# Are taxes too high?



## slacker (Mar 8, 2010)

Are taxes too high?


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## andrewf (Mar 1, 2010)

No just right?

I think some taxes are too high and others are too low. I'd rather see lower personal and corporate income taxes, and higher HST/GST, gasoline taxes and/or a carbon tax. Revenue neutral would be just peachy.


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## GeniusBoy27 (Jun 11, 2010)

I agree with Andrew on this. The poll is a little vague to me without enough options.


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## the-royal-mail (Dec 11, 2009)

The options are just fine. You can't get clear answers if you provide too many options.


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## Karen (Jul 24, 2010)

I disagree with you, TRM. The question is so oversimplified that I couldn't begin to answer it accurately. Too high or too low compared to what? What taxes does it refer to?

I don't think it's a matter of whether taxes are too high or too low; it's a matter of how our taxes are being used - i.e. could they be less if they were used efficiently, or do they have to be higher in order for our governments to accomplish what the taxpayers want them to. Too many people want it both ways; they want more or improved government services, but they want to pay less for them. To me, that way of thinking indicates a lack of intelligence - we can't have it both ways.


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## OhGreatGuru (May 24, 2009)

Compared to what? Sheesh, this is as dumb as the referendum against the HST. Nobody likes taxes. But what services would you get rid of/cut back on to lower them?
OAS?
Medicare?
Long Term Care Facilities?
The Canadian Forces?
Highway construction?
Coast Guard?
Provincial/Federal Policing?
The courts?
Prisons?
Stats Canada? (oh sorry, Harper has already started that)
Environmental Protection?
etc, etc.


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## Assetologist (Apr 19, 2009)

Keep the services but trim the redundancy and waste within the political infrastructure.


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## dogcom (May 23, 2009)

Taxes are too high and we don't need to cut anything OhGreatGuru mentioned to lower them. Cut the waste as mentioned and you could also cut a lot of the Indian affairs budget since most of it doesn't help Indians anyways. Also doesn't a have not province like Quebec have substantial subsidies for child day care which could be drastically cut and save the have provinces in transfer payments. Abolishing the useless senate would also be helpful. I am sure we could think of a ton of stuff that could go that would not affect our lives one bit and no services we really want would need to be cut.


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## andrewf (Mar 1, 2010)

Ah, the mythical waste. I suppose we could start with your OAS payments, right dogcom?


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## meddlesomemarmots (Feb 16, 2011)

The country, and almost every province is reporting a deficit. We are therefore paying too lower taxes. If you want to cut things, that's fine, but at present, we are not being taxed enough. Simple as that really.

This is the reason the whole HST debacle in BC annoyed me. I wanted the HST, but the flip-flopping with the BC Liberals dropping the rate to 10% after a couple of years was stupid - it made both taxation offers too low in my view. I'm all for consumption tax. It gives people the chance to save if they wish, however if it proved a drastically increased consumption based tax hit the economy (and not just a couple of reports from local restaurateurs reasoning that the HST has killed their trade!) then hike the income tax (preferably on a personal level, rather than hitting the corporations).


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## brad (May 22, 2009)

Everyone talks about waste without providing hard evidence. I've read about a few examples of government waste, but altogether does it amount to enough to warrant tax decreases?

In my experience (16 years as a contractor for U.S. government agencies; I have no experience with the Canadian government), government agencies tend to be frugal with their money and have a high sense of accountability. Yes, some programs fail or are ineffective, but you can't innovate or develop new solutions without experiencing some failures. The failures make the news while the successes mainly go unreported, so we get a skewed view of the effectiveness of government programs.


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## slacker (Mar 8, 2010)

Hey, Toronto voted Rob Ford in to eliminate waste (aka gravy). Look how well he has done. He hasn't had to backtrack on any of his campaign promises to not raise taxes at ALL !!

The federal Conservatives will do just as well. They can eliminate the deficit without raising taxes.

Same thing with the american Obama administration. He promised to "go through the budget line by line" to "eliminate the programs that don't work". Look how well he has done.

