GST Cut Falls Flat

Here is a new definition of Flat Tax.
A tax cut that lands flat, as in flat on its face.

Last year's GST cut did not stimulate increased consumer spending or the economy and, unlike some other tax cuts, will not pay for itself in the long run, a new analysis has concluded.

"Do tax cuts pay for themselves? Well, certainly the GST reduction didn't," Global Insight said in an analysis Tuesday of the costs and impact of the one-point cut in the sales tax rate by the minority Conservative government to 6% from seven last July.

"The relationship between GST revenues and consumer expenditures reveals no significant evidence of stimulated consumer spending," concluded the analysis, based on Finance Department fiscal reports that run through June 2007 -- the first 12 months since the Harper government carried through on its election promise and cut the GST.

"A cut in almost any other kind of federal government tax would have been more effective in stimulating economic growth and would have resulted in it getting more of the lost revenue back," Dale Orr, the think tank's chief economist, and author of the report, said in an interview.

Among the tax cuts that would be the most effective in stimulating economic activity and boosting future revenues would an income-tax cut, which as well as leaving people with more money to spend, would encourage them to work longer and harder to earn more, Mr. Orr said.

However, he noted that the Conservative government instead raised personal income taxes in its first budget.

"That was done specifically to finance the GST cut," Mr. Orr said.

Insured workers pay GST which was intended to address the national debt, yet we have not received any evidence that all those funds are doing that. Insured workers then pay GST for servicing the national debt, pay income taxes to fund programs and serve the national debt and then workers and employers pay down the national debt yet again through their EI premiums - not voluntary contributions!

VAT (value added tax) and GST (goods and service tax) are two of the fastest growing taxes globally, a new report launched today by PricewaterhouseCoopers demonstrates. The report, Shifting the balance –the evolution of indirect taxes, offers an insight into the growth of indirect taxes and focuses on a number of key themes such as the shift from direct to indirect taxes, barriers to business and the need for reform, litigation, and the use of technology in indirect tax compliance.

It suggests that this could reflect a global trend by governments to focus on the certainty of revenues from VAT/GST and a desire to shift compliance costs from tax authorities to businesses. The report describes how, in light of the evolution of indirect taxation, there is a further challenge not to be forgotten. VAT systems can be regressive in nature and also potentially inflationary. It recommends that governments considering the introduction of such systems to enhance global tax competitiveness, need to bear in mind measures that will ensure a level of welfare for the lower paid individual taxpayers, including the potential for applying reduced tax rates or even zero tax rates for basic goods and services or those supporting other social aims, such as relieving the burden on the elderly or disabled.

SEE

Tax Cuts For The Rich Burden You and Me

Tax Fairness For The Rich

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Osama bin Laden Republican

Osama promises that under Islamic rule, you'd be free of the Tax Man forever. "There are no taxes in Islam," he says in the much anticipated new tape, "only a limited Zakaat (alms) totaling 2.5 percent."

Wait a minute that still is a tax.




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Glass Half Full

In true blue fashion neither the Alberta Government nor their Federal cousins can calculate.

Someone get these guys an abacus.

Alberta surplus jumps in first-quarter projection


Fed surplus more than forecast, again

In Alberta though we have a regime stuck in the nineties, and even this surplus will end up somehow being a deficit when it comes to government spending.

While the Federal Surplus is helped along by the Conservatives delays in funding their eco-programs.


SEE:

Tax Cuts For The Rich Burden You and Me

Tax Fairness For The Rich

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The Cost of War

That's Trillions of dollars.


U.S. NATIONAL
DEBT
CLOCK

The Outstanding Public Debt as of 14 Aug 2007 at 09:16:31 AM GMT is:

The estimated population of the United States is 302,702,356

so each citizen's share of this debt is
$29,645.27.

The National Debt has continued to increase an average of

$1.47 billion per day since September 29, 2006!

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Tax Cuts For The Rich Burden You and Me

Two recent stories point out the failure of the 'peoples government of Canada' to meet the peoples need. Instead they have passed on the tax burdens once again to Johnny and Janey Canuck. And these assessments don't come from the Left but from the Right.

Basically reminding us that Jim Flaherty's much vaunted Tax Fairness is not.

