Ever wonder why The Beatles left their home country to come to America? Some believe for the sake of escaping the insanely high-income tax rate in Britain of 80%! As a result, we have the song, “Taxman”.

Nothing unites Canadians like their collective dislike of taxation. With that being said, it is much easier to hate something you fully don’t understand. There is a popular belief that Canada’s income tax was introduced as a temporary measure during a financial emergency, the Great War. However, true or not, income tax ultimately stayed for the long-haul.

Generally, income tax is utilized in a progressive manner meaning as a person earns a higher salary, a higher proportion (or percentage) of their income is taxed. The idea of progressive income tax has been supported by economists and political scientists of many ideologies, from Adam Smith in his book The Wealth of Nations to Karl Marx in The Communist Manifesto. Income taxes in Canada are categorized in this progressive scheme, but this does not come without critique.

The Drawback On Canadian Taxes

Until recently, Canada enjoyed a competitive tax advantage with a low corporate tax rate relative to other advanced countries and more markedly the U.S. While Canada has maintained its tax rate and even increased it over the last five years, other countries have lowered their tax rate. This pushes Canada to be one of the most highly taxed countries ranking 7th in 34 industrialized nations. In particular, the lower U.S corporate tax rate reduces Canada’s parallel appeal for more foreign investments and increases the shifting profits to the U.S.

Many Canadians have lost their trust in the tax system, which may contribute to reduced conformity and a rise in “under the table” activity. These threats are arising at a time when our country needs the contributions of our citizens more than ever. Unfortunately for some, the complexity of filing taxes makes it difficult to access much-needed income support through tax programs and incentives. Small and medium-sized businesses have had their fair share of reduced tax incentives and reduced deductions. Although corporate tax rates are on schedule to reduce over the coming years, still, the lowered deductions have hurt companies on a day to day basis.

Taxes Are Here to Stay – So How Do We Focus on the Good?

Imagine a country where more than half the population does not know how to read or write, where massive fires can’t be put out, or most significantly, where the streets our children run on are not safe. Past generations paid taxes in order for us to have our elaborate school and education systems, hospitals, roads and public transit. Our Canadian pride would not be here today if it weren’t for the funding of this infrastructure, especially our free health care system that is the envy of the world.

Nonetheless, now, more than ever, we need our government to do what’s right and fair to maintain the balance of our tipping financial crisis and debt by stimulating growth in the economy. The question stands whether the answer to this unexpected problem lies in our taxation system. The ebb and flow of SMEs have been on the decline as the government starts to realize that the continued growth of our economy is significantly hinged on the ease of new startups (with federal and provincial help) and the health of established companies (through tax incentives) continued expansion.

Our Final Thoughts

As a country, we seem to no longer understand what taxation really is – or perhaps we never did know. Public figures talk about taxes as though they are theft or as though they are a charity. Some believe income tax is a violation of a citizen’s individual freedom, while other higher-tax advocates simply argue that in order to sustain the functions of the government, everyone must contribute through taxes. However, taxes are here to stay and both these conceptions lead back to a crucial misunderstanding. Tax money is not a means of being “mine” or “yours” or “theirs”; It is simply ours. Taxes are the price we pay for the Canada we love.

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