Tag Archives: taxes

Insulting Tax Word Games Must Stop When Math is Clear

By Jason Menard

Technically speaking, we’re not morons. So why, in trying to repackage tax increases in cute euphemisms and technicalities, are our politicians treating us as such?

This morning, the City of London’s finance and administration committee voted on what they called a “tax shift,” which would have transferred some of the tax-paying burden from industries (to the tune of a 23.5% decrease) to the residential tax payers (an increase of 1.3 per cent). (The committee voted against the increase).

Because the numbers would basically wash, technically it’s wasn’t a hike, true. But for tax paying citizens already struggling under the weight of sizeable property tax bills (not to mention various charges collected by City-run utilities such as London Hydro), it’s insulting. Continue reading

Quebec’s Field of Dreams a Potential Nightmare

By Jason Menard

If you build it, they will come.

No, it’s not the premise of a hokey, corn-fed baseball film. It’s the divining principle behind various levels of government willing to bet big on a prospect that is only guaranteed of doing one thing – taxing an already taxed province. Continue reading

Less May Not Be More

By Jason Menard

With the budget announcement looming and the income tax filing deadline just in the past, it’s an interesting time to consider what Canadians want from their government.

Finance Minister Jim Flaherty states that Canadians are facing an “excessive” tax burden. And, while that may be true, do we really want it to change? What are our alternatives? Is less taxation the answer?

Or are our elected representatives simply not asking the right question?

For many Canadians the issue is not simply one of too much tax, but rather the fact that our taxes are not being properly used. The much-debated one per cent cut of the GST is a simple sound-bite ready move to offer immediate sating our immediate ravenous appetite without tackling the larger issue of our hunger.

The GST, which due to the fact that it’s a consumption tax and therefore is actually one of our fairest taxes, is despised not for its existence, but for the fact that it was never applied as specified. Initially levied in order to cut down the country’s crushing debt, the GST has become just another cash cow from which our federal government can milk Canadians’ wallets.

However, if the funds were applied as prescribed, our deficit eliminated, and the debt paid down, would Canadians object? Would a minority that wields an inordinate amount of power in our first-past-the-post system of elections be swayed in an election to offer a negligible cut in a valuable tax?

Probably not. But we’re not being asked that questions now, are we?

The addition of $100 per month for child-care expenses? Great for those of us with stay-at-home spouses, not so good for those who truly need daycare. When in Quebec, we were able to take advantage of the then-$5-a-day system. Coming to Ontario and facing $30-ish costs per day, that $100 would simply provide us with a week’s worth of care.

Am I going to look a gift $100 in the mouth? No. But would I rather that my money go back into the creation of an effective system? You’re damn right!

And that’s the key. Canadians don’t want less taxes, they just want to make sure that we’re getting the most value for our buck. We don’t want duplication of effort, multiple levels of bureaucracy eating up funds and delaying processes between federal and provincial governments. Nor do we want to throw money after proven ineffective business models.

We, as Canadians, are proud to have access to universal health care and are willing to pay a premium through taxations to do so. We, as Canadians, in large part value our social programs and see the benefit in providing support for various segments of our society that may need it. We see the value of education, we see the value of environmentalism, and we see the need for a social conscience.

But what we also see is the fact that a significant number of those tax dollars are being misspent. We see hospital emergency rooms closing as school classes bulge due to lack of funding, yet more and more money is being siphoned from our wallets.

So, as Flaherty prepares to wow us with a budget that promises a reduction in our taxes, do we have any faith that the government is suddenly going to become astute money managers and be able to do more with less? No.

Canadians may be one of the most taxed nations in the world, but we’re fine with that as long as we get what we pay for. The question shouldn’t be one of whether we’d like to pay less taxes, but rather one of would we rather our government does a better job with the taxes it gets now?

And that’s an answer I’m sure we’re all in agreement on.

2006© Menard Communications – Jason Menard All Rights Reserved

Tax Cuts Good, Just Choose the Right One

By Jason Menard

Stephen Harper, reeling after being undercut by his own deputy and lighting a fire under a long-cooled debate, is trying to right his ship by jumping on the bandwagon that all voters can agree on – cutting taxes.

Unfortunately, although the idea is good, he’s chosen the wrong tax.

As much maligned as the Goods and Services Tax has been since its inception in January 1991, it is Canada’s fairest tax. The GST is a consumption tax that actually offers the proportional taxation levels to which income tax aspires.

Simply put, the more you buy, the more you pay. Since those with more money tend to be the ones that buy the bigger toys more frequently, they end up paying more in GST over the course of a year. Conversely, those who are on fixed incomes aren’t at liberty to spend as much, so they don’t incur additional taxation in the form of this consumption tax. And because our financial leaders had the forethought to exclude basic staples from the grips of the GST, the essentials of life are generally free from this type of taxation.

So, in the end, Harper’s promise to cut the GST ends up being yet another tax cut for the rich – a far cry from the softer-sell conservative image that Harper’s been trying to put forth. Upon closer inspection, the GST tax cut benefits exactly the type of people that Harper’s been trying to distance himself from – rich, fat cats, and corporate interests. It distances himself from the very people of whom he needs to woo – middle to lower-income families, stretched to the breaking point under the burden of debt and taxes.

A reduction in the GST from 7% to 5% is a sexy concept that draws the big headlines. And, more importantly, a reduction offers the immediate relief that those who are in need of it the most will latch onto and can be a significant factor when it comes to going to the polls.

