CPA PEP Prep Forum (Unofficial)

In Canada, the main idea for principles of an optimal tax system is a push/pull between simplicity and fairness. The tax system should be simple enough to be accessible and understood by all, while at the same time providing fair treatment for all taxpayers. The simpler the provisions, the less likely they are to be fair to all circumstances, and the more fair the treatment, the more likely the provisions will be complex to account for a variety of circumstances. 

An example would be if we had a straight income tax rate for everyone; this would be simple. If the rate is too high, people with lower income may not be able to afford their everyday expenses in addition to a sustainable tax rate for the government. If the rate is too low, higher income earners would have more than enough to pay their share of tax, but may not be contributing enough or may find ways around paying tax by using corporations. This is why in Canada we have a graduated income tax rate system and deductions like the basic personal amount.

The GST(5%) is an example of a straight tax on all goods purchased by individuals in Canada.  Lower income earners are actually paying a higher proportion of their income toward this tax because the tax rate is fixed based on the price of items purchased. In Canada, the fairness aspect is partly addressed by having "essential items" exempt from sales tax, like groceries and public transit.

I know there are additional principles (i.e., promote positive social behaviours), but I think these are the main two.