Abolish Income Tax, Increase Consumption Tax

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Votes: 83

Income tax is a costly system and easily manipulated (by the government to control behaviour as well as by taxpayers). Tax spending with a GST of 20% and eliminate tax on income.

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Comments

Submitted by Patrick Carre on January 22, 2021 - 6:53 PM

The current tax system is intrusive, replacing it with a progressive sales tax. Luxury goods can be taxed more, while necessities are taxed less. Also take a look at other methods of taxation like land value which would be more effective.

Submitted by Jesse Mowles on December 05, 2020 - 9:31 PM

Between losing 20% of my income to federal taxes and HST+GST, how are taxpayers able to save for the future?

When are we going to get to keep our hard earned money? Scrap the tax, let's get ahead.

Submitted by Anonymous on November 24, 2020 - 11:38 AM

Transaction tax is the future, it is a question of when. Additionally, transaction tax could vary depending upon the type of commodity purchased, basic necessities can have less transaction tax vs luxury goods

Submitted by Garnet McLaren on October 27, 2020 - 2:07 AM

No one likes income taxes. It was supposed to be temporary for WW1- which is clearly long over. Taxes on spending are generally better/maybe taxes on wealth or financial transactions.

Submitted by Arun Jain on June 27, 2020 - 4:01 PM

Our govt basic aim is to collect funds for running nation.The sources can be easy and without trouble to a common man . Collection of taxes at every source and every person is a complicated process.why not replace it with first point increase in few products and services like increase in fees or licence in mining ,crude oil, petroleum, telecom spectrum etc at one point only where it's under govt hold before circulation to common public. Corporates already supporting with majority of taxes . They can be made liable for more taxes with increase in their products margins .we can buy a biscuit @10 instead @5 if no burden seen of taxes.Buying petrol @3 dollars can fetch more than total country tax amount .it will boost economy with free trade and foreign investment

Submitted by Arun Jain on June 27, 2020 - 4:00 PM

Why India Should Abolish Personal Income Taxes?

Personal income taxes are omnipresent all over the world. From the developed nations to the developing ones, all tax the incomes of their citizens at different rates. There are only ten countries across the entire world where there are no income taxes. Out of these ten countries, six are from the Gulf peninsula. The governments of these nations derive a vast portion of their wealth from oil revenues. The other four are countries like Monaco and Bermuda. They are known tax havens which generate enough revenue from offshore money that they can run their small economies.

If India were to abolish personal income taxes, the move would be unprecedented in many ways. It would become the first major economy in the world to abolish income taxes. In this article, we will explain why it is plausible that India can abolish personal income taxes without disrupting the economy.

Tax on Middle Class
Firstly, it needs to be understood that the rate of tax compliance in India is very low. The very rich do not pay any taxes because they find loopholes and ways to hide their wealth. The majority are very poor and therefore do not need to pay taxes. It is only the middle-class salaried people in India who are paying taxes. This demographic is also the one which is driving India’s growth. The average taxpayer is educated, young lives in an urban area and is used for conspicuous consumption. BY taking money away from these people, the Indian government only hurts the GDP.

Low Tax Base
It also needs to be understood that less than 3% of the total population of India pays any income tax. Amongst the ones that do file tax returns, about 50% declare zero taxes. A very tiny percentage of people who are in the very high-income range actually pay these taxes. In a country of 1.25 billion people, only 400 thousand people pay a substantial amount of income tax.

Also, other countries are heavily dependent on personal income tax to meet their budgets. However, this is not the same in India. India derives less than 15% of their budget from personal income taxes. If the government can cut 15% of their spending, they can simply abolish the income tax and there will be no effect on the budget.

This less reliance on personal income tax is what makes abolishing it a very real possibility.

Lower Administrative Costs
As mentioned above, the amount of money received from this whole charade is very less. The government does not make a lion’s share of its revenue from income taxes. However, they do pay a lion’s share of the money received in the form of expenditures.

The Indian government has a large bureaucracy which enforces these tax laws. Everyone is supposed to file a tax return. The paperwork takes up a lot of time and resources. Also, since the rate of compliance is so less, the government has employed many people to zero down on non-compliance and conduct raids. Corruption and bribery have ensured that the Indian state has not been able to substantially increase its tax income even after employing these tax hit men.

Hence, if the personal tax is abolished, the government would not need to employ a large number of people doing paperwork. Hence, even though the income would go down 15%, there will be a huge drop in the expenditure as well! Once again, this is what makes abolishing income tax a plausible idea in an economy which has the scale of India.