The fact of the matter, is that cutting waste is an effective means to not raise taxes.

Prove me wrong.


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## Karen (Jul 24, 2010)

I worked for a very small federal gov't department, and I certainly saw many examples of wasteful spending - things like being told to spend, spend, spend before the end of the fiscal year so our next year's budget wouldn't be reduced. Our head office in Ottawa would send us all new office furniture every few years, even though there was nothing wrong with our old furniture - in many cases it still looked brand new. One year they replaced all our computer monitors with larger ones, even though none of has asked for them. Another year it was several new laser printers when the ones we had were just over a year old, and we were perfectly happy with them. Another year they sent in an interior design team and a contractor to completely renovate our offices for no reason whatsoever, except to get rid of some money. (Our office was not open to the public so there was no reason why everything had to be the very latest style.) In my first few years there, the old furniture and equipment was sent to Public Works, who would hold an auction once a year to get rid of government surplus but, after a few years, the auctions were discontinued, and we were told to find some charitable group that could use it. 

Because we were such a small office, the waste that happened there was not enough to affect the federal budget, but I'm sure it happened in the large departments as well, and probably to a much larger extent.


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## dogcom (May 23, 2009)

Karen raises some very good points in that once something is in place like the budget it is natural for you to want to spend it so you can get the same funding the next year. Bureaucracies once created will continue to feed or change mandates or do whatever is necessary to grow. 

Once in place these bureaucracies and whatever are very hard to deal with even if someone says they are going to cut it. They will put up such a fight that most elected people would back off once they feel the heat from these people. So the waste it is not mythical but instead very hard to deal with the politics involved with changing the system.

I also think we could simplify the tax system and the system of law in our country. We spend way to much money on courts and lawyers fighting cases of people who should be deported or dealing with the Air India crisis for decades or whatever else you can think of. 

After we do find all this waste money then we should put it all on the deficit and then to the debt.


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## the-royal-mail (Dec 11, 2009)

I agree with you 100% dogcom.


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## slacker (Mar 8, 2010)

To be fair, the same thing happens in private sector. Departments doing frivolous hirings or other spendings because if they don't use it, they'll lose it. It's not a practice unique to the public sector.


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## andrewf (Mar 1, 2010)

^It is literally impossible for any large organization, be it government, institution or corporation, to operate without any waste. Some people are greedy, stupid, or just make mistakes. Some great ideas just don't pan out.

The goal of zero waste is laudable, but it is totally unreasonable to expect any large organization to achieve it.

And for 'eliminating waste' to solve the deficit problem in this country, we'd have to be wasting $100 billion+ on office furniture and new laser printers. It just isn't happening on anything like that scale. It's pure fantasy. If you took all the transfers to people, provinces and cities, and the military as sacrosanct (as the Tories do in Ottawa), you would have to cut the remainder of the federal budget in half the eliminate the deficit. Do you honestly believe we could cut federal operating spending in half without any negative impact on services?


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## brad (May 22, 2009)

In fact I think this mentality is backwards: agencies and departments that come in under budget should be rewarded with higher budgets the following year, rather than penalized for underspending. That would provide an incentive for frugality. By coming in under budget you've proven that you can accomplish your work efficiently. That kind of behaviour should be rewarded, but instead it is punished, which sends all the wrong signals. This might be one of the biggest across-the-board reforms needed in government.


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## clovis8 (Dec 7, 2010)

It's a ludicrous notion of the right that we should all approve of how every tax dollar is spent and every dollar we dont approve of is "waste". We are nation of 34 million people. I am not going to like everything government does because, shockingly, government does not work just for me, but for the other 34 million citizens as well.


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## LBCfan (Jan 13, 2011)

meddlesomemarmots said:


> The country, and almost every province is reporting a deficit. We are therefore paying too lower taxes.



Indeed, meddlsome..

Tax revenue should be high enough to cover government spending. If a person, like me for example, doesn't like government spending that's a different issue.


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## crazyjackcsa (Aug 8, 2010)

I like pie. Don't tax pie...


