1 How and why does tax legislation exist?

Income tax was introduced in Canada in 1917 as a temporary measure to fund the 1st World War.  This temporary measure has proven to be remarkably resilient and has stuck around for more than a century.    During this time tax rules have grown from 11 pages in 1917 to approximately 2000 pages presently.

In the 2016-2017 fiscal year, the Canadian government raised $293 billion dollars in revenue. Of this amount approximately 50% came from individual income tax, 15% from corporate taxation, 12% from GST/HST and 7% from the employment insurance premiums.  Personal and corporate taxation play a huge role in defining Canadian identity as they fund our social infrastructure (e.g. education, healthcare, legal system, humanitarian aid, military…).

It is important to understand that there is nothing immutable about taxation and that it is often driven by the political will of the day. For example, a left-leaning government may implement a wealth on high net worth individuals or  increase taxes on high income earners with the intent to reduce a wealth imbalance and fund egalitarian social programs and thus benefit society.  Right-leaning governments may reduce taxes on high income earners and corporations with the intent to create jobs, stimulate economic development and thus benefit society.

Taxation policies arguably communicate values and fund their expression in our society.  Hence you should consider taxation policies and expenditures of political parties whenever you vote.  You can make a difference.

2020