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Abolish the Income Tax!
Part 1:
The Problem

Originally published at About.com - April 26, 2001
This article is also available at
Towards a Tax Free Canada

"It would appear to me that income tax should not be resorted to."

Sir Thomas White, Finance Minister

The cost of World War I was weighing heavily on Canada in April 1917 and newly appointed Tory Finance Minister Sir Thomas White was casting about for a way to pay for it. Discussing the situation in the House, White noted that Britain and the U.S. had already implemented income tax schemes. But, as noted in the quote above, White did not see the tax as a solution for Canada.

Famous last words! Nary a few months later, on July 25, 1917, White reluctantly introduced the tax as a temporary measure.

"I have thought it desirable that we should not be known to the outside world as a country of heavy individual taxation," said White. But the situation demanded it and he suggested that "a year or two after the war is over, the measure should be reviewed by the minister of finance of the day, with a view of judging whether it is suitable to the conditions which then prevail".

White's hope was that the Act would be scrapped and he insisted on calling it the "War Tax Upon Income" bill, leaving clear the implication that it should be discontinued when peace arrived.

The Liberal finance critic of the day proved to be the prescient one. "I have no doubt," said Alexander Maclean, "that once we have embarked upon it, the judgement of the country will be that it should be continued for many years to come." Over eighty years later, we're still saddled with this burden.

Today federal income taxes account for 63% of all federal revenues. Income taxes account for 42% of the taxes imposed by all levels of government - federal, provincial and municipal. And personal income tax makes up the bulk of it.

But the problem of government aggrandizing itself and ever increasing the taxes it levies is not the main problem. The big problem is the failure of government to take a long term view of things. A failure to see the harm that taxes do to an economy. And a failure to envision a world - dare I say it? - a world without taxes!

Government believes the old saw that nothing is certain but death and taxes. This despite the fact that the income tax was explicitly introduced as a temporary wartime measure. So what can we do about it?

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