Higher Economic Turnover
Cutting down on income taxes will end up putting a lot of money in the hands of the people. These people will then spend this money on everything from electronics to real estate. As a result, the GDP of the nation will increase by leaps and bounds. India needs to increase the indirect taxes marginally. This would help the government raise more revenue when the economic turnover increases and the economy grows in size. The shortfall from personal income taxes will be compensated by an increase in the tax base and a marginal increase in the tax rate of indirect taxes.

Cut Subsidies
At the present moment, the Indian government offers a lot of subsidies to the lower middle-class population. These subsidies include subsidy on cooking gas, electricity etc. Farmers also get frequent loan waivers and fertilizer subsidies. The government, therefore, spends more than it earns in personal income tax revenue on subsidies. The solution to this problem is that the subsidies should also be cut down. Cutting down on subsidies without cutting down on income tax would be politically unpopular. If the subsidies are also cut down along with income tax, the government may end up saving some revenue instead of losing revenue.

Asset Price Deflation
India is also suffering from asset price inflation. The prices of housing and other assets like gold have gone through the roof. This is because people try to evade income tax by investing the money in other assets. Since gold and real estate are these assets, their prices are heavily inflated, and the common man is not able to afford them.

Abolishing the income tax will, therefore, have several benefits for the government as well as the common man. It would be financially imprudent to take such a step

Submitted by Anonymous on June 27, 2020 - 3:58 PM

Our govt basic aim is to collect funds for running nation.The sources can be easy and without trouble to a common man . Collection of taxes at every source and every person is a complicated process.why not replace it with first point increase in few products and services like increase in fees or licence in mining ,crude oil, petroleum, telecom spectrum etc at one point only where it's under govt hold before circulation to common public. Corporates already supporting with majority of taxes . They can be made liable for more taxes with increase in their products margins .we can buy a biscuit @10 instead @5 if no burden seen of taxes.Buying petrol @3 dollars can fetch more amount than taxes .It will boost economy with free trade

Submitted by Arun Jain on June 27, 2020 - 3:56 PM

Why India Should Abolish Personal Income Taxes?

Personal income taxes are omnipresent all over the world. From the developed nations to the developing ones, all tax the incomes of their citizens at different rates. There are only ten countries across the entire world where there are no income taxes. Out of these ten countries, six are from the Gulf peninsula. The governments of these nations derive a vast portion of their wealth from oil revenues. The other four are countries like Monaco and Bermuda. They are known tax havens which generate enough revenue from offshore money that they can run their small economies.

If India were to abolish personal income taxes, the move would be unprecedented in many ways. It would become the first major economy in the world to abolish income taxes. In this article, we will explain why it is plausible that India can abolish personal income taxes without disrupting the economy.

Tax on Middle Class
Firstly, it needs to be understood that the rate of tax compliance in India is very low. The very rich do not pay any taxes because they find loopholes and ways to hide their wealth. The majority are very poor and therefore do not need to pay taxes. It is only the middle-class salaried people in India who are paying taxes. This demographic is also the one which is driving India’s growth. The average taxpayer is educated, young lives in an urban area and is used for conspicuous consumption. BY taking money away from these people, the Indian government only hurts the GDP.

Low Tax Base
It also needs to be understood that less than 3% of the total population of India pays any income tax. Amongst the ones that do file tax returns, about 50% declare zero taxes. A very tiny percentage of people who are in the very high-income range actually pay these taxes. In a country of 1.25 billion people, only 400 thousand people pay a substantial amount of income tax.

Also, other countries are heavily dependent on personal income tax to meet their budgets. However, this is not the same in India. India derives less than 15% of their budget from personal income taxes. If the government can cut 15% of their spending, they can simply abolish the income tax and there will be no effect on the budget.

This less reliance on personal income tax is what makes abolishing it a very real possibility.

Lower Administrative Costs
As mentioned above, the amount of money received from this whole charade is very less. The government does not make a lion’s share of its revenue from income taxes. However, they do pay a lion’s share of the money received in the form of expenditures.

The Indian government has a large bureaucracy which enforces these tax laws. Everyone is supposed to file a tax return. The paperwork takes up a lot of time and resources. Also, since the rate of compliance is so less, the government has employed many people to zero down on non-compliance and conduct raids. Corruption and bribery have ensured that the Indian state has not been able to substantially increase its tax income even after employing these tax hit men.

Hence, if the personal tax is abolished, the government would not need to employ a large number of people doing paperwork. Hence, even though the income would go down 15%, there will be a huge drop in the expenditure as well! Once again, this is what makes abolishing income tax a plausible idea in an economy which has the scale of India.

