Jul 162012
 

What is the largest expense you have? For me, it’s taxes, which makes up about 30% of everything I make. As a democratic society we are not only responsible to pay our fair share of taxes, but we should also try to understand where our tax money goes.  Did you know the CRA (IRS equivalent) uses up 3% of all our tax money?  Before the next time you sit down with your accountant or pull up some tax software, have a look at these charts below showing where the federal government gets all their taxes from, and where they spend it on.

image source: creditcardscanada.ca

In today’s reality it’s common practice to want the best education for our kids and the best health care for our elderly parents, despite whether or not we have the ability to afford it or not. So if a family is already in debt and is living paycheck to paycheck, what can they do to maintain their style of living? They borrow more money of course and dig deeper into debt, just so they can pay for those services with the hope that their financial situation will get better in the future. Sounds familiar?

Canada is in a similar situation. This country is in debt. And instead of saving money each year to pay off that debt it chooses to borrow even more money to continue paying for all it’s important federal services. Our teachers and nurses are being paid by borrowed money (a loan) that every future tax payer is on the hook for. It’s a fine balance between doing what’s best for our people now, VS what’s best for the future. I would personally like to see a balanced federal budget and will gladly pay more taxes, or receive less social benefits, or some combination of both. But I know not everyone would be on board with that. Fortunately our financial situation hasn’t hit a point of no return yet. But if we continue to spend more than we make then eventually, if nothing is done about it, we might find ourselves facing the same challenges as Greece is right now. The United States also has their own financial difficulties.

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Andreas
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Andreas

we have the same problem in europe!!!
europe is in debt … we do it like the us government!

greetings from austria.

andy

Liquid
Admin

schön euch zu treffen. I’ve always wanted to visit Europe some day.

Not Working
Guest
Not Working

Oh god i don’t want to pay more taxes i already pay 42% in taxes ! 🙁 it’s sad to see my money go away on each paycheck, they better find another solutions (damn Quebec)

Liquid
Admin

42%! Get out of here (╯°□°)╯︵ /(.□.)\
That’s crazy high man. I use to think BC had high taxes compared to our neighbor Alberta, but now I won’t complain anymore lol. Yeah, taxes suck 🙁

Modest Money
Guest

The problem is that balancing the budgeting and planning for tomorrow doesn’t win many votes for today. Most of the politicians just care about getting re-elected. So they are wary of stepping on too many people’s toes with increased taxes or budget cuts.

Really I think governments just need to run things more like a business. If it isn’t feasible to get more money through taxes, they should be getting creative and finding more ways to make money and limit internal spending. Instead they just accept the traditional way of doing things and gladly accept all the expensive perks of being a politician.

Liquid
Admin

That’s exactly the problem we have with our system, a lack of accountability. I think part of the reason is because policy makers only get to spend the public’s money, not their own. I would like governments to function like businesses too, that would go a long way towards fiscal soundness 🙂

Bridget
Guest

Oy. I’m still at the point of getting all my tax money back, but I think that’s ending =\ I’ve always had huge amounts of tuition credits but I’m using them up pretty quickly. I’ll be seeing if RRSP and charitable contributions can save me some extra.

Sad to see governments overspending as badly (or worse!) than their citizens!

Liquid
Admin

That’s a great feeling to get tax money back from the government. Using tax efficient vehicles like registered plans is what keeps my tax rate in check ^_^. Like your gravatar btw.

RetireInNiagara
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In my house if we make x amount of dollars we spend LESS than x amount of dollars, not quite sure why the government doesn’t get this. I’ll never understand lol

Of course we don’t give away money to people for free either (actually we do on occasion BUT its only what we can afford to, we would never borrow money to do it)

IMHO we (the government) take in more than enough money, we just give too much away for free.

Someone commented earlier that its about getting votes and I think they are absolutely correct.

I know endless amounts of people who get soooo excited when that government cheque comes in and here in Ontario the amounts keep growing and growing.

Liquid
Admin

I also agree our country spends too much and don’t know how to live within our means. There’s just no incentive for sound financial prudence in policy making. One possible solution towards a more sustainable budget is to reform the political compensation system so that the salaries and more importantly, the pensions, of policy makers are directly related to the productivity and prosperity of the country’s future, rather than whether they get re-elected or not haha.

Phil
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Phil

As RIN has pointed out, the inflow must be less than or equal to the outflow for financial well being to work out, and until this happens, there will be a problem. Politians represent the people, and as long as “the people”, of which their are many statistics to support this, continue to break this money flow rule, why should the government be any different since they were elected to represent the people’s ideals? The governemnt is not the problem…

liquid
Guest

That really puts things into perspective. If people want to change society they must first learn to change themselves. It won’t be easy getting 34 million people to agree on the same ideas. I’m optimistic we’ll find a long term solution eventually :).

agentfang
Guest

Sigh it’s always the poor that gets screwed over! Taxed to death. I’m really surprised at the figure where tax money comes from individual income tax @ 48% vs corporate income tax @ 13%. Corporations should be taxed at a higher rate since they’re always at surplus… but I guess they do keep the economy going. As for gov’t, they can suck it. Can’t even keep a budget… There are too many people handling things… overpaid good for nothing idiots.

Liquid
Admin

In the US something like 1 in 5 workers are in the public sector. Up here it’s more like 1 in 4. Not sure if we need so many people working for the gov’t, especially when there is a lot of unnecessary overlap between the different levels of government. Too many people handling things is right.

RetireInNiagara
Guest

My own quote from a few days ago:

“I know endless amounts of people who get soooo excited when that government cheque comes in and here in Ontario the amounts keep growing and growing”

And what arrives in our mailbox today ! A cheque for $345.38 from The Ontario government.

The note attached says: To help smaller businesses with the costs related to the transition to HST, Ontario is providing this one-time Small Business Transition Support.

Go Figure !

Liquid
Admin

Lol, nice! Too bad we won’t be getting the tax transfer credit here in BC because the majority voted to get rid of the HST in favor of re-implementing the GST/PST system (>_<)