Wednesday, 26 October 2011

Border tax? Tax on airport servers more likely

The U.S. is looking to cash in on Canadians to fix it's budget. Yep, there will (sometime) be a $5.50 tax on crossing the border by sea or air. With an average 7 million Canadians crossing the border a year that's $38.5 Million in border taxes from Canada alone. I guess that will exclude all the Mexicans streaming into the south illegally since that is usually by land.

I suppose this really does not affect me as I have decided that I will likely not cross that border again, but it raises a question of two for me. If this tax became exempt when NAFTA was enacted was it part and parcel with NAFTA? If so does this now mean that the U.S. has unilaterally changed the agreement? Would that not constitute a "breach of contract"? and doesn't a "breach of contract" give us an opening to have said contract "annulled"?

Then to top it off, they are going to attack imports with a 'Buy American" campaign. So less money enters our economy, and more money leaves. Who is looking out for Canadian interests in all of this?

And where will this TAX offset itself? Will Canadian travelers spend $5.50 less during their stay in the U.S.? Doubtful. Humans tend not to be that abstract in their thinking. Will they spend $5.50 less at the airport restaurant or simply stiff their server of a tip? This seems much more linear and plausible. So the offset will be within the Canadian economy since U.S. customs (where the tax will be collected) is inside the Canadian airport which employs Canadian restaurant staff.

Wonderful, isn't it? Waiters and Waitresses are paid less hourly than everybody else under the presumption that they will receive gratuities. They are also taxed on their sales as well as their hourly salary as the government presumes they will receive a percentage of the food bill in gratuities. So, if they suddenly stop receiving their gratuities then this becomes a an American tax on the lowest paid Canadian workers. Am I the only one who sees a problem with this?

Thank you, I'll be here all week, and remember to tip your server.


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