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A government should be an entity that serves us; not one that rules us.

- Cyrus Derakhshan


The Theory of Taxation


Tax is a compulsory fee collected from individuals, small business and corporations by the government of a country for the purpose of providing services to the citizens of that country. Based on the given definition, there is nothing wrong with the collection of taxes by governments. Tax collection is necessary for society to be able to live in a civilized manner and for a government to run the affairs of a country. Taxation becomes problematic when the tax rate exceeds a just amount and is collected in an excessive manner. Furthermore, if the tax collected is not used for its intended purpose and is not used efficiently it becomes a burden on the taxpayer without the expected outcome. Canada is a good case in point. One must inquire as to why Canada has an average rate of taxation that exceeds 45% of an individual's income (This is taking into account all taxes not just income tax). Unfortunately many countries collect taxes and do not provide the services. Most of the tax collected is wasted by government as a result of corrupt practices and politicians filling their own pockets first. The other problem is that governments do not run in an efficient manner and there are obsolete sections and fake jobs created by the government not only to employ themselves but also to justify the funds collected.

Government inefficiency has caused a lot of social problems because government has failed to do its job, namely to run the affairs of the country. Why should youth work hard and finish their education and not have prospects for good jobs and a good future? This is because our government has failed us. The sustaining of a stable economy is one of the most crucial tasks of a government, yet because of government shortcomings we find high unemployment rates not only in Canada but around the world. Greece is the perfect case study of what can happen when government abuses public funds and does not do its job. Greece today has sunk into a state of economic stagnation. With unemployment at 26%, the youth of Greece have no promising future ahead of them.[1] All because the Government of Greece kept on abusing public funds until it all came tumbling down. In due time, this can also happen to countries like Canada if people do not start taking an active role in keeping government expenditure under check.

A global economic catastrophe is lurking around the corner and all governments around the world are dumbfounded and clueless as to how to deal with it. The world is now a global village and all countries in the world are not only closely related politically, but also economically. As a result, if certain economies of the globe are in a recession, they will inevitably affect other economies around the globe. The only way the world is going to have a stable sustainable economy is for countries to realize that they are now faced with a global economy and that they need one another to sustain it. Furthermore, governments and economists need to begin understanding that fake economic systems are not going to bail the world out of this economic disaster. An example of this is when the government creates fake jobs within the government. If a job does not produce anything it is not going to contribute to the economy in any shape or form. Neither are corporate welfare handouts going to save the economy. Stocks are another fake economic entity that has contributed to ruining the world's economic structure.

Although in Canada people are provided with many great services one must ask if those services are worth 45% or more of their income. The answer is a solid no. Canada has one of the highest tax rates in the world. Most Canadians do not realize this fact and neither is it apparent because the government uses a psychological tactic that I will call bite size pieces to collect taxes. As a result, most Canadians are unaware that once they add up all the numerous types of taxes they are paying, it amounts to an excess of 45% of their income on average! One must question where those funds are going and how they are being spent. Most of the funds are taken by politicians that not only give themselves generous salaries but also give their offices funding that can be spend for personal gain and unethically justified under the guise of running a governmental office. A substantial amount of the funds are also spent on useless or obsolete governmental offices and sections. Another problem lies in the way government funds its different sections. If a government section runs in an efficient manner and saves money for the government, rather than being rewarded their funding is cut down for the next fiscal year. As a result, a governmental section is forced to waste what they have left in funding in order to receive the same amount of funding for the next fiscal year. Consequently, government sections do not run with economic efficiency and taxpayer's contributions are wasted. The other problem within the Canadian government is that there is not enough control over who does what. Once a section gets its funding it can spend it as it wishes without accountability. In other words the right hand does not know what the left hand is doing. These are the makings of an inefficient government. Once you add government incompetence into the mix (example: The Maher Arar case which cost the Canadian tax payers over $12 million), it becomes apparent where all the taxes collected are going.

Income Tax

The income tax rate in Canada is one of the highest in the world, that aside, no one has ever sat down to question the inefficient way in which the government of Canada collects that tax. Why is there a need for employed people receiving a regular salary to do income tax every year? Why can't the government figure out a formula that can be applied to automatically deduct income tax from a salary without the need to do income tax every year? That way no adjustments are necessary at the end of the year. Income tax time should only be for the self-employed, small businesses and corporations whose incomes oscillate from day to day and a formula cannot be applied. Instead the government inefficiently spends millions of taxpayer dollars every income tax season to process income tax for its citizens when it is not necessary.

Why are people not taking action to address these issues that is costing them so much and affecting their quality of life? The answer can be analyzed to one or all of the following:

  1. The entrenched myth ingrained deep into people's minds that there is nothing they can do about it. For that reason, they do not want to think about it in order to avoid the realization that they have been handed the short end of the stick (why boil your blood over an issue if you are not going to do anything about it).

  2. Apathy - One of the worst conditions that a human being can be afflicted with.

  3. Some people are leading a good lifestyle and they just don't care.

  4. Some people are so busy trying to make ends meet and to pay off their debts (The average Canadian's consumer debt load is at $28,000)[2] that they think they don't have the time to do anything about it. Not realizing that if they did do something about it their lifestyle would change and there would be no need to run around 24 hours a day to make ends meet.

  5. Relative distinction - People are content with relative distinction of themselves as a society (example: we have it so much better than the Ethiopians) instead of gaging themselves against the ideal. Just because you have it less bad than more bad it does not mean that you have it good.

  6. A substantial population of the world live under dictatorships, totalitarian or theocratic governments that rule by force. In such cases the political climate does not allow people to use any sort of political channels to bring about change.

In a nutshell, tax is a fee paid for services to improve the quality of life, not worsen it. To use an analogy, if someone is paying for a service (example cable) and they don't get that service, or if the fee for that service gets increased would they not question it? Likewise, unless people start taking an active role about asking questions about their tax rate and how those funds are being spent, the government is going to continue to take advantage and abuse public funds and provide less and less services.




References

  1. http://www.tradingeconomics.com/greece/unemployment-rate
  2. http://www.cbc.ca/news/canada/story/2013/02/04/business-transunion-credit-debt.html