Monday, June 21 2010
Don't Steal (the Government Hates Competition)
In the next panel the little man is flattened, with money squirting out everywhere
I read an article once, by a prominent economist. He contended that people didn't mind taxes, they just hated getting lied to, and they hated getting nothing in return for their part of the social contract. It ain't the heat, it's the hypocrisy, apparently.
And thus we come to the matter at hand. According to the Vancouver Sun, BCLDB Increases Markup On Booze As HST Lowers Tax.
It's tough to know the players without a scorecard, so here we go: last election the ruling party in my home province solemnly vowed they wouldn't radically alter the tax structure here, and most especially they would not harmonise the sales tax between British Columbia and the federal government. About thirty seconds after the poll numbers were tallied, they did exactly that, handing over sovereign control of provincial taxation to another government and applying a new tax to many previously untaxed items.This process was considerably aided by a $1.5 Billion dollar 'incentive' from the Feds, who know which side of a greedy government to butter to get the HST pushed through.
This has been very upsetting to many, so much so that there has been a recall petition circulated to have the tax repealed. It's managed to sign up over 15% of all registered voters in every single riding in the province, an accomplishment so overwhelming and unprecedented, it's terrifying the government, whose rattier members are jumping ship. But they counter with the argument that the tax burden will be lifted from manufacturers, who will pass the savings along to consumers, and thus the tax will be neutral! In the same breath they claim it will raise extra revenue necessary to balance the budget. How could that possibly be? Why, through the power of lying!
According to the Sun article:
British Columbians won't be getting a price break on their favourite libations this summer, even though the harmonized sales tax lowers the provincial sales tax on booze.
The provincial Liquor Distribution Branch is . . . increasing its markup on wines and spirits to offset a three-percent reduction in the sales tax, said Gord Hall, the LDB's corporate policy director. In other words, prices of wine, beer and spirits at provincial liquor stores will remain the same.
So, while the government is telling consumers that businesses will reduce prices because of the benefits they receive under the HST, the government's most profitable business, their provincial liquor monopoly, will do the exact opposite. It's enough to (designated) drive you to drink.
One of the worries presented by commentators is the potential for a black economy to spring up to evade taxation on goods and services. This is a very real worry, and works on the principal of the Laffer curve.
At this point, nobody's laffing
The Laffer Curve is a variant of the law of diminishing returns. If tax rates are too low, the government can't raise enough funds to meet budgets. If rates are too high, economic activity could be stifled and/or people will refuse to pay and tax revenues fall. Ideally governments try to fiddle in the area bounded by points A, B and the equilibrium, as though human responses can be easily codified into mere numbers. It's thinking like this that's getting those sign-ups to the anti-HST petition.
What really influences people's willingness to pay more taxes is the sense that they're getting value for dollar. The Swedes have incredibly high tax rates, but pay them contentedly because they have an excellent social structure and prudent governance and sound fiscal policy. Other western countries are less pleased because they see their money going to boondoggles and photo-ops for the ruling cliques. (Countries where taxation is low to non-existent are pretty much places where you don't want to visit.) When the government says tax burden will fall, and immediately takes steps to make sure it doesn't, then the midden hits the windmill.
There is some good news in all of this. If you make your own wine, you'll be able to afford to drink: there's no HST on the raw materials for consumer winemaking. After all, it's just grape juice!
Consumer winemaking isn't tax evasion: it's tax avoidance, which is not only legal, it's the prudent duty of every patriotic citizen After you don't want to overpay the government. That simply encourages them. Consumer winemaking isn't a black economy activity, it's an avocation that people have followed for centuries, connecting themselves to the handiwork that produces their food and drink, and the pride they can take in making something essential for themselves.
Now, if you'll excuse me, I've got a patriotic winemaking duty to attend to.
| Posted by Totally Taxed Tim AT 11:56AM | 0 Comments |  |
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