There was an important announcement in Canada yesterday. A corporate tax system, introduced with maybe misguided intent, has been extensively abused for a purpose for which it was never intended. The result is that a form of trust has been used by large businesses in Canada to save more than $70 billion, a cost Canada could clearly not afford. It's interesting to note that many such businesses claimed:
They feel compelled to seek more favourable tax treatment by capitalizing on an available tax rule.
While these decisions offer corporations short-term tax benefits, they are creating an economic distortion that is threatening Canada's long-term economic growth and shifting any future tax burden onto hardworking individuals and families. If left unchecked, these corporate decisions would result in billions of dollars in less revenue for the federal government to invest in the priorities of Canadians, including more personal income tax relief. These decisions would also mean less revenue for the provinces and territories.
It's good news to see therefore that the practice is being stopped, and that this is quite deliberately termed a 'tax fairness plan'. That's a step in the right direction. And is some indication of the absurdity of the argument that businesses are 'compelled' to act anti-socially.
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What is fair about any tax? Often it is based on arbitary rules that people fall foul of by mistake. The rules are changed at a whim to meet the short term needs of politicians.
How many governements invest taxes?
How many governements invest taxes?
This is in fact a very good point. The Norwegians set up a fund to invest the take from their interests in North Sea oil and gas and, if memory serves, the fund is now worth about £35k for every Norwegian citizen.
Gordan sold our gold!
You might be interested to know that the Norwegian fund in question is very interested in the work and I others are doing on tax risk in investment management. I am expecting developments on this front as a result – with this fund quite possibly spearheading the investment community in this respect.
Richard