Reshaping the Debate on Raising Taxes: A RefuteIn the article entitled Reshaping the Debate on Raising Taxes, Robert H. Frank (2007) demonstrates his full support that politicians should be able to increase taxes without the fear of civic retaliation. He emphasizes the great need to speak about taxes, and is confident that, over the years, voters would be more open to ÃÂfresh points of viewÃÂ. He thereby concludes that they would understand the needs for raising taxes.
It would be a common consensus that voters are not as objective as Frank renders them to be, and not much has changed over the years in terms of how constituents react to even the slightest possibility of raising taxes. Most voters, no matter how effective the means of communication, will always respond resentfully in opposition to raising taxes. Additionally, Canada is taxed high enough and the money is being distributed unduly in the wrong areas, thus explaining the constant need for politicians to increase taxes.
Even when tax hikes are announced and explanations are provided of its reasoning as Frank would promote, people continue to respond unfavourably. For instance, tobacco prices had increased by an additional $1.25 per carton of cigarettes from $24.70 to $25.95 in February 2006 (Kelly, 2006). The government inaugurated this particularly to discourage teens from smoking using the analogy that ÃÂyoung people are especially sensitive to price increasesÃÂ (Kelly). Since then, this has probably caused underground smoking to escalate where it would not be very difficult for people to find cheaper cigarettes illegally, thus endorsing further criminal activity.
Such was the case when Ontario and Quebec endured an influx of robberies and hijackings during the 1990s all in the quest for cigarettes (Luik, 2004) as if it were gold. Further evidence demonstrates that New York is the highest taxed city in the United States for cigarettes and, as a result, also has one of the largest black markets in tobacco products (Luik). One can see the adverse reaction of the public when it comes to raising taxes. Constituents instigate their own way of dealing with the system of politics if taxes are raised.
The Conference Board of Canada located in Ottawa had released a report early in the year calling for carbon taxes in order to reduce emissions of greenhouse gases (Jackson, 2008). Here is another case in point where many stakeholders would not be very impressed with the mere introduction of carbon taxes. The Board is taking a wise stance by opting for the tax to be revenue neutral. According to the Board, any level of high carbon taxes can easily discourage and drive business out of Canadian markets (Jackson). Many of CanadaÃÂs manufacturing industries vie with powerful foreign players in the market, and a carbon tax would make an onerous task for them to merely stay in the competition. This could possibly lead to many job losses within the domestic manufacturing industries. Any level of high carbon taxes can be detrimental to Canadian businesses and lead to further negative consequences such as a rise in gas prices. Constituents would definitely be quite aggravated if such had to happen, thus, once again emphasizing that the anti-tax rhetoric, as powerful as it is, would continue to prevail.
Canada is taxed high enough, and it is absolutely unnecessary for the government to draw out additional proceeds from the pockets of hard working citizens. In September 2007, the CRA had won the eBay Canada tax information case where ÃÂhigh volume online Canadian sellersÃÂ would have to ÃÂturnover all names, addresses, phone numbers and gross annual salesÃÂ (Gnaedinger, 2007). From this, it is apparent that the government will have bonus revenue streaming in. All sizeable amounts of underground money made by powerful sellers before would now turn up in tax remittances to the government, hence the additional revenue. This gives a greater reason for politicians to avoid raising taxes or even addressing the issue.
There is a great imbalance in the Canadian system in terms of the way tax revenue is distributed among the three levels of government. The fact that roads are not fixed properly, public transportation is not organized well and like issues are mostly due to municipal governments not having many sources of receiving revenue (Anonymous, 2004). Cities are not allowed to tax personal income, retail sales or profits (Anonymous). Most of municipal revenue comes from property taxes where the leverage to raise it is quite limited, and the cities are ultimately prohibited to run deficits by law (Anonymous). Toronto ÃÂreceives only eight cents of every new tax dollar that residents pay on their rising incomes; the other 92 cents goes to the federal and provincial governmentsÃÂ (Anonymous). This is strong evidence of the fact that the nation does not need to be taxed anymore than it already is because huge amounts of taxpayersÃÂ money are distributed disproportionately. The cities that need the most money to maintain its upkeep and where businesses thrive receive a mere fraction of the tax revenue whilst the federal and provincial levels get unnecessary chunks. Thus, there is absolutely no need to even speak of raising taxes only the necessitation to redistribute tax dollars along the federal, provincial and municipal levels proportionately.
