Falling Behind the Reds

Steve Forbes has nothing on Vladimir Putin. You may have missed it, but in early June the Russian Parliament approved a 13% flat rate income tax proposed by President Putin. The flat tax is an idea floated from time to time in Canada and the United States, most notably by the new Canadian Alliance Party and one-time U.S. presidential candidate Steve Forbes.

Analysts believe Putin is making notable progress in his battle to simplify that country's tax regime, remove loopholes, and reduce tax rates to stamp out the underground economy. Moreover, the changes are reportedly very popular. Perhaps policy-makers here in North America could learn a thing or two about taxes from the former Soviet Union, of all places.

A Taxing Situation

Just how complicated and confusing is Canada's tax system Well, according to the records of the Canada Customs and Revenue Agency (a.k.a. Revenue Canada), probably even more that you think. Information obtained by the Canadian Taxpayers Federation through Access to Information shows that a large number of individual tax returns contain errors or omissions. Nearly one-third of all returns required some "intervention" by the Agency's staff during processing.

Think of the administration (not to mention time and compliance costs for taxpayers!). No wonder the Agency is easily the largest federal department.

No Business Being in Saskatchewan

The National Post Business Magazine publishes an annual list of Canada's largest corporations. Would you believe only 9 of Canada's 800 largest corporations have their headquarters in Saskatchewan. Winnipeg alone has 21 head offices and Calgary an incredible 94 - more than 10 times Saskatchewan's total. Hmmm, I wonder if our high taxes have anything to do with this stat

Alberta: Rat-free and Debt-free

Albertans like to brag they live in a rat-free zone (other than a few politicians, of course). But they can also look forward to being debt free in the not-to-distant future. Alberta Treasurer Steve West has just announced a $5 billion surplus and by next year the total debt of our sister province will be down to only $9 billion. Compare that with Saskatchewan's $11 billion supported by a lot fewer taxpayers and you can clearly see our challenge.

Alberta is now not only close to getting rid of all its debt, but talk has begun on the possibility that income tax may eventually be eliminated!

It Pays to Live South of the Border

High taxes have helped turn Canadians into the poor cousins of the Americans, according to a new report by Standard and Poor's DRI Canada. The analysis found that even those Canadians in the richest provinces have less disposable income that Americans in the poorest states. In fact, its not even close; Alberta's real per capita disposable income is 10% below Mississippi, the poorest U.S. state.

But disposable incomes in Canada have also been sliding compared with those in other industrialized countries. Canada moved from 20% above the average for industrialized countries in 1989 to only matching the average by 1998. The reason - high personal taxes.