Realwomen of BC - Archives - March2004

THE REAL NEWS The R.E.A.L WOMEN of BC Newsletter March 2004, BOX 39068, Point Grey RPO, Vancouver, BC V6R 4P1, Tel/Fax: 604- 463-1611, website: http://www.realwomen.bc.ca, e-mail: lgeschke@almatree.net Back to contents
Income Tax News The Fraser Institute has released a report Feb 4, 2004 finding that the average family of four in Canada has seen a tax rate rise of 40% since 1961. In that year a household paid 33.5% of their income in taxes but in 2003 families paid 47% of their income in tax. In some provinces this rate was even higher_ in Quebec at 49.9%, BC at 49.6% while in the ''have_not provinces'' which receive equalization payments, the rate was lower at 45.6% in Nova Scotia and 43.6% in Prince Edward Island. The average Canadian family in 2003 earned $58,782 and paid $27,640 in tax (in Canada tax is based however on individual income not on household income so that for a household earning the $58,000 amount, the family that had two earners paid much less tax than did the family with one earner. REAL Women of BC has criticized this state intrusion into the earning style of citizens and their families and penalizing unpaid caregivers. Three approaches to taxation change have appeared recently and may become spring election issues. Under the current system, tax begins in your first year of earning money but the rate increases depending on how much you earn. Students fresh out of university and paying off debts still must pay the same tax rate as those without such obligations. There is often no help for home purchase or for costs of rearing children (some have criticized the present situation for favoring the elderly who have fewer costs). The first option is a flat tax _ all income levels pay the same proportional share of what they earn. Some people feel this option undertaxes the wealthy and overtaxes the poor. American Steve Forbes advocates this system and it is currently in use in Russia and Iraq. The second option is a tax based on cumulative lifetime income. Leadership candidate for the federal Conservative party in Canada, Tony Clement, has unveiled in February, 2004 his proposal to allow young adults to pay less tax. Those aged 18 or younger in 2005 would not have to pay tax until they had earned over a lifetime $250,000. Once they had earned that they would pay tax at 14%, and once they earned $500,000 the rate would go up to 20%, then 24 and 27 % at higher and higher lifetime incomes. Tax rates would therefore be higher than at present for the prime _earning years so the result is the state loses no money overall. By this system, advocates hope to help the young buy homes, pay off student debt, set down roots, start families and not be attracted to move to the US through brain drain. Critics however have suggested that such a plan would discourage people from earning big salaries later in life and others have said that the middle_aged would for too long have to subsidize the young. C.D. Howe Institute Jack Mintz suggests that rather than keeping track of lifetime earnings, which is administratively difficult, it is wiser to have an age_related tax exemption for those between 18_25.
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