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## Dmoney (Apr 28, 2011)

I like the idea of a substantial VAT on anything that is not essential. People with no or very little income should not be penalized to the point that they cannot get food, clothing or shelter, but at the same time, luxuries should not be attainable for those living off of public subsidies.

The top marginal tax rate is a little on the high side in my opinion. When combined with the VAT already in place, people in the top tax bracket are paying upwards of 60% of their marginal pre-tax income for any goods or services.


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## financialnoob (Feb 26, 2011)

Nobody likes paying taxes. And most people are so focused on themselves that they think anything that doesn't help them is considered waste. There's always complaining about special interest groups but once you consider cutting a program that benefits someone directly, it's a big deal. It's easy to offer up everyone else's programs than your own.

Governments do waste money. Then again, so do corporations. Then again, so do you and I. We can all do better, absolutely. Brad's idea of organizations being rewarded for coming in under budget is a good one. The current system doesn't give any incentive to reduce spending, and in a perverted way, rewards wasteful spending, so we shouldn't be surprised by the results.

My concern is we start slashing budgets because we're obsessed with short-term thinking. Any idiot can balance a budget in the short-term. Just hack away chunks until the numbers match up. But there are longer-term consequences. You could save yourself a penny today but cost yourself a dollar tomorrow. And sometimes the right answer is spending MORE money in the short-term to save yourself a lot more long-term. But again, when you go into the exercise of slashing away, you're not going to see that.

At the same time, our tax levels are certainly lower than they were 10 years ago. It doesn't matter what the number is. If you ask people if they are paying too much, the majority will say yes. If taxes were cut in half tomorrow, 99% of Canadians would still think they're paying too much (though I'm quite surprised at this poll's results). America has historically low tax levels but they are still complaining they are too high, while refusing to budge on their entitlements much. They want more while paying less. That's human nature.


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## andrewf (Mar 1, 2010)

Dmoney said:


> I like the idea of a substantial VAT on anything that is not essential. People with no or very little income should not be penalized to the point that they cannot get food, clothing or shelter, but at the same time, luxuries should not be attainable for those living off of public subsidies.
> 
> The top marginal tax rate is a little on the high side in my opinion. When combined with the VAT already in place, people in the top tax bracket are paying upwards of 60% of their marginal pre-tax income for any goods or services.


You're advocating a luxury tax. 

If you're concerned about VATs negatively affecting the poor, never fear. That is what rebates are for. It makes more sense to give them rebates than to give everyone a break. A broader tax is usually better, because the same revenue can be raised with a lower rate.


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## andrewf (Mar 1, 2010)

brad said:


> In fact I think this mentality is backwards: agencies and departments that come in under budget should be rewarded with higher budgets the following year, rather than penalized for underspending. That would provide an incentive for frugality. By coming in under budget you've proven that you can accomplish your work efficiently. That kind of behaviour should be rewarded, but instead it is punished, which sends all the wrong signals. This might be one of the biggest across-the-board reforms needed in government.


It might work better to give bonuses to departments that come in under budget (while meeting their performance objectives, it should be noted).


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## dogcom (May 23, 2009)

The royal mail and a few others are the only ones who seem to be thinking with a clear head here. It seems when we try to explain that the government has a clear spending problem you all shoot back saying we don't want tax for our own good only. This is completely false because I like everyone else need health care and roads and so on. Also yes there has to be waste in government just like I have waste in my own house it is just not justified the extent of government waste out there.

I for one would like to go back to the mid 90's style of budget where we tax and cut spending until the deficit is gone and the debt starts getting repaid again. The pain in the 90's was terrible for everyone but at least we knew something was getting done about the problems of spending and the deficit. 

The government must wish everyone thinks the way you guys do so they can go nuts and do whatever they please and then point out that we need the services. For money people you are no better then the so called idiots out there which is a real disappointment in my opinion.