Misdirected Tax Reforms Driving High Canadian Tax Rates: C.D. Howe Institute

Targeted tax relief doesn’t cut it, think tank says

Workers bear the brunt of taxation with high personal income, payroll and sales taxes, the report stated, with the Canadian effective tax rate on labour at 45.9%, down slightly from 46% in 2006.

"As economic studies have shown, the effect of such high effective tax rates on employment income is to reduce the incentive to work, especially for secondary workers in the family," said the report.

Corporate cuts at consumers' expense

- Finance Minister Jim Flaherty is urging provinces to go for a tax change that would shift billions of dollars a year in corporate taxes to the shoulders of individuals.

In this year's federal budget, Flaherty renewed Ottawa's push to get all provinces to harmonize their sales taxes with the goods-and-services tax (GST).

However, full harmonization by the five provinces that still operate retail-sales taxes --Ontario, B.C., Saskatchewan, Manitoba, and Prince Edward Island -- would shift $7.5 billion in what is now a tax on businesses to consumers, a new report estimates.

In Ontario alone, the shift would amount to $5 billion annually, said Jonathan Kesselman, a public policy professor at Simon Fraser University. "It's large," he said in an interview, adding that it's been a bit of a political sleeper.

"Harmonization's Achilles heel continues to be the visibility of the large tax-burden shift from business to consumer," Kesselman writes in the latest edition of Canadian Tax Highlights, a Canadian Tax Foundation publication.

See:

Tax Fairness For The Rich

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CEO Cream Sour Milk for Workers

Explain this to workers laid off who do not get golden parachute and may not even qualify for EI for weeks if not months. Or those who were sold out for a sweetheart contract to improve Loblaws capacity to compete with Wal-Mart.

For those CEOs ousted for poor performance or because their companies are targets of takeovers, golden parachutes are also getting bigger, and not only because they are based on multiples of ever-increasing base pay. Loblaw Cos. Ltd. president John Lederer, who left the struggling grocery chain last fall with almost $22-million, including a $12-million payment under the terms of his employment contract.

Sometime in 2002, senior executives at the hugely profitable Loblaw Co's summoned their UFCW partners , to a high-level meeting where they announced that they had competition. Wal-Mart was coming to town with its Sam's Club warehouse stores and its Wal-Mart Supercenter's. The Supercenters sell groceries and, for this reason, must have been a major part of the selling pitch. In response to the impending invasion the hugely profitable Loblaw Co's had come up with a business strategy to make it more competitive.

It planned to launch a chain of new stores, called Real Canadian Super Stores (RCSS's) which were going to sell groceries and some department store merchandise, sort of like Wal-mart's Supercenter stores in the US. The company intended to get the RCSS's happening really soon. No more conventional Loblaws, Zehr's of Fortino's supermarkets would be opened. From here on in, it would be RCSS all the way. Some RCSS's would be newly built stores while others would be existing supermarkets converted to the RCSS format.

So that these new stores had a good shot at keeping the company hugely profitable, the guys from Loblaw Co's told the union leaders that they wanted to put the Loblaws, Fortino's and Zehr's "banners" on them. This was because the grocery-shopping public recognizes these "brand names" and is more likely to shop at the RCSS's if they think they're pretty much like Loblaws, Fortino's or Zehr's.

Doing so, however, would mean that the RCSS's would be stuck with the current contracts with UFCW Locals 1000a, 1977 and 175 and that's not what the hugely profitable Loblaw Co's wanted. Wal-Mart pays its workers low wages and provides minimal benefits. The RCSS's would be that much more competitive if they could pay low wages and provide minimal benefits too. So the representatives from the hugely profitable Loblaw Co's put a deal to their UFCW partners: We'll fork over the thousands of new RCSS workers to your bargaining units if you agree to lower wages and benefits for them. If you don't, we'll screw you and your current members and what are you going to do about it? According to President Corporon, the hugely profitable Loblaw Co's threatened to close unionized stores, throw unionized members out of work and open new non-union supermarkets.

See:

CEO Profits From Ford Failure

Criminal Capitalist Gets Honorary Degree

Criminal Capitalism Business As Usual

CN Whines

Banks Profit From Job Cuts

BMO More ATM's Less People

Golden Parachutes

Canadian CEO Blinks Earns $38,000

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Deja Voodoo Economics

Gee it was earlier this week that I reported on this.Except that Stats Can report was more blue sky messaging, the glass half full rather than the glass half empty.

