a research chair position that essentially barred non-homosexual white men from applying for the job.
Additionally, during his short time in office, Liberal Prime Minister Mark Carney has already shown Canadians that he is a staunch supporter of the LGBT agenda after he spent over $2 million in taxpayer funding on LGBT groups during his first week in office.
Canadians have repeatedly appealed to Liberals to end pro-LGBT DEI mandates, particularly within the education system.
As LifeSiteNews previously reported, in June 2024, 40 Canadian university professors appealed to the Liberal government to abandon DEI initiatives in universities, arguing they are both ineffective and harmful to Canadians.
The Governor General’s closet: A queen’s dream and a taxpayers’ nightmare
Governor General Mary Simon is spending your money like it’s her personal fund for Buckingham Palace’s boutique.
The governor general dipped into her taxpayer piggy bank (a.k.a. your wallet) to fund her shoe collection — six new pairs in 12 months — and is even charging you for her undergarments.
You read that right. Apparently, hundreds of dollars in silk undergarments are now considered essential to public services.
Simon spent $330 of taxpayers’ money on silk camisoles, $1,117 on shoes, $875 on a single blazer, $1,500 on a “sealskin chest piece” and $2,510 on luxury wool suits during the last fiscal year.
Simon spent $144 on a “black dress cardigan.” The “value of the item” according to the expense sheet is half that, listed at only $72. Is there anything the government doesn’t go overbudget on?
It’s very rare for any minister or prime minister to expense clothing. Only two ministers expensed apparel last year — each less than $300 for work boots for an event at a construction site.
Simon billed you for a total of $7,576 on shoes and clothing last year.
Simon’s annual salary is $378,000 a year. Let’s just say she doesn’t need to force you to pay for her clothes.
And that’s not all! Simon’s expansive wardrobe isn’t the only way the governor general’s office is draining the public purse.
Her lavish wardrobe is just the start of the spending spree. Since her appointment, she spent more than $120,000 on speech writers — and don’t get us started on her crazy travel expenses.
Simon has been enjoying mile-high catering — meals on airplanes include beef Wellington, carpaccio, stuffed pork tenderloin and hundreds of dollars on lemons, limes and bottled water. The list goes on.
Simon and her entourage billed you about $100,000 for airplane food during their week-long trip to the Middle East. A separate four-day trip to Germany totaled $103,000 in catering costs. She also spent hundreds of dollars on flowers to go along with the lavish meals.
All on your dime.
Oh, and the cost of those trips totalled $1 million and $700,000, respectively.
Simon also famously spent $71,000 at “Icelimo Luxury Travel” during a four-day trip to Iceland. The total bill for that trip cost taxpayers $298,000.
In fact, the governor general’s travel during her first year in office cost you almost $3 million.
Why is she even going on these far-flung excursions? The governor general’s role is to represent the monarchy here in Canada.
When was the last time you took your family on a vacation? Next time you agonize over fuel or air travel costs, remember you’re already footing the bill for an unelected figurehead’s opulent jet-setting.
The worst part of all this? The governor general’s flamboyant spending is all within rules laid out by the federal government.
Governors general can bill you up to $130,000 on clothes over their five-year term.
And all those posh clothes need cleaning, right? The governor general’s office spent $117,000 on professional dry-cleaning services since 2018, despite having staff dedicated to doing the laundry.
That works out to more than $1,800 per month spent on dry cleaning.
It’s time to close the royal boutique and stop treating taxpayers like an unlimited credit card.
Franco’s note: I just want to give a shout out to the great investigative news outlet, Blacklock’s Reporter. They were the first outlet to report on this spending. And that’s not the only big taxpayer story they uncovered this week. Check this one out: https://www.blacklocks.ca/d-e-
Carney shrinks from pro-active cuts — lets bureaucrats retire themselves
The Canadian Taxpayers Federation called out Prime Minister Mark Carney for his lackadaisical approach to Ottawa’s bureaucracy.
Carney needs to cut staff, not just wait for them to retire.
Here’s the back story:
The federal bureaucracy ballooned disproportionately under the Trudeau Liberals. Carney’s predecessor added nearly 100,000 paper pushers during his decade-long tenure.
The federal bureaucracy cost taxpayers $71.1 billion in 2024-25 — a 77 per cent increase from the $40.2 billion expense in 2016-17.
Enter Mark Carney, armed with a plan … based on inaction and procrastination.
The prime minister said he’s directed federal departments and Crown corporations to cut up to 15 per cent of their budgets over the next few years. He also claimed he would “balance the operating budget by Budget 2028.”
That seemed like a promising start — until Carney announced the cuts would “happen naturally through attrition.”
The bureaucracy now consumes about 55 per cent of the operating budget. And quality of service is decreasing.
Half of Canadians think services are worse than in 2016, according to a Leger poll commissioned by the CTF. Only 11 per cent say they’re better — proving the bureaucracy isn’t shrinking, it’s suffocating.
The poll showed most Canadians want to see the federal bureaucracy cut.
We’ll keep fighting for real cuts — not just a slow march to retirement.
Video: Carney clueless about his own gun confiscation
Carney called his gun confiscation “voluntary.”
Except the federal government announced a list of banned guns that many Canadians had stored in their homes.
Those firearms are suddenly illegal.
The Carney government plans to confiscate them in exchange for compensation. The penalty for illegal possession of a prohibited firearm under the Criminal Code is up to five years in jail.
And taxpayers like you are forced to pay those law-abiding Canadians after the government seizes their property.
“We’re not confiscating guns,” Carney said. “[It’s] an opportunity for Canadians to return guns for compensation.”
What does that mean? Taxpayers have questions.
The CTF’s Gage Haubrich and Kris Sims break it down in the video below and offer Carney an easy solution: scrap the gun ban and confiscation scheme.
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