The Income Tax War Act

It was 1917. Canada was just fifty years old, barely out of colonial status, and deeply committed to Britain’s European war– a war like nothing before, brutal and costly. The federal government was financially exhausted and needed money.

The clever solution was a temporary tax on personal and corporate income. Temporary, yes, but the Finance Minister of the day did not attach an end date, as he suspected that raising money would still be necessary for a few more years to deal with veterans’ needs, medical care for the blind and the maimed, and to help settle returning soldiers into civilian life. To ensure nobody saw this as an invasive money-grab, though, he and everyone else called it a temporary war tax. Patriotic but short-term, you know.

And so it was that the Income Tax War Act introduced an income tax system to Canada, and continued it, just one year at a time, until 1948. In that year the government came clean and admitted it could not live without it. Renamed the Income Tax Act, today’s monster is approximately four inches thick in paper format.

So much for temporary measures. But the truth is that in a modern democratic society, our government couldn’t function without a comprehensive income tax. As much as we moan and groan, the income tax is foundational to our modern world.

In 2021 we live at another turning point in time, what Churchill would call a “Hinge of History”. COVID has turned our world upside down, socially, economically, and technologically.

We’ve been surprisingly resilient and creative. We’ve found all kinds of stopgap, temporary ways of getting by, “until things get back to normal”.

But as time has gone by, we’ve discovered that many essentials are not essential, and that there may be some things better than “back to normal”.

Sometimes history’s surprises yield surprising benefits. Sometimes we’re forced to get out of a rut, and be the better for it.

Let’s not waste this opportunity.