Canadians now spend more on taxes than on food, clothing and
BeaverFever @ Wed Aug 24, 2016 2:02 pm
andyt andyt:
Assuming that higher tax rates produce higher revenue (seems reasonable) the province with lower tax rates will have lower revenue from those sources of tax, so receive more equalization.
As I understand it, the above is test of the provinces' ability to raise revenue, not actual revenue. The test is "if all the provinces taxed at the same rate (the provincial average) how much revenue would each province raise for itself?" If a Province would have less than the overall average, they are eligible for equalization for the difference.
http://www.lop.parl.gc.ca/content/lop/R ... 0-e.htm#a3
BRAH @ Wed Aug 24, 2016 2:23 pm
Taxes that continue to bring in more immigrants for the Liberal's new base. 
andyt @ Wed Aug 24, 2016 2:24 pm
It compares actual tax revenue to what would be raised if the province taxed at the average rate. If the province has high taxes that bring in high revenue, they would get less than if they have low taxes/low revenue. Of course if you believe Laffer the inverse is true.
stratos @ Wed Aug 24, 2016 2:29 pm
andyt andyt:
It compares actual tax revenue to what would be raised if the province taxed at the average rate. If the province has high taxes that bring in high revenue, they would get less than if they have low taxes/low revenue. Of course if you believe Laffer the inverse is true.
So the provinces that tax less get a bigger chunk of the shared tax revenue?
![[huh]](./images/smilies/icon_scratch.gif "huh?"){kind=icon}
Not saying you guys are wrong just saying that makes no sense to me.
peck420 @ Wed Aug 24, 2016 3:10 pm
andyt andyt:
So you're saying that lower tax rates would bring in more revenues? The old Laffer thing?
Not quite.
Lowering taxes increases revenues...to a point, than revenues stagnate and drop.
Raising taxes increases revenues...to a point, than revenues stagnate and drop.
To make it even worse, regional differences play a huge part as well, making the initial point, and how far you can deviate prior to drop off, different for each region.
To top it all off, you have to factor in non-tax based circumstances as well.
There is a reason that no government has ever been able to make everybody happy with a single tax rate.
That all being said, it is easier to find the revenue drop off point than it is to find the optimum revenue point, which is why a formula, like the equalization payment formula, tend to induce complacency and dependency, not progress and self sufficiency.
Why do something very hard, when you can do something rather easily, and get the same end benefit?
peck420 @ Wed Aug 24, 2016 3:31 pm
BeaverFever BeaverFever:
As I understand it, the above is test of the provinces' ability to raise revenue, not actual revenue. The test is "if all the provinces taxed at the same rate (the provincial average) how much revenue would each province raise for itself?" If a Province would have less than the overall average, they are eligible for equalization for the difference.
http://www.lop.parl.gc.ca/content/lop/R ... 0-e.htm#a3
http://www.lop.parl.gc.ca/content/lop/R ... 0-e.htm#a3
They test the Province's actual revenue against the national theoretical revenue.
Why? Each Province taxes differently, and has different rebates, exclusions, etc. The only way to compare them is to make a theoretical 'average'.
But, it is the Province's actual revenues in relation to that theoretical number that is the primary determining factor in the equation.
The Province's actual revenues are determined by adding:
1) Personal income tax revenues
2) Corporate income tax revenues
3) Consumption tax revenues
4) Property taxes and miscellaneous revenues
5) Natural resource revenues (50%)
BeaverFever @ Wed Aug 24, 2016 7:39 pm
andyt andyt:
It compares actual tax revenue to what would be raised if the province taxed at the average rate. If the province has high taxes that bring in high revenue, they would get less than if they have low taxes/low revenue. Of course if you believe Laffer the inverse is true.
No you're missing it. Actual tax revenue is not part of the formula. It only compares POTENTIAL tax revenue of the province if the province taxed at the average rate to POTENTIAL tax revenue of the other provinces. The provinces with the lowest potential get a supplement.
andyt @ Wed Aug 24, 2016 8:02 pm
andyt andyt:
The equalization formula (to put this extremely simply) compares how much a province would collect in revenue using national averages for tax rates in five revenue-generating areas (property tax, corporate taxes, etc.), and determines how much that province actually is collecting.
