A confession

In the UK, people pay VAT when they make certain purchases. It's the same in Canada with GST, except that the price is generally displayed without the tax. So you need to calculate the extra.

In Canada the GST is "refunded." Kind of makes one wonder why it's charged in the first place. I suppose less get's refunded than is taken but then why not just reduce the GST charged and not refund it?

To my confession.

GST refunds are made following your annual tax return. Why everyone has to do a tax return every year is beyond me. The UK manages to avoid having to do that.

Anyway, a refund should reflect what you pay out and it's obviously impractical to calculate everyone's GST payment to refund it, so I thought the idea was to see what income was reported and then have some sort of formula to identify a "typical" spend and, thus, some sort of pro-rata refund. In other words, the greater the income, the greater the spend, the greater the refund to reflect that spend.

But I recently discovered the refunds are calculated using rates per person and children and then reduced according to income above a certain level. So it is means tested in exactly the same way Canada's Child Benefit is means tested.

This begs the question why not simply increase the Child Benefit rates instead and, for those without kids, increase the tax alloance accordingly?

Just how much money is wasted on processing refunds? Every household has a refund and many households have multiple recipients of them.

Still...as Canadians would say if it ain't broke, don't fix it. Carry on wasting money on bureaucracy.