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Over the past year, I have been watching the fine work of the late James Flaherty, our previous finance minister, become quasi destroyed. His policy was based on a balanced budget — or better — and a reduction of the sales tax in a number of small decreases. While the sales tax policy remains, the balanced budget is gone with a national deficit of some $30 billion in 2017 after a slightly lower one in 2016. The deficit is in addition to an increase in the top federal tax rate from 29 to 33 per cent, a 13.8-per-cent increase in one year. With just under 50 per cent of the population paying no taxes on income, those earning over $200,000 annually continue to carry the load. The increase not only raises the income tax rate, but automatically the rate on capital gains, which is fixed at one-half the income tax rate.

To love their work and their country, entrepreneurs must feel treated fairly by the tax system

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This profligacy, leaning as it does on political populism, is highly discouraging, not only for any ambitious people in Canada, but especially for young entrepreneurs and patriotic people trying to build Canada’s private sector. Would I, as a young entrepreneur, settle in Canada or stay in Canada with an income tax that in most provinces takes well over 50 per cent of my income, plus a 15-per-cent sales tax? Even if that were all the tax payable, I would look for greener pastures. But of course there are all the other taxes on real estate (municipal and school taxes), hidden taxes (liquor, gasoline, etc.) and the inflation tax on my bond and cash savings, currently around two per cent. Moreover, due to the ravages of inflation on fixed monetary values (cash, mortgages, and bonds), the “real” capital gains tax on all but very short-term investments pushes the tax well above that of half the income tax rate. As an owner of a business, were I to sell it after many years, the capital gains tax would hit fully all past cumulative inflation that took place in those years. If the sale price did not exceed the accumulated inflation, I would be taxed on a real loss. This in contrast to a short-term stock market gambler, who obviously is little affected by inflation if he owns shares for, say, six months.