I have been trying to figure out a way to explain why the Green Taxation plans of the Liberals and the Greens make no sense and I came up with one that not only explains the problems but puts into terms that all Canadians can understand. I decided to make it a beer analogy to basically use the time honoured cliche about us Canadians, that we love our beer!
Ok here is how it will work for you and me the Joe/Jolene Canucks.
You earn a case of beer a month. Currently the Government takes 3 of the bottles for taxes, leaving you with 9 bottles.
You pay 6 bottles for your monthly bills. At the end of the month you are left with 3 bottles of refreshing lager.
Under the Green Plans you will now get to keep 10 bottles and the Government only gets 2 bottles! Great!
But the bills you pay go up by two bottles because of the tax shift*. So now you pay 8 bottles. One of the two extra bottles goes to the Government. Revenue Neutral 3 before, 3 now.
So that is you.
Now currently the company where you work, they make 100 bottles of beer a month selling 10 things for 10 bottles each. Out of that they pay you your cold dozen plus 1 more for the Government.
They pay 70 more to operate the company and are left with 17 bottles. They pay the government 5 bottles in taxes.
So they have a case(12) of cold refreshment left over as profit to buy more equipment, so they can make more product to sell for more beer and hire another you.
Hey they make a whole case! Great!
Now under the green plans here is what happens...
The company still pays one bottle to the Government on your 12.
The company you work for has to pay taxes on the energy to operate the equipment each month. Plus higher supplier costs so now it costs 80 bottles to operate the business.
The extra 10 bottles 5 goes to the suppliers, and 5 goes to the government in carbon taxes**.
So they are left with 17 bottles but pay less tax so they only pay 4 bottles in tax, wow sounds good!
So what is the Score?
Before the Tax Shift the Score is ...
Company = Case of Cold Ones (12)
You = 3 Bottles in the Fridge
Government = 9 Bottles of Beer in the Vault
After the Tax Shift the Score is...
Company = 13 Bottles
You = 2 Bottles
Government = 12 Bottles
So in the end the company stays about the same, you get less beer, the government gets 3 more! That is how this works.
Notes on the Math
* You will pay one bottle directly to government under the tax, the other bottle will be the result of the following company response of raising prices on things they sell.
** Ok the company buys products from 5 suppliers, all who will do the following as will the company. The suppliers want to keep the same number of bottles for them to expand and grow, so they raise the price by 1 bottle each, plus 5 bottles in carbon taxes on the company for energy. So the company raised its prices by one bottle so that it now makes 110 bottles on 10 things. Now this is repeated for each supplier.