The point to remember is that what the government gives it must first take away.
— John S. Coleman
Certainty of death and taxes has been a truism for quite awhile now. It seems to me that consumers pay all taxes levied by all levels of government either directly or indirectly. Regardless of your position on the Harmonized Sales Tax (HST) we collectively need to acknowledge that governments spend money and they need to collect money to pay for that spending.
Let’s say you drop into a local restaurant on a lunch-time walk to pick up a fresh slice of deluxe pizza. There are quite a few things that go into the making of a slice of pizza. The flour for the dough comes from a supplier who, in turn, purchased it from a farmer at some point. The toppings and cheese came through various levels of producers, wholesalers and distributors. The pizza oven was supplied by a manufacturer and installed by an electrician. The shop will pay business license fees and property taxes along with rent, employee wages and various remittances for employment insurance, workers compensation, Canada Pension Plan and the like.
If you stop to think about it, dozens of business entities were involved in the production of that slice of pizza in some fashion or another. Each of them had to remit taxes to various agencies and levels of government, pay for the raw materials and (hopefully) produce a profit. When you part with some of your money to buy that slice of pizza you have effectively paid every tax and government charge associated with its production.
Individual companies remit taxes and other payments to government but this ultimately becomes one of the input costs to doing business and is reflected in the product or service you acquire. In theory, we could make personal taxes zero and put the entire tax burden on business. We would simply have to pay a lot more for things because our need for health care and education requirements, road usage or old age pension cheques wouldn’t change.
Also, our businesses would likely be unable to compete in other jurisdictions because their cost structure would be too high and consumers would naturally try to purchase goods across borders where prices were lower. Likewise, we could make the business tax zero and put the whole load on individuals directly. Prices might drop but we would have less spare cash to buy things. Again, we would have a hard time attracting skilled but mobile individuals because they could probably take home more money in other jurisdictions.
So, like the marketplace itself, the tax regimes of various provinces and countries are in competition with each other to some extent. Balancing the competitive pressures of personal and corporate taxes is one of government’s more difficult tasks and this task has to reflect the actions of competing jurisdictions both nationally and internationally.
Now, I am simplifying things a bit. When we export things like coal or lumber we collect a royalty that is not paid directly by consumers in this province. Likewise, when we import items much of the purchase price reflects taxes that are remitted in a different province or nation. Overall however, consumers are the ultimate payers of all taxes.
Were the government to abandon sales taxes altogether, in the absence of severe spending cuts, the revenue lost would have to come out of the taxpayer through some other tax or charge. Reversing the HST decision isn’t going to change that.
Whether or not you agree with the HST one of the core rationales is that it creates a better competitive environment for BC based business. This is the consensus opinion of most economists and the fact that a business group launched a legal challenge to the anti-HST petition is a pretty clear indicator that overall, business sees the HST regime as better for their enterprises than the split GST/PST system.
The debate over various taxation mechanisms is an interesting one. Locally, the rationale behind property taxes is that, by and large, local governments provide services so their primary income source is property taxes. Property taxes are not a reflection of ability to pay or even equity in one’s property. In many respects one could argue it does not treat people equitably. Yet, we have to pay for the police cruiser, the fire truck and the myriad of civic services somehow and for the moment, property taxes are what carry the majority of the load.
Whether one argues that income taxes are better or worse than consumption taxes or that flat fees and levies are better or worse that those based upon income or some other variable measure, what is clear is that taxation is the admission price to civilization.
Show me a country of any size that does not collect proper levels of taxes and I will show you a country in which you would probably choose not to live. We all have expectations from our various levels of government and so the bill for those services will, either directly or indirectly, land squarely at our own two feet.
