Social Programs and Taxation

What is a Social Program? Social Program- services provided by the government to reduce economic inequalities and promote the well-being of citizens Some social programs include: Health care Pensions Affordable housing Employment insurance Income Assistance These services are free to Canadians… right?

Show me the money! The “free” health care enjoyed by Canadians costs big bucks… where does the government get it? TAXES All social programs are paid for by taxes The ideals of the government in control can determine whether or not supports that are paid for by taxes are given to citizens. Ex. Healthcare in Canada, vs. healthcare in the U.S.

Healthcare Health care in Canada is a public service… meaning that everyone in Canada is entitled to health care coverage Health care in the United States is paid for out of pocket by the recipient of the services at the time they are received Some services can cost hundreds, thousands, or even hundreds of thousands of dollars… how do people pay?

Healthcare Public Health Care- health care paid for by taxes; ex. Canada’s system Private Health Care- health care paid for by individuals; ex. United States’ system Health insurance- an agreement by a company to pay for your health services in exchange for a fee you pay every month, or year People (especially in the U.S.) need to get health care insurance to ensure they can receive the care they need in the event they become ill. Some companies offer additional coverage for things like dental or eye care to supplement the health care coverage provided by a public system, or to make costs more affordable in a private system.

Who foots the bill? Different social programs are covered by the different levels of government because under Canada’s constitution, each level of government has different responsibilities. Examples: Healthcare= Provincial Employment insurance= Federal Child Care subsidies= possibly all levels

Social Programs in the U.S. Federal and State governments can make legislation regarding social programs. There is no differentiation of responsibilities as there is in Canada. In general, federal laws take precedence. Historically, the U.S. governments have found less reason to support social programs on the same level as the Canadian and Provincial governments.

Taxation and Social programs Governments collect taxes to pay for the services it provides to its citizens (that’s how they raise money!) In Canada, citizens pay two kinds of taxes; income tax and sales tax Income Tax- based on a percentage of a person’s income… the more you earn, the more you pay Sales Tax- tax paid at the time of buying a product or service, and based on a percentage of the price of the product or service GST- Goods and Services Tax; a federal sales tax in Canada

What do Taxes pay for? In Canada and Alberta, your tax money (yes, YOUR tax money) goes towards: Recreation and culture Health Environment Education Debt reduction Foreign affairs and Aid Transportation Social Programs Defence Resource Conservation

Taxation in Canada Taxation Model- a policy of a political party of government about what to tax, how much to tax, and how to spend tax money Tax base- all the economic activity in a society, taxed by the government to pay for services See taxation model in text p. 283

Taxation in Canada Some people avoid paying taxes, or don’t tell the truth when they file taxes. This is called: Tax evasion: misrepresenting what you earn to avoid paying tax This contributes to the “underground economy” or “black market” Why does that matter?

Taxation in Canada Since the government uses the tax money to fund social programs, the more money, the better. If you (or anyone else) hides money from the government, there is less money to be used that could potentially be to your benefit.

Government in the Economy Along with social programs, we have seen that the government uses our tax money to fund other ventures as well, and where they choose to put that money, may have different effects and consequences for the country or province. Example: Canadian Film industry (ch. 6) Example: Business subsidies or “bailouts” (ch. 6) Example: Labour Union Strike (health care;ch. 6)