BeaverFever BeaverFever:
No you're missing it. Actual tax revenue is not part of the formula. It only compares POTENTIAL tax revenue of the province if the province taxed at the average rate
BeaverFever BeaverFever:
to POTENTIAL tax revenue of the other provinces. The provinces with the lowest potential get a supplement.
No, see underlined part of my quote.
bootlegga @ Wed Aug 24, 2016 8:26 pm
DrCaleb DrCaleb:
stratos stratos:
$1:
That goes to the federal 'Equalization' program, where rich province's taxes go to Quebec poorer provinces to cover differences by region. That way poorer provinces (or territories) don't suffer because of low incomes.
Yeah I seen that thread and my mind was going Ummm isn't Quebec kind of rich. Tourism alone should boost them up a notch or two.
They are well off, but they also spend heavily. The way the federal equalization system works, it tend to favour Quebec and the Maritimes as 'have not' and the West and Ontario as 'have'. It's a subject for a whole other thread!
http://www.taxpayer.com/commentaries/-m ... ualization
Quebec (and some other provinces) also benefit from the fact that non-renewable resource royalties (oil/natural gas) are included in the calculations for equalization, while renewable resource royalties (like the roughly $3 billion Quebec got from sales of hydro power) are not.
bootlegga @ Wed Aug 24, 2016 8:27 pm
peck420 peck420:
When you have a formula that makes it advantageous to NOT develop, you have a problem. If anything, the entire purpose of the equalization should be the reverse.
^ This.
andyt @ Wed Aug 24, 2016 8:30 pm
bootlegga bootlegga:
Quebec (and some other provinces) also benefit from the fact that non-renewable resource royalties (oil/natural gas) are included in the calculations for equalization, while renewable resource royalties (like the roughly $3 billion Quebec got from sales of hydro power) are not.
non-renewable revenue is assessed at 50% or at 0%, whichever benefits the province in question most. I don't understand why the distinction is made between non-renewable and renewable.
DrCaleb @ Thu Aug 25, 2016 5:18 am
andyt andyt:
bootlegga bootlegga:
Quebec (and some other provinces) also benefit from the fact that non-renewable resource royalties (oil/natural gas) are included in the calculations for equalization, while renewable resource royalties (like the roughly $3 billion Quebec got from sales of hydro power) are not.
non-renewable revenue is assessed at 50% or at 0%, whichever benefits the province in question most. I don't understand why the distinction is made between non-renewable and renewable.
The conspiracy minded among us go back to the special treatment Quebec gets in the Constitution. Because of that, in order to form Government, you need seats in Quebec to be majority party in Parliament. So Quebec's renewable energy sector means they will always come out as 'have not' in the equalization equation, even with having the second largest population and manufacturing sector in Canada.
uwish @ Wed Dec 07, 2016 11:10 am
andyt andyt:
uwish uwish:
definitely less than say, the average I would estimate.
So you would favor paying for the services you use as you go? Ie all the free or subsidized schooling you got, you would have wanted to pay way higher taxes to pay for it as you used it? While you were not earning any money? As you age and start needing more and more healthcare, you want to start paying more and more taxes in your retirement to pay for it, because you didn't want to pay during your earning years? Your parents should have been handed a high bill for your birth, rather than averaging it out over time?
Just a couple of examples.
I am not suggesting anything other than the idiocy of our current tax system. I pay 3.5X more in taxes than the average Canadian, but I sure don't use 3.5X more services than say you do as my dry cleaner for example.
BeaverFever @ Wed Dec 07, 2016 11:26 am
So you say but it sounds like you benefit more from the system.
At any rate, if everybody paid the same taxes as the poorest taxpayer we'd be a third-world country.
uwish @ Wed Dec 07, 2016 1:33 pm
complete and utter BS