Keeping taxes low encourages additional consumer spending and might even push for higher standards of living. It is apparent that constituents will have more income to spend if taxes are low, and this would be extremely advantageous for the economy particularly the GDP. Many voters responded favourably to the government lowering the GST from 7% to 5% over the span of two years. As of the beginning of 2008, consumer spending rose exceedingly aided in part by the one percent cut back in GST. ÃÂJanuary's sales jumped 1.5% to a seasonally adjusted C$35.75 billion (US$35.12 billion) from the previous month's 0.8% gainÃÂ ÃÂ (Menon, 2008)Economists were surprised at how CanadaÃÂs per capita GDP has grown 26% over the past ten years surpassing even the US, whose growth was about 20%. An even welcoming fact was that the standard of living last year had gone up 84.4% of the average American (Geddes, 2008). One might agree that these consequential benefits can, in part, if not all, be owed to the lowering of taxes. Constituents are able to spend more because of lower taxes, and having extra disposable income increases the standard of living. These certainly cannot be achieved at high tax levels where consumers cannot even afford the basic necessities, and this consequently causes GDP to fall.
As connoted earlier, there is an unfair distribution of taxes, and politicians need to agree on balancing the tax system better before contemplating the need for tax hikes. Frank (2007) did not make a reasonable claim that constituents are more perceptive to fresh ideas, and politicians should raise taxes without fear. In fact, as seen in prior evidence, they respond with great hostility to the mere hike of taxes, and even more pleasantly when the opposite occurs.
Word Count: 1125BibliographyAnonymous (2004, May). Overtaxed and Underfunded. Canada and the WorldBackgrounder, 69(6), 4-8. Retrieved March 22, 2008, from [Research Library] database. (Document ID: 653843991).
This was a strong article used to give evidence and support of the fact that Canadians are indeed overtaxed but funds are spent disproportionately in very unnecessary areas.
Geddes, John (2008, March). An Election Budget After All. Maclean's, 121(9), 20-21.
Retrieved March 21, 2008, from [Research Library] database. (Document ID: 1445715811).
Used to provide evidence of growth in GDP and standard of living in order to support the claim that decreasing taxes has positive consequences.
Gnaedinger, Charles (2007, October 8). Canada Wins eBay Tax Information Case.
Country Digest, p.136. Retrieved March 3, 2008, from [Tax Notes International] database.
This was evidence provided to show an additional stream of revenue that the government might be receiving and consequently to support the claim that politicians do not need to raise taxes when there is enough revenue in the system. It connects with the idea from the previous article that Canadians are being overtaxed but funds are not evenly distributed in the systemJackson, Randall (2008, March 3). Budget Calls for Carbon Tax. Country Digest,p. 739.
Retrieved March 3, 2008, from [Tax Notes International] database.
This was an example of the latest tax issue used to discuss the negative consequences of raising or introducing new and additional taxes into the system.
Kelly, Patrick (2006, February 1). Ontario raises taxes on a carton of cigarettes byanother $1.25 :[Toronto Edition]. National Post,p. A11. Retrieved March 26, 2008, from [Canadian Newsstand Major Dailies database]. (Document ID: 980521801).
KellyÃÂs article aided in providing an example of one of the areas where the government has raised the tax in good intentions to discourage the act of smoking.
Luik, John (2004, May 19). Hiking taxes won't lower smoking rates :[NationalEdition]. National Post,p. FP19. Retrieved March 20, 2008, from [Canadian Newsstand Major Dailies] database. (Document ID: 642210531).
LuikÃÂs article proved very well the negative effects from raising taxes in an area such as smoking and thus provided a linkage with and reasoning for the first article. The title is self-explanatory.
Luik, John (2004, May 19). Hiking taxes won't lower smoking rates. National Post(Index-only),p. FP19. Retrieved March 26, 2008, from [CBCA Current Events] database. (Document ID: 668914751).
This was merely an index that provided another link to the Canadian Newsstand Major Dailies database for the previous full abstract of the article. In other words, it led me to a fuller version of the text with additional information.
Menon, Nirmala (2008, March 25). Canada Retail Sales +1.5% in Jan from Dec. DowJones Newswires. Retrieved March 10, 2008, from [Factiva] database.
This provided yet another confirmation to the claim that lowering taxes has positive consequences. Thus, politicians should be nervous about speaking or even thinking of raising taxes.