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## DanFo (Apr 9, 2011)

I had posted this in the HST column by mistake..tax is tax i guess..It is a spending problem...Governments have a good idea of their intended revenues each year..they need to have budgets that account for about 80% of those revenues with the remaining 20% set aside for cost overruns/unexpected expenses (storms etc) More than a third of my money goes to the government just from income taxes, even more after consumer taxes, I expect some sort of fiscal responsibility for this money. Politicians are paid good money and elected to make the decisions on what programs need to be kept and what programs can be cut.... If they keep increasing taxes eventually people and business will begin leaving. The paper mill in Port Hawkesbury NS just annouced their closure due to the costs of doing business in Canada.


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## KaeJS (Sep 28, 2010)

andrewf said:


> I'd rather see lower personal and corporate income taxes, *and higher HST/GST, gasoline taxes and/or a carbon tax*. Revenue neutral would be just peachy.


Higher gasoline taxes?

You've got to be kidding me...

I already spend $300.00/month in gas, and you want the taxes associated with gasoline to increase?

High gasoline prices are not good for anybody except the government and the people selling it. It is bad for EVERYONE else.


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## slacker (Mar 8, 2010)

Hi KaeJS:

Can you elaborate on how higher gas tax benefit the people selling it?

Thanks,
Slacker


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## KaeJS (Sep 28, 2010)

KaeJS said:


> *High gasoline prices *


slacker,

I said high gasoline prices, not high gasoline taxes.

Obviously, high gasoline taxes would be worse for suppliers. However, because the amount of tax you pay on gasoline is based on a percentage, high gasoline prices would benefit the supplier and the government (unless of course they got too ridiculously high and people started selling their cars, but I don't see that happening) since the suppliers would be making more $ by volume and the government would be taking in more taxes.


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## slacker (Mar 8, 2010)

Ah ok. I got confused. You were originally complaining about higher gasoline taxes, which is reasonable. But then shifted towards arguing about how higher prices, which I read as you intending it to mean to be caused by higher gasoline taxes, would benefit the people who sell gasoline. That is of course non-sense.

Thanks for clearing that up.

Keep up the complaining.


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## andrewf (Mar 1, 2010)

We have some of the lowest gasoline taxes in the OECD. We only seem high in comparison to the USA, where they effectively subsidize gasoline on a net basis.


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## andrewf (Mar 1, 2010)

Oh, and I said I would be happy to see gas taxes rise to fund cuts in income taxes. I stand by that statement, notwithstanding how much you spend on fuel per month. Although, I could skip a rise is gasoline taxes in exchange for road tolls on all major highways a la 407 ETR (not necessarily at those rates).


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## dogcom (May 23, 2009)

Where do you live andrewf. Probably in the middle of the city 2 blocks from work or you have lots of money and don't care. Car owners already pay enough taxes in the form of gas taxes, fines, economic growth, jobs and so on. And by doing so providing jobs for city offices and on and on. Of course there is to much to write here to give you the whole picture but I think you might get the idea.

I think the biggest problem is when we build homes the city has little vision and we run into huge problems down the road. I am no expert but maybe when they construct new homes on new land or add density that those buyers should pay for the improvements needed to add them to the city. Also these new buyers add a lot to city taxes year after year so we need the city to properly manage that money to the benefit of all in the city. Of course that will not happen because all they will do is spend to much on new furniture and pet projects around the city and really manage to do nothing.


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## andrewf (Mar 1, 2010)

I live in the burbs, but happen to live reasonably close to work. I am not a highway warrior for lifestyle reasons (stress and time), never mind the cost of fuel.

Drivers pay taxes and create jobs, but so do people who drive less or not at all. People can consume cars and gasoline or they can consume other goods. Jobs either way. Jobs creation is the worst reason to spend money--those jobs would have largely been created anyway, if that money was spent sensibly without regard to job creation.

As far as new home construction--most cities levy development charges. Here is the fee schedule for Mississauga:

http://www.mississauga.ca/portal/re...s;jsessionid=IIZJ3ERTNTD05TRPH3XT44WOF25W2PW0

A new housing unit will result in ~$25,000-$50,000 in development charges to pay for infrastructure, schools, community centres, etc.

So you should be pleased as punch--there are taxes that are already doing what you advocate.