In that case you had to read between the lines, this is more honest reporting. No blue skying this, tax changes have only benefited the rich.

Rich get richer, poor get poorer, study finds

Updated Fri. May. 11 2007 8:55 AM ET

Canadian Press

OTTAWA -- A new study says the gap between rich and poor is widening in Canada, appearing to confirm that the rich do indeed get richer while the poor get poorer.

Statistics Canada found that inequality in after-tax family incomes has increased over the past 15 years.

The study says that while the tax-transfer system changed in many ways throughout the 1990s, it reduced income inequality by as much in 2004 as it did in 1989.

The study found that incomes among the top 10 per cent of earning families rose by 22 per cent between 1989 and 2004, while at the same time incomes fell 11 per cent among the poorest families.

SEE:

Canada's Wealthy, Still

Productivity

Taxes

Wealth


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Flaherty Flip Flops

Okay so when will the Conservatives back track on their failed Child Care program and reinstate funding for actual child care spaces. Oops that of course affects only Martha, Henry and the kids, not corporations and CEO's.

Flaherty backtracks on tax measure

In a reversal, Finance Minister Jim Flaherty says a new controversial tax measure will be rewritten to ensure that legitimate Canadian corporations can continue to invest abroad and deduct the interest charge from their taxes.

Under pressure to back down from a "sleeper" measure in the March 19 budget that Canadian businesses said would cost them more than $1 billion and make them less competitive, Flaherty confirmed yesterday that draft legislation being prepared by the finance department would ensure that the provision only went after tax havens and so-called double dipping.

Flaherty blitzed on Alcan bid

Nevertheless, news yesterday of Alcoa Inc.' s US$33-billion takeover bid for Alcan turned up the heat once again on Mr. Flaherty and his proposed move to limit companies' ability to deduct interest on foreign financings.

Tax specialists, business groups, blue-chip chief execdutives and think-tanks have weighed in in opposition to the move. The government has said the proposal would end the practice by some Canadian-based firms of obtaining two or more deductions for interest expenses incurred to finance offshore operations.

Last month, Richard Evans, Alcan CEO, said in a published interview that the tax change could make the aluminum maker susceptible to a foreign bid because it would hinder Alcan's ability to grow through foreign acquisitions.

SEE:

Gildan Sweat Wear

Tax Fairness For The Rich

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Ben Stein's Truth

On Fox News Saturday Cost of Freedom with Cavuto his guest; Ben Stein spoke unvarnished economic truth to the usual crowd of capitalist whiners;

Tax the Rich?

Lifelong Republican Ben Stein: Democrats are right to tax the rich more

"You need government to defend you, to conduct war. Government needs money. Better to tax dead rich people than to tax the working class."

Right on Ben.

He was talking about Anna Nicole Smith and the fact her estate will be taxed by the U.S. Federal Government. And that is all I will blog on Ms. Smith's recent demise.

Though I am not alone in blogging on the political economy of Anna Nicole Smith Inc.



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Merck Tax Rip Off

Merck still has a $1.76 billion tax dispute with Canadian authorities, and has filed an appeal with the Canada Revenue Agency that is expected to be reviewed this year, spokesman Raymond Kerins said.

The pharmaceutical giant disclosed both tax cases in November in a routine Securities and Exchange Commission filing. Merck said the Canadian dispute "related to certain intercompany pricing matters."

Tax and accounting analyst Robert Willens of Lehman Brothers said in such cases drugmakers generally sell medicines at low cost to subsidiaries in countries with lower tax rates, which can then mark up the prices and keep more profit after taxes.

Merck is not the only Big Pharma company to get caught out engaging in this tax swindle known as transfer pricing. It's based on off shoring ones corporation or personal taxes in a tax haven thus avoiding paying taxes in the country of operation. Something the Irving's have done for years.

We have been participating in OECD for 20 years now on transfer pricing guidelines for instance. That work is critical to having a set of international rules that work for everybody.

We do try and understand the way that businesses operate and certainly there are many needs a company will have for offshore treasury functions. We start to get a bit upset about these when we find that they aren’t really carrying out real treasury functions, that there aren’t, possibly, real people there or very few people there and very few facilities for them to do this work. That is when we get into arguments as to whether or not it is a genuinely commercial function of the group or whether or not it is some sort of tax mitigation or tax planning.

See:

Big Pharma Rip Off

The Mulroney Legacy

AIDS


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