The Reasoning: By lowering the GST and PST across all of Canada to a total of 10% instead of 15%, we will in effect be boosting the Canadian economy by 5% and creating opportunities for huge economic growth. Citizens will essentially have 5% more money in their wallet and companies will be able to hire more people and expand due to increased profits. That economic growth will translate into huge corportate profits which will then be taxed 5%.

For example, if the Widget Company sells widgets for $10 each, plus GST and PST, the total is $11.50 Canadian. By lowering the sales taxes the price becomes $11.00. People who need to buy more widgets then have 50 cents extra to help them buy more widgets in the future. Therefore the Widget Company sells extra Widgets and consumers can afford to buy extra Widgets. If the Widget Company normally makes $1 million in profits and boosts their profits by 10% to $1.1 million, Canada would get 5% of that (an extra $50,000). The Widget Company is still making $100,000 more than they used to and therefore doesn't really mind paying extra corporate taxes.

Furthermore, this results in cyclical profits.

The CEO of the Widget Company builds a new house and the construction company makes more money... The owner of the construction company buys a new fishing boat and all the construction workers spend extra money on flowers for their wives and gifts for their children. The boatmaker, the florists and the toy companies make extra profits and the money cycles through the system boosting the profits and the economy of everything it touches.

Over the long term, Canada and the Provinces actually would reap more in corporate taxes then they would in regular GST due to the constant flow of money. Four years from now, it might be possible to eliminate the GST entirely and increase corporate taxes by an addition 5%, thus boosting the economy all over again.

Cigarette/Tobacco Taxes: Healthcare costs is a huge drain on Canada's coffers. The current taxes on cigarettes do not even come close to the millions and millions of dollars needed to fund the healthcare costs of lung cancer patients. We can't get rid of cigarettes cold turkey, but we can tax it more and more Canadians will stop smoking (simply because they can't afford it anymore). The revenues from tobacco taxes can then go towards paying for healthcare costs.

By creating an immediate price increase and mandatory $10/pack (with fines attached to any vender who sells for less than $10/pack, and additional fines for selling to children) Canada can become tougher on tobacco products, promote non-smoking and gain extra tax revenues at the same time. The additional 7% annually (compounded over previous years) insures that by 10 years from now a pack of cigarettes won't cost $10, but $20. Presumably by then, Canada will be making a lot more revenues and there will be a lot less smokers in the healthcare system.

Lets take a look at Joe Smoker. Joe makes $35,000/year and will be happy when he has an extra 5% of money ($1750 to be exact) in his pocket due to sales taxes going down. However, Joe smokes 1/pack per day at a cost $6/pack. He currently spends $2190/year on cigarettes. If the price of cigarettes goes up to $10/pack, he would have to spend $3650/year just to keep smoking 1 pack/day. So Joe Smoker has a choice: He can use the extra money in his pocket to continue buying cigarettes, he can stop smoking as much, or he can stop smoking entirely and have an extra $3940 total to spend elsewhere. With that much extra money, he could take a trip to Hawaii every year. Or trade in his old car and buy a nicer car every three years. Or spend it all on gifts for his family. Or put $4000 into a RRSP. Ten years later when the price of cigarettes has gone up to $20/pack, he will have saved a lot of money and be healthier too. He's become Joe Regular.

Gasoline Taxes: The Canadian government currently subsidizes the oil and gasoline industry millions of dollars in order to keep gas prices lower. We need to stop giving away money to the oil industry and taxing it at the same time. The current system is a bit like taking money out of one pocket and putting it into the other. We subsidize the oil and tax the gasoline. Its a stupid system where we make no profits. Instead, what we need to be doing is simply taxing gasoline, and taxing it slightly more on an annual basis.

By 2010 Canada's gas stations will all have hydrogen-fuel tanks for filling up hydrogen cars. Traditional gasoline contains hydrogen and is the component of gasoline that actually makes the car run. We're simply switching a more efficient fuel, and we really don't have a choice. Gasoline and oil prices are going to skyrocket during the next four years. By December 2006 oil prices are expected to reach $100/barrel, which will cause gasoline prices to rise to roughly $1.50/litre by 2007.

Think that's bad? By 2010 gasoline prices is estimated to be $5/litre or MORE. By 2020 most people won't be able to afford gasoline at all. Almost everyone will be using hydrogen instead.

So if you're thinking of buying a hybrid car, think again. It will actually make your money back during the next four years, but after 2010, even a gasoline-hybrid car will seem expensive compared to the low cost of hydrogen. Sure, you may be getting double the gas mileage, but at $5/litre you'd still be paying $2.50/litre comparatively.

The problem with hydrogen-fuel is that its going to take time to convince people to switch to a hydrogen car. By raising taxes on it, people will see the rising cost of gasoline and will be more tempted to make the switch to a hydrogen car earlier. The cost of gasoline will still be rising anyway due to the world oil shortage, it will just be rising slightly more due to some extra invisible taxes on top. Extra tax revenues for Canada, and those tax revenues can help pay for setting up the new hydrogen system.

Switching to hydrogen fuel is a matter of economic stability. Gas prices go up constantly and are subject to volatility in the international markets and wars in the middle-east. By switching to hydrogen, we can maintain a constant price of $0.80/litre, a price that can be found in all parts of Canada (remote regions of Canada already pay between $1.20 to $1.50/litre). The lower cost of transportation effects the overall economy and maintains stability. That stability cannot be gained while Canadians are still using gasoline. We can continue to export gasoline and make profits from it, but Canadians themselves need something that is more reliable and efficient.

Other Possible Changes:

Sweatshop labour is a form of legalized slavery used in factories to produce items that are made extremely cheaply. Those items are then sold overseas at competitive prices that undercut the local markets and still manage to make a fortune. By increasing import tarriffs on products from such countries, Canada will not only be raising the amount of money in their coffers, but they will also be sending a clear message to countries which use slave labour. If the countries in question stop using slave labour and pay their workers a decent wage, then the tarriffs can be removed.

Smuggling is used to bring a variety of things into Canada. Everything from cigarettes to guns to diamonds. Its an incredibly profitable business. By increasing the fines and cracking down on border security and smuggling, Canada can actually make money and decrease the amount of smuggling that occurs. Smuggled weapons and drugs are the leading cause of gun crime on Canadian streets. We need to get those weapons off the streets and make it tougher for criminals. Americans may think its okay to carry a gun in public, but that is not the case in Canada.

I don't believe doctors, nurses, teachers, farmers and fishermen should pay income taxes. They perform a valuable public service feeding and keeping Canadians healthy and we need more people in these fields. In order to be more competitive with the United States, we can still exempt these professions from income taxes. The people in these professions would then spend their money locally in Canada anyway, and boost the economy.

It would help solve doctor/nursing shortages. The exception to this is doctors/nurses who work in privately run clinics. People who work for private clinics must still pay their taxes. Indeed, doctors and nurses who compare the two will likely decide its better to work for public hospitals because they make more money there. This will also prevent the "brain drain" of Canadian doctors/nurses/teachers going overseas or to the United States to find work.

Author's Note:

I hate politicians in general. My forte is economics and understanding what will happen, and then manipulating events towards what I feel is a more favourable position. The average Canadian doesn't understand the math involved in creating a strong economy. You have to insure an inexpensive transportation, inexpensive food and an inexpensive cost of living. Those are the three cornerstones of building a strong economy. Transportation comes down to gas prices and public transit. Inexpensive food means farmers need our support. The cost of living is dependent upon having a job and a place to live where you don't have to worry about electrical/heating bills. Nail all three down, make them stable and we will have a strong economy.