The Canadian Alliance proposed a 17% flat income tax for people above a minimum income. The Liberals countered with comparable taxation decreases. As we explained in the Debt link above, both proposals are irresponsible until the national debt burden is brought under control. Nevertheless, we find great merit in the flat tax concept.

We will ignore the question of the legality of income taxes, since it is unlikely that any court decision will declare it unconstitutional any time soon.

The existing income tax regulations are so complicated, so filled with loopholes, that rich people hire expensive tax consultants and lawyers to minimize their tax burden. Indeed, many rich people don't pay any tax at all. Rather than spend their time trying to improve their productivity, they expend all their creative energy in avoiding taxes.

A simplified flat tax, with absolutely no loopholes, would simplify their lives and unleash their creativity in a more useful direction. It could also lead to many accountants, tax consultants and lawyers retraining themselves to pursue more useful careers. And, of course, it could lead to a large reduction of bureaucrats within Revenue Canada.

Seriously, the flat tax concept should be considered very carefully.

GST:
The Goods and Services Tax (GST) was originally passed to replace the hidden 11% Manufacturer's Tax. Ever since its inception by the Mulroney government, it has been a subject of political hypocrisy. All opposing political parties promised to repeal it once they got into power (and, of course, didn't and won't).

The GST is probably the fairest tax yet devised and will probably outlive all of us. So rest assured that any discussion of its abolishment is pure political hypocrisy.

However, the efficient administration of the GST is another matter. Each small (or large) business, that has a GST number, has become an unpaid tax collector for the federal government. There are substantial costs involved for small business in time, mental energy and money. Should not the small business person be re-imbursed? Should they not all submit invoices to Revenue Canada?

As could be expected, the GST bureaucracy within Revenue Canada has grown exponentially in both size and power. First, they must ensure that their slaves are not diverting any of the largesse into their own pockets and, secondly, there are hundreds of rules, regulations and exemptions which must be interpreted and enforced. On the one hand, they collect the GST and on the other hand, they give some of it back. Not very efficient at all!

Recommendations:
Simplify the rules and regulations
Remove all exemptions
Fire three quarters of GST bureaucrats