Higher Economic Turnover
Cutting down on income taxes will end up putting a lot of money in the hands of the people. These people will then spend this money on everything from electronics to real estate. As a result, the GDP of the nation will increase by leaps and bounds. India needs to increase the indirect taxes marginally. This would help the government raise more revenue when the economic turnover increases and the economy grows in size. The shortfall from personal income taxes will be compensated by an increase in the tax base and a marginal increase in the tax rate of indirect taxes.

Cut Subsidies
At the present moment, the Indian government offers a lot of subsidies to the lower middle-class population. These subsidies include subsidy on cooking gas, electricity etc. Farmers also get frequent loan waivers and fertilizer subsidies. The government, therefore, spends more than it earns in personal income tax revenue on subsidies. The solution to this problem is that the subsidies should also be cut down. Cutting down on subsidies without cutting down on income tax would be politically unpopular. If the subsidies are also cut down along with income tax, the government may end up saving some revenue instead of losing revenue.

Asset Price Deflation
India is also suffering from asset price inflation. The prices of housing and other assets like gold have gone through the roof. This is because people try to evade income tax by investing the money in other assets. Since gold and real estate are these assets, their prices are heavily inflated, and the common man is not able to afford them.

Abolishing the income tax will, therefore, have several benefits for the government as well as the common man. It would be financially imprudent to take such a step

Submitted by david tully on June 17, 2020 - 11:34 PM

i have one word for you all . abolish all current taxes and bring in the commonsense electronic bank tax on all electronic bank payments. this industry has exploded in popularity. in 2019 there was over 55 trillion dollars in electronic bank payments in 2019 and over 31 billion electronic bank transfers and payments

Submitted by Anonymous on June 04, 2020 - 10:28 PM

Abolish income tax and instead, tax people on their net assets on a graduated level. People who have 10 houses (by inheritance especially) should be taxed more, compared to a hard working doctor who earns $400,000 per year but gets $200,000 taken by income tax.

Submitted by Edd Twohig on April 25, 2020 - 9:34 PM

1st thought: Whatever, wise or foolish, amount of expenditures are made by the Government, that amount must be paid by the people or by money created by Government. All taxes are now added to the cost of goods and services produced, even on those goods which are exported or that which becomes public or private investment. Would it not be better for the tax to be on goods and services used, destroyed, consumed?

2nd thought: Is consumption, as we are led to believe, necessary for the economy? No! It is not the destruction of wealth by consumption, or war, it is production that benefits the economy. It is not consumption, but production of goods and services, that circulates money in the economy, and, to the extent not consumed, creates wealth.

3rd thought: A graduated rate of tax (as with income tax) on all money received less money not spent, savings, would be much simpler to calculate than the present complications of determining taxable income.

4th thought: Point of Sale (Gst/Hst) taxes are flat regressive taxes which serve no purpose except raising money and should be eliminated. There are many present, and possible, taxes that can replace direct taxation. Taxes can also serve to discourage use, or to recover costs. The present liquor, carbon and like taxes discourage harm, as well as relieve the need for personal direct taxes.

5th thought: What other taxes could relieve the taxation of individuals, and benefit the economy? Firstly, all imports should be taxed at a rate at least equal to that borne by goods and services produced nationally. Since national taxation equals about 40% of Gross Domestic Product, national production bearing taxes is less competitive both at home and abroad. Secondly, the trading of securities, except Initial Public Offerings, add nothing to economic growth and diverts wealth from productive use and should have a transaction tax.

Submitted by Anonymous on April 06, 2020 - 4:08 AM

Yes, this system is archaic, over-complicated, error-prone and must be abolished entirely!

The new system should be a lot simpler, without any need to file taxes every year and be afraid to do something wrong and be in trouble without even realizing it.

Nobody should know how much people make. My income is hard work and I care a lot about my money, so, I would spend wisely and the government should tax ONLY my consumption (for now).

Submitted by Anonymous on November 23, 2019 - 11:18 AM

It is also theft, plain and simple. A business owner pays taxes on all income they make, he pays his employees who pay taxes on the same money that was already taxed once. Then the employee pays taxes on everything else they buy from stores that buy

Submitted by Mike on March 28, 2020 - 4:32 PM

Well said. It's like being taxed over and over again. By the time we actually use our generated value (revenue, income), its easily less than 50%. Our government is, generally speaking, using coercion to steal at least 50% of the wealth of the average individual