Taxation evolution and dealing with the taxman

“If it wasn’t for tax collectors, there wouldn’t be taxes!”  – Me

Two seemingly unrelated events struck me recently. The first was my visit to the passport office to renew my passport. If you’ve ever been to the North York, ON passport office, you know it’s located in the most horrendous part of the city for parking. If you do find a parking spot, then you have to ensure you’ve paid and display your receipt – or you’re going to receive a ticket north of $50. If you’re in line at around 4:30 pm, one of the army of tow trucks will appear from nowhere and you’ll be walking home.

Inside the office, the first thing that will grab you is the sign in the ‘pre-line’ line that says “We do not accept cash”. Really? A federal government office that doesn’t accept Canadian currency? Ok, I can see a multitude of reasons for avoiding the handling cash, not the least of which is removing the temptation for stealing. You would need people watching people watching people, not unlike a casino. Which brings me to my second observation.

While in line at the passport office and listening to music through my ear buds, I switched to all-news radio and heard a monumental news release from the Minister of Revenue blaming the budget deficit on tax cheats and the underground economy, and promising to balance the budget by collecting from these scofflaws.

Numbers generated by the underground economy were said to be in the billions – and because no tax is paid on this, that’s the reason according to the Minister that there’s a budget deficit. Based on that illogic, if there weren’t tax cheats, there wouldn’t be a budget deficit! That’s like saying, “tax collectors are responsible for taxes.” The budget deficit probably has little to do with the fact that there is a fundamental lack of accountability as to how tax dollars are spent. Or perhaps tax dollars are squandered in the billions by a bloated bureaucracy.

Taxes, in and of themselves, are basically a good thing. If you think about it, no one gets through life alone. In society, our contribution to the collective good is measured in dollars, and taxes are the payment we make to live where we live, to enjoy the quality of life that we enjoy, and to benefit from the services provided through an elected government. On that level, taxes have financed the ascent of humanity. Tax used to be a tribute/extortion paid to live under the Pax Romana, and it was the currency of freedom when introduced as a ‘temporary measure’ to finance WWI.

Taxes have been used in the basest manner to affect human behaviour, and in the most altruistic manner by leveling the playing field and shifting wealth to help individuals aspire to improve their lives. The rules are complicated, and a benevolent government (heavy dose of sarcasm here) has proclaimed that ignorance of the law is no excuse. You need to use and know the rules to survive – if you don’t, the rules will be used to bury you. If the system of taxes was made easier to follow and comply with, and elected individuals had a mission a little deeper than just getting re-elected, I think that would go a long way to curbing the so-called ‘underground economy.’

To me there is nothing underground about it. It’s there, it happens and everyone participates because the victim is faceless. The true victims are you and I. If government was less self-serving, then perhaps there would be more compliance. If the rules were less complicated and the bureaucracy less mysterious, then people would be, in my opinion, less inclined to cheat. It’s easy to cheat someone you don’t know, and whom you don’t feel will miss it, than to steal from a victim staring you in the face.

I believe most people would be more inclined to participate if they felt there was some real accountability as to how their contribution was being spent. Taxes are not a right we give government to extort money from us. Taxes are a contribution to the well-being of our society and to the improvement of living conditions of our nation. Of course, many do not pay tax, and the numbers may be staggering, but are they any less staggering than an operating budget of upwards of $5 billion annually which we fund to collect money from us? Talk about self-abuse!

Two final points: 1. Every government needs money and they work tirelessly to extract it from us. And that doesn’t count other taxing authorities on this planet. 2. The rules are there. You can choose to flaunt them or follow them. If you choose to comply, then you’d better engage the appropriate level of assistance to protect yourself against being victimized financially. If you don’t use ’em, you lose ’em.

I would love to hear from you. You can reach me by e-mail at With three decades of experience as an accounting professional, consultant to small business and business owner, there may be a few things I can help you with.