Chapter 4 - Government in Canada
"Liberal Tax Cuts Mustered Cool Reception", Globe and Mail - February 27, 2006
In last November's mini-budget, personal income tax cuts were put forth by the former Liberals, finance minister Ralph Goodale. These reductions would have added up to almost $30 billion within the next five years. However, instead of creating a positive reaction, a negative reaction was received by the Liberals from focus groups in three major Canadian cities: Toronto, Montreal, and Vancouver. A survey was conducted by Decima Research Inc. to study the people's reactions in these three cities to the November 14th mini-budget. From these focus groups, it was concluded from the people that they thought the Liberals' economic update was not enough to create a significant impact on their tax gains. Even if it was significant, their tax gains would be taken back by the municipal and provincial governments through other means. The Conservatives were against the Liberals' personal income tax cuts. Instead, they planned to reduce the goods and services tax. This survey also informed the government to put more emphasis on the education and skills training spending of the budget.
Relation to Chapter 4 - tax, Wagner's law
Personal income tax is the major source of tax revenue for both the federal and provincial governments. But apparently, many people think that if there were to be a personal tax cut, they would not gain much from it. It's ironic how personal income tax is such a great source of revenue for the government, but Canadians think it to be insignificant for them. Wagner's law of increasing state activity states that people in urban areas require more services than people in rural areas. With Canada being an urban country, we would need many services to be provided by the government – such as education and skills training. However, if there were to be cuts in taxes–whether it be personal income or goods and services–then how are we to expect the same level of services to be continued being provided by the government?
In last November's mini-budget, personal income tax cuts were put forth by the former Liberals, finance minister Ralph Goodale. These reductions would have added up to almost $30 billion within the next five years. However, instead of creating a positive reaction, a negative reaction was received by the Liberals from focus groups in three major Canadian cities: Toronto, Montreal, and Vancouver. A survey was conducted by Decima Research Inc. to study the people's reactions in these three cities to the November 14th mini-budget. From these focus groups, it was concluded from the people that they thought the Liberals' economic update was not enough to create a significant impact on their tax gains. Even if it was significant, their tax gains would be taken back by the municipal and provincial governments through other means. The Conservatives were against the Liberals' personal income tax cuts. Instead, they planned to reduce the goods and services tax. This survey also informed the government to put more emphasis on the education and skills training spending of the budget.
Relation to Chapter 4 - tax, Wagner's law
Personal income tax is the major source of tax revenue for both the federal and provincial governments. But apparently, many people think that if there were to be a personal tax cut, they would not gain much from it. It's ironic how personal income tax is such a great source of revenue for the government, but Canadians think it to be insignificant for them. Wagner's law of increasing state activity states that people in urban areas require more services than people in rural areas. With Canada being an urban country, we would need many services to be provided by the government – such as education and skills training. However, if there were to be cuts in taxes–whether it be personal income or goods and services–then how are we to expect the same level of services to be continued being provided by the government?
posted by Susanna Cho at
3:27 p.m.
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David Bach, at 11:19 a.m.
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