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## andrewf (Mar 1, 2010)

How much money I have is irrelevant. If increased gas taxes are returned in income tax breaks and transfers to low income individuals, people who drive less will have more money in their pocket and those who drive a lot will have less. Everyone will have an incentive to drive less, buy more fuel efficient cars, carpool, etc. It will help to reduce congestion and smog.


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## brad (May 22, 2009)

There have been many attempts to estimate the "true" cost of gasoline, which are absorbed by society and paid for in other ways, including through our income taxes. Some studies estimate that gasoline actually costs $5 to $15 per gallon (see http://www.icta.org/doc/Real Price of Gasoline.pdf for example).

I'm in favour of higher gasoline taxes, but as andrewf says these increases should be counterbalanced by lower taxes in other areas such as income taxes. But I think any increases have to be enacted gradually to avoid economic disruption; you have to start sending price signals that then create demand for alternatives, which in turn creates the need for funding for innovation, technological development, and commercialization.

Gasoline is just a means for us to get from point A to point B, and right now it's the only means available for many of us. But ultimately you just need to get from point A to point B; the fuel or technology used to do it doesn't matter in the end. Gasoline is still cheap enough that there's no real incentive for anyone to switch to the alternatives, and the alternatives aren't advanced enough to be attractive (too expensive, limited range, etc.).


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## nathan79 (Feb 21, 2011)

Gasoline taxes should not be raised in my opinion. Canadians require affordable gasoline because we rely on our vehicles more than Europeans, who live in geographically small countries with much better public transit infrastructures. Increasing the tax would also hurt the economy because it would raise the cost of transporting goods.

Our personal income taxes are already some of the lowest among developed countries. I would rather the structure was tweaked and the rate slightly increased for high income earners. The basic personal amount is too low. People who are barely scraping by are being charged income tax, even though the government freely admits you can't live properly on less than about 18K per year. I would like to see the personal amount raised to about 20K.

I'm not particularly fond of high sales taxes/HST due to their regressive nature. The low income cut-off for rebates is typically too low, which means the middle class pay a greater percentage of their income than the wealthy. These taxes also discourage spending, which hurts the economy, and increase black market activity, which further reduces tax revenue.


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## brad (May 22, 2009)

nathan79 said:


> Canadians require affordable gasoline because we rely on our vehicles more than Europeans, who live in geographically small countries with much better public transit infrastructures.


Right, but if gasoline prices were higher, we'd have much better public transit infrastructure here too. 

The geographically small vs. large argument doesn't really hold for personal cars: most people drive to and from work and maybe some longer road trips during the weekends, but most of us aren't driving cross-country on a regular basis. The exception is transportation of goods, produce, etc., but even there the comparison with Europe doesn't hold up so well: a lot of goods and produce there are shipped from one country to another or even from one continent to another.


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## andrewf (Mar 1, 2010)

Value added taxes (VATs) like HST/GST as less economically damaging than personal income taxes or corporate taxes. If you're worried about regressivity, give larger refunds to more people. Raising $1 in GST revenue causes less economic harm than $1 in personal income tax revenue.

Rather than raising the basic personal amount, I'd like to go to a guaranteed annual income. I think a minimum income of about $8k-$10 per year per individual plus $6k per minor child. With a flat 40% tax rate, a single person earning $20k-22.5k would pay no net tax. That's a pretty ambitious tax reform, though.


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## nathan79 (Feb 21, 2011)

Corporate taxes should be kept low, but I'm not sure about personal income taxes. I've heard your argument but I don't understand the basis for it.

I still maintain that a high VAT causes more tax evasion, especially with the US right next door.

I like the idea of a guaranteed income. I'd also use it to eliminate Welfare. Not sure about 40% flat tax, I'd have to do the math. That might hurt the middle class a little.


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## KaeJS (Sep 28, 2010)

slacker said:


> Ah ok. I got confused.Thanks for clearing that up.
> 
> Keep up the complaining.


