Little Bits of History

“Temporary” Tax

Posted in History by patriciahysell on July 25, 2014
Sir Robert Borden

Sir Robert Borden

July 25, 1917: Sir Robert Borden introduces a new temporary tax in Canada. Unlike their neighbor to the south and the Mother Country, Canada was able to avoid instituting an income tax until World War I. Prior to this, one of the key reasons for immigrating to the country was the lack of an income tax. Funding of the government came from tariffs and customs as well as management of natural resources. At the beginning of the twentieth century, one debate between the Conservatives and Liberals centered on whether or not to tax imports from the US. The Conservatives defeated the Liberals in 1911 as they supported free trade. The Conservatives also opposed an income tax in the hopes of attracting more US and British citizens to their lands.

Wartime expenses increased and the Tories had to reconsider their stance. Borden imposed what was to be a temporary income tax to help cover the cost of the war. With debts piling up in spite of having the tax imposed, it was impossible to simply stop after the war was over. A new Liberal government with Prime Minister William Lyon Mackenzie King was brought in. The debate over dismantling it was abandoned and the income tax has been part of Canadian life ever since. The constitutional authority comes from section 91 paragraph 3 of the Constitution Act, 1867.

Canada levies personal income tax on her citizens and certain types of Canadian-source income earned by nonresidents. The amount one must pay is based on the total of taxable income (income earned less allowed expenses). Taxes may be sent to the government via deductions at the source, installment payments, payments paid when filing, or arrears payments. The most often used deductions are for contributions to Registered Retirement Savings Plans, union or professional dues, child care expenses, and business investment losses. Other deductions are less used and certain amounts can be excluded from taxation altogether. Charitable contributions create a tax credit which is based on the amount donated.

Robert Borders was the 8th Prime Minister of Canada and served in that role from October 10, 1911 until July 20, 1920. George V was King at the time with Earl Grey as Governor General. Borders was born in Nova Scotia in 1854 and was originally affiliated with the Liberal party (1867-1891). He switched at that time to the Conservative party and remained so affiliated with them except for a stint as a Unionist from 1917 to 1922. After retiring from political life, he went on to become Chancellor of Queen’s University and at the time of his death in 1937 he was president of Barclay’s Bank of Canada and of the Crown Life Insurance Company. Just as an interesting fact, he is a distant relative to Lizzie Borden, accused murderer.

The hardest thing to understand in the world is the income tax. – Albert Einstein

There is no such thing as a good tax. – Winston Churchill

When there is an income tax, the just man will pay more and the unjust less on the same amount of income. – Plato

Be wary of strong drink. It can make you shoot at tax collectors… and miss. – Robert A. Heinlein

Also on this day: Oh Joy! Louise – In 1978, Louise Joy Brown is born.
TP – in 1871, a patent was granted for perforated toilet paper.
Free Press – In 1925, TASS is established.
SS Andrea Doria – In 1956, the ship was struck out at sea.

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