Squeezing Blood from Stones : The Income Tax Industry in Canada

The purpose of this paper is to critically examine the income tax discounting industry in Canada. What I wish to argue is that an analysis of the income tax discounting industry reveals the way in which the redistributive premise of the income tax has been undermined by the privatization of perhaps the most important aspect of tax administration for low-income taxpayers, namely, the delivery of tax refunds and credits. In the case of the income tax industry, it is ultimately those low-income consumers with limited access to credit who are compelled to pay for a service they ought not to need.This essay is divided into three parts. The first part provides the context into which tax rebate discounting emerged, emphasizing both the growing fear and mistrust of Revenue Canada and the scarcity of credit for low-income Canadians that combined to create a favourable climate for the rise of a private, money-lending tax rebate service. The second part charts the growth of the tax discounting industry and the government's attempt to regulate it. The third part analyzes the disempowerment of low-income consumers that is reinforced and reproduced through conventional consumer protection legislation. Finally, by way of conclusion, I shall argue that the solution to the problem of tax discounting lies not with reforms to consumer statutes, but with redefining income tax administration so as to transform the tax process into an empowering experience in political participation for the poor