Sorry about that. I re-read my original post just now and I can see how it was definitely confusing. Maybe my brain wasn't functioning properly last night and I should have gone to bed earlier than I did.  It was a rough night at the Casino... 

andrewf, why would someone like myself vote for a decrease in income taxes and an increase in gasoline taxes? I want the people with more money than me to get taxed more than me. It would be foolish of me to vote for lower income taxes when I am already in the lowest bracket. With that being said, being in the lowest tax bracket and with gasoline taxes what they are, a reduction in gasoline taxes would help me out greatly - while also helping the rich as well, just not as much as an income tax reduction would.


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## OhGreatGuru (May 24, 2009)

Assetologist said:


> Keep the services but trim the redundancy and waste within the political infrastructure.


This is a favourite line of ultra-conservatives. They are all convinced that if government simply "eliminated waste" all our economic problems would be solved. it is the mantra of the Tea Party and like-minded people.

My sermon for today:

1. "Eliminating government waste" is often a euphemism for eliminating government programs one disagrees with, not eliminating inefficiencies in government. But parties can't get elected by promising to eliminate programs.

2. In my experience, no government elected on promises to "eliminate waste" has ever succeeded in finding these mythical billions of dollars of wasted money. Some of them, like Mike Harris, found ways of transferring costs to local government, or cutting programs, or selling government assets, to find "savings". That wasn't elimination of waste.

3. Government is the biggest business there is. When they make a political or administrative blunder it is going to seem expensive simply because of the scale of the "business".

4. Government books are open to the public. When they make a blunder it eventually becomes public knowledge. When a private business makes a blunder management covers it up so their boards of directors, shareholders & creditors don't hear about it (at least until after they get their golden parachutes). 

5. When business make a blunder, they get to write it off as a business loss agaisnt their taxes. So the taxpayers subsidize their bad decision making.

6. When business management really screws up, like Nortel, they get to take their golden parachutes, and leave their pensioners, shareholders, and creditors holding the bag. When government ministers or senior officials really screw up, they get to face the Auditor General, Parliamentary Committees, Commissions of Inquiry, and the media. Some of them even lose their jobs in the next election (but admittedly get to keep their golden pensions)

7. Often at the root of true "government waste" you will find a private contractor or contractors who have bilked the taxpayer. Unless a contractor has been convicted of outright fraud on the government, it is next to impossible to get one eliminated from a list of eligible bidders. In the private sector, a company can simpy refuse to do business with a contractor with a reputation of cost overruns, poor quality work, or being difficult . In the public sector contractors know they can screw the government over and over again and they will still be allowed to bid on contracts.

Thus endeth the lesson.


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## Dmoney (Apr 28, 2011)

http://www40.statcan.ca/l01/cst01/govt48b-eng.htm

Health care, social services, and education are the three biggest expenditures by a long shot. 

There is a strong argument that waste can be eliminated in all three of these areas. However, what would be ideal would be if, on top of eliminating waste where possible, we, as a country, suck it up and start reducing the $40 billion that goes to debt servicing on an annual basis. 

Health care costs are only going to soar as boomers age, if we increase immigration to fill the void left by retiring baby boomers, social services and education expenditure will soar. Government revenue will decrease at the same time. Better to decrease the debt while we still have single digit unemployment.


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## balk (Dec 6, 2010)

I don't know if this would be a net increase or decrease in taxes but I would like to see certain things in the tax code overhauled. 

1. Get rid of the stupid targeted tax breaks like the $75 rebate for arts, the tax break for sports, the tax break for public transportation, etc. This would clean up the tax code. 

2. Raise the GST back to 7% and reinstitute the GST tax credit for poor people. This was the worst financial move that our government has done. 

3. Cap the total TFSA room t $50 000. It was billed as a savings account for families but the longer it will be around, the more it will turn into a vehicle for wealthy people to shelter their income. This would suck for me, as my wife and I each contribute $5000 a year but we all must make sacrifices. 

4. I would like the government to cut taxes to the lowest bracket. Wealthy people would be able to take that money and save it, while it would have a stimulative effect for those in the lower and middle class who would spend their extra money.


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