Why are Canadians so opposed to sale tax reforms? (user search)
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  Why are Canadians so opposed to sale tax reforms? (search mode)
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Author Topic: Why are Canadians so opposed to sale tax reforms?  (Read 482 times)
Nichlemn
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« on: April 20, 2012, 03:08:02 PM »
« edited: April 20, 2012, 03:19:25 PM by Nichlemn »

The introduction of GST under Mulroney and Harmonised Sales Taxes at the provincial level have all been highly unpopular.

Why? I don't much about the details, but it seems that a lot of opposition is a simple failure to understand tax incidence - the legal instance of a tax has no bearing on its economic incidence but most people don't realise this.

The other possibility is that the reforms have created some winners and some losers, but the losers make a bigger song and dance about it.

Does anyone have a good argument that these reforms were bad, not just misunderstood?

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Nichlemn
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« Reply #1 on: April 20, 2012, 11:40:22 PM »

Yes, but these tax reforms as far as I'm aware were meant to be revenue neutral. Maybe they don't like visible taxes versus stealth taxes, but I file that under "stupid reasons".
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Nichlemn
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« Reply #2 on: April 21, 2012, 05:25:14 PM »

It's also a tax that affects everyone. And, I'm not sure if I speak for most Canadians, but I'm against sales taxes in general because they're not proportionate to income (the term's progressive tax, right?) My general tax philosophy is that one of its purposes is to attempt to create equality among the public. Those who make more money than they deserve should be taxed more.

But these reforms aren't replacing income taxes with sales taxes, they're simply changing the way a type of sales tax is structured. From what I can gather, the main source of grief appears to be that "businesses paid" the original taxes while "consumers pay" the new taxes. But tax incidence theory proves this to be irrelevant - the incidence of the tax is shared by the firm and the consumer in the same way regardless of who is actually responsible for paying it.
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