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Feature   April 1, 2001   by Jim Anderton

You don’t need a tax cut. Here’s why.

It that time of the year again. Tax time. If you're like me, and I suspect most SSGM readers are, preparing your return isn't a pleasant way to spend your spare time. Tax cuts are currently in vogue a...

It that time of the year again. Tax time. If you’re like me, and I suspect most SSGM readers are, preparing your return isn’t a pleasant way to spend your spare time. Tax cuts are currently in vogue as a proposed means of kick starting a rapidly slowing economy and I think that both the Federal and Provincial governments should resist the pressure and forget about them. Before you send that hot E-mail or letter, however, hear me out. No one wants to pay more than is absolutely necessary, myself included, but so called tax cuts are simply a politician’s technique for obfuscating the real taxation issue facing all “small business” today: compliance costs. Take a look at what you spend on accountants and bookkeepers, and ask yourself this question: how have we managed to create a country where simply paying your taxes and balancing your books is too complex and time consuming to do yourself? The reality of paying outsiders to tell you how your business is doing illustrates a fundamental flaw in our economy, one that threatens quietly, hidden by media-driven drivel about “recession”. Individual Canadians and small business owner/operators live in a regulatory and taxation regime so complex that in an attempt to do what our industry does best (service Canada’s vehicles) we surrender effective control to another set of specialists whose job isn’t to create wealth or provide a wealth-enhancing service, but to make sense of a government-generated kaleidoscope of rules.

Check what you spend on bookkeeping, accountants, lawyers and financial advisors, both in your business and personally, and think…how could that money be used to enhance my business? Why does it take an expert to determine whether that new ‘scope or lift is better financed or leased? It seems to me that we have a de facto welfare system for lawyers and accountants, yet again covered up by politicians (both Provincial and Federal), that hide behind tax cuts and government downsizing. Instead of taking a big, inefficient government and turning it into a slightly smaller, inefficient government, why not decide what government should do and what it shouldn’t, then build a lean structure around the best managers available, drawn from both public and private sectors? Then eliminate tax credits, deductions, surtaxes and other subterfuge and send every Canadian citizen and business a Revenue Canada postcard: Gross, Tax and Net. Three lines, ten minutes, and make the cheque payable to the Receiver General. This won’t happen in my lifetime, if ever, for several reasons. One is the previously mentioned need to keep the legal and accountancy professions in new BMWs despite their parasitic drain on wealth-creating sectors of the economy. Another is the need for governments to hide their complex systems of subsidy that ensure that the larger a company gets, the more insulted it is from the effects of its own bad management. Can’t make your factory efficient enough to compete? Threaten layoffs, and negotiate the inevitable government payoff, disguised as tax breaks and loan guarantees. Yet another is the pervasive effect of simple greed. It’s easier to rip off shareholders and reallocate wealth to yourself if the tax and reporting rules are so complex that courts decide what a simple regulation really means. And perhaps the most insidious reason for this chaos is the need to conceal just how rigged our so-called market economy really is. There are probably more, but I’m far too angry to think about them right now. Think you’re life is tough? Well, it is. So is mine. But I suspect it’s a lot easier for Paul Martin and your Provincial Minister of Finance. They have the right tools, and the right write-offs.

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