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Simpler, Lower and Flatter

July 14, 1998
Simpler, Lower and Flatter
EDMONTON: The Alberta division of the Canadian Taxpayers Federation (CTF) today released its recent submission to the Alberta Tax Review Committee. The Federation endorsed the idea of a switch from calculating provincial personal income tax (PIT) as a percentage of federal tax, to calculating PIT based on income.

"The purpose of the tax system should be to calculate and collect taxes in the fairest, most efficient way possible for the operation of government," said CTF Alberta director Mark Milke. "It should not be used for social or political engineering. The target of such reforms must be simpler, lower, and flatter taxes."

The CTF submission recommends:

  • That provincial personal income tax be calculated as a percentage of income, instead of the current method where it is calculated as a percentage of federal tax.
  • That a generous provincial Basic Personal Exemption be established.
  • That the Basic Personal Exemption be indexed for inflation to prevent the erosion of earnings ("bracket creep.")
  • That a single tax rate be applied to all income above the provincial Basic Personal Exemption with a minimum of tax credits.
  • That the single tax rate be set low enough to ensure that no Albertan pays more than before the reforms.

    "Personal income in American states with "flatter" income taxes or no income taxes at all grew 25 per cent faster over the past three decades when compared with states with multi-rate income taxes. Such states also fared better economically," said Milke. "Internationally, flatter tax jurisdictions do exist and are conducive to economic growth. Hong Kong, with an effective tax rate of 15% has fared quite well -- present Asian flu symptoms notwithstanding. Simpler, lower, and flatter taxes are to everyone's advantage."

    Note that the proposal does not recommend a change in the federal government's role in collecting Alberta's taxes, or in how taxable income is determined.
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