However, the problem is that this type of mentality is short-sighted. While paying less when heading to the store sounds great initially, the fact of the matter is that this lost income will have to be made up elsewhere. Whether it’s through increases in income taxes or through other venues, chances are we’re all going to be paying for it anyways. At least the GST allows the distribution of the burden to be placed proportionately amongst those who can best afford it.

Harper’s not a dumb man. As his campaign is reeling from early missteps and internal conflict, he chose to use the old magicians’ trick of deflecting our attention. We’re so enamoured with shiny little things and hot sound bites that we often fail to chew upon their ramifications. Those shiny statements tend to lose their luster upon careful reflection.

Real tax relief has to come from better management of the federal coffers, a reduction in income taxes, and sound investment. In fact, an increase of the GST would be preferable if it meant that our personal income tax burden could be reduced. The problem is that with our national rapid-fire attention span, any politician advocating an increase in a tax would be automatically vilified. The message of a lowered personal tax that would offer long-term benefits would be overpowered by that initial sticker shock of paying a few bucks more on a new TV.

So, in the end, Harper has spent a bit of capital earning our national goodwill through the concept of tax cuts. Unfortunately, that short-term capital is going to be paid off long-term with interest by the taxpayer. Compound that with the fact that we have grown accustomed to paying certain prices for products. Any short-term reduction in taxes will be quickly gobbled up by savvy business interests who realize that the upper limit of their product pricing has yet to be reached. Within a very short period of time, profit margins will eat up any relief brought by a reduced GST.

And what replaces the 1-2% GST monies that have been reduced? Increased income taxation? Reduced services? Increased federal debt load? It’s a simple concept that if you reduce the amount you take from one area, you’ll have to make up the shortfall in another.

The tax money has to come from somewhere. At least the GST lets it be a proportional burden.

2005 © Menard Communications – Jason Menard All Rights Reserved

Tax Cuts Won’t Address the “C” Word

By Jason Menard

Rampant calls for a reduction in federal taxes on gas may make for good sound bites, but it doesn’t appear that any of our political parties have the teeth to deal with the real problem.

As Finance Minister Ralph Goodale states, any tax reduction at the pumps would be brief at best. Any gains would be lost within hours because the actual issue would continue to go on unchecked – the relatively unfettered ability of the oil companies to set their own prices.

No one wants to bring up the dreaded “C” word when it comes to the inner machinations of Big Oil, but it’s hard for the average taxpayer, who finds themselves paying more and more at the pump, not to believe that there is some form of collusion and price-fixing taking place at a higher level.

If, as the powers-that-be state, there is no collusion in the Canadian gas market, then we need to see transparency in the process for how fuel prices are set. We need to know what market forces go into the rapid fluctuations at the pump, because what we see on our street corners doesn’t necessarily reflect what happens in the market.

What frustrates consumers is that they feel like they’re being held hostage to speculation. Instead of dealing with the realities of the market, we’re driving to work each morning to see a price based on fear, anticipation, and opportunism. We’re paying today’s market price for previously purchased gas that’s already in the tanks. The average consumer is fed up of paying $65 a barrel premiums for fuel made from crude that was purchased at $55.

Generally, one would think that if you purchased a product at one cost, you’d retail it for a little higher price. Then, once your supply ran out and you were forced to purchase more, your new price would reflect what your actual costs were. Instead, the purchase price seems to have no bearing on the actual price at the pumps. For all we know, the gas in the tanks could have been purchased at $40 a barrel, but the second that there’s a hint of a hurricane, we see some opportunists push the $2 a litre threshold, without any real rationale for doing so, other than speculation.

Conversely, the laws of a free-market economy don’t appear to be holding any sway over the gas industry. As a business-owner, one would think that a gas company would entertain the idea of dropping prices or offering premiums to entice people to purchase gas from their institution. Essentially, in any other sector, one would find certain providers willing to swallow some profits in order to gain market share. Considering the howls of anger and the sense of powerlessness that the average consumer has shared, think of the goodwill that a gas company would earn by reducing the price of their product to meet the needs of the community.

If that precipitates a price war, then so be it! That’s what the market’s supposed to be about: freedom to choose, freedom to set your own price, and freedom to compete with others in your industry. Yet, we find the opposite taking place. Instead of companies competing with each other, we find them magically reaching the same conclusion when it comes to setting the price of their product. And it appears the higher the better.

Generally, if it looks like a colluding duck and it walks like a colluding duck, then the conclusions are evident. If that’s not the case, then the government has an obligation to prove that to its populace.

But let’s be honest. We know that no party is going to risk upsetting that giant elephant in the corner known as Big Oil. There is little political wherewithal to confront this powerful lobby group head-on and address the problems at their source.

So instead of curing the disease, we’re railing against the symptoms. Instead of truly dealing with an issue of interest to Canadians, we’re presented with catchy sound bites advocating ineffective tax cuts. It’s political opportunism at its worst at a time when we need true political leadership.

Calls for tax cuts and sniping across the House of Commons only prove to the Canadian public that our elected representatives are only looking out for their own interests and those of their party. By not dealing with the actual problem, they’re showing that the game of politics trumps the realities of life and the needs of their electorate.

Demanding accountability and transparency from Big Oil is not the easy fight, or the safest one – but it’s the battle that we want fought. And the party that takes up the call should find that they’ll be fuelled by voters’ gratitude in the next election.

2005 © Menard Communications – Jason Menard All Rights Reserved