Sir Richard Cartwright

Minister Manley,
tear a page out of Canadian history!

Ottawa - Wednesday, February 12, 2003 - by: Walter Robinson, Federal Director, Canadian Taxpayers Federation

build the

In Canada, it is often assumed that our identity rests upon a higher tax burden vis-à-vis the United States. However, our identity is originally found in an attachment to limited government, lower taxes and a more robust desire for liberty in contrast to the United States in the 19th century. For the 50 years between Confederation and the introduction of the wartime income tax in 1917, Canada’s budget speeches had two central themes: Attract people to Canada and build the country.



taxes lower
than U.S.

Our Confederation-era politicians assumed a policy of taxes lower than the U.S. as crucial to filling the country with immigrants and investment; both building blocks for prosperity. Our leaders trumpeted Canada's lower taxes compared to the tax-happy Americans, an advantage they argued was needed to ensure citizens and immigrants were not lost to the Yanks.




This view was true as it concerned taxes in general, but was also held by the Liberal party as it concerned the main revenue of the day: tariffs. Tariffs, unlike other taxes, had political appeal, as they could be used to stoke protectionist sentiment to win votes. However, the Liberals, -- seeing themselves as disciples of Adam Smith and in the tradition of English free-traders and economic liberals — thought higher tariffs were not only uneconomical but also morally questionable.




In 1876, Liberal Finance Minister, Sir Richard Cartwright, responded critically to the call for higher tariffs:
“All taxation is a loss per se. It is the sacred duty of the government to take only from the people what is necessary to the proper discharge of the public service; and that taxation in any other mode, is simply in one shape or another, legalized robbery.”




So what changed? A combination of events and American policy. World War One and the federal income tax is the most obvious example of how an event propelled the introduction of a previously forbidden levy. While events provided the context, new American policy often provided the justification. When Canadian politicians imposed additional and higher taxes in the late 19th and early 20th century, they invariably did so only after the Americans acted first. Our federal income tax, gasoline taxes, property taxes, and corporate taxes; all have American origins.



corporate &
land tax

As well, there were direct legislative influences on Canadian tax laws. For example, the first provincial corporate tax (Quebec, 1884) came from an American precedent. The taxation of personal property, common in many Canadian municipalities at Confederation, was also American in origin, not British, as Britain abandoned such taxes centuries before.




When Ontario and the other provinces introduced succession duties (i.e, “death taxes”), the influence of American legislation in the Canadian versions was clear. As tax historian J. Harvey Perry writes:
“The first Canadian Act was drafted in the office of the Attorney General for Ontario and was modelled upon the Acts of New York passed in 1887… The Ontario Act of 1892 was purely American in its origin.”




The pattern established in the last twenty years of the 19th century–where Canadian governments copied the taxing habits and also the legislation of American governments–continued unabated into the new century.



low taxes
- Canadian

Canada’s federal income tax, introduced in 1917 and three years after the American federal income tax, bore the mark of U.S. legislative influence. Canada’s first federal income tax, brought into being by the Dominion Income War Tax Act of 1917 “bore an unmistakable resemblance to the similar 1913 American legislation” wrote one historian. Thus, far from low taxes being “American,” they were once a most Canadian trait.

Walter Robinson
Federal Director

  Mark Milke, author, Tax Me I’m Canadian -- Your Money and How Politicians Spend It. This book is now a Canadian best-seller, published by Thomas & Black and available in bookstores across Canada.
  Williamson, Linda, Why high taxes are un-Canadian, December 8, 2002, Toronto Sun
  A short biography on Sir Richard Cartwright


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