Archive for the ‘Political’ Category

Jun

Why We Need The HST in BC!

Posted by: Phil Tags: GST, GST/PST, PST

GST/PST vs HST

On July 22, 2011 we will know if British Columbians decide to keep the HST or reinstate the GST/PST. I do hope that we see the long term benefit of a single consumer based tax and say No to the referendum question.

Hate the way the tax was introduced but don’t hate the tax.

No one likes taxes; however, a government itself does not generate any revenues. It takes from its people to support its spending habits. The citizens look to the government to provide services in exchange for sending hard earned money to them.

We, as Canadian and British Columbians, pay taxes to support free health care, free public education and many other services. Governments need taxes to support these spending habits. Any drop in income will reduce services unless they borrow money, which is not a good idea.

While people may think that companies are getting a break here they are wrong. Do you think that companies ‘eat’ profit to pay their taxes? No they pass along that cost to the consumer. Companies can either raise prices to generate more revenue (easier in a monopoly situation) or reduce costs (more likely in a competitive situation), so I think that any discussion around this is a mute point. End consumers pay ALL the taxes in some form.

What really has me worried is as baby boomers retire there will be less income tax collected. They won’t be working but they will be spending more on leisure activities. They will have an income but it will be less.

So how do we make up for the short fall? Reduce services? I don’t think the people would like this as we struggle funding schools and hospitals now.

A consumer tax makes sense. These Baby Boomer will have some income but it will be less as they need less. They will; however, continue to be consumers … with a lot more dispoable income too!

Can the government do things to make the HST a better tax? Yes. Dropping it as they have really does smack of vote buying but it is now less that the GST (5%) and the PST (7%) combined. It could even reduce or remove other taxes (i.e. the Property Transfer Tax) to simplify all tax reporting.

Thinking about it, Income Taxes are the worst way to fund services. If you were able to keep every dollar you earned and were only taxed as you spent it, wouldn’t that be nice. No disclosure to the government, no annual filing, no need to keep detailed records (for 7 years) … imagine.

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Sep

The Dreaded BC Harmonized Sales Tax or HST

Posted by: Phil Tags: BC Liberals, Harmonized Sales Tax, HST, taxation

I’ll agree the implementation of the BC Harmonized Sales Tax or HST was poorly done and the voters of BC were probably not told the 100% truth but what you need to do is look at the tax itself. Is it really a bad tax?

No one likes taxes, but as part of a society it’s a function to fund various “necessities” in life. In Canada we have free medical, which really isn’t free since we pay for it with the taxes we pay. The people complaining about the HST, shopping in Washington State, will be the first in line to say “Where’s my Medicare?” when services are cut back (as if they aren’t enough already) as public funds dwindle.

I remember the howls when the Mulroney Conservatives brought in the original GST. It replaced several hidden taxes that consumers never saw but I think the economy is better off because of it. Some of those same arguments from back then are also being used today to denounce or support the HST today.

First off, three Atlantic Provinces, New Brunswick, Newfoundland and Labrador, and Nova Scotia all implemented the HST when the GST was first implemented, back in 1996. Their rates are 14% or 15% today (BC’s is set to 12%). Consumer prices did fall after the implementation of the HST in the Atlantic Provinces. Why should the result in BC be any different?

Next, the HST is a consumption based tax. The more you consume, the more you pay. In theory the more money you earn, the more money you can spend therefore you pay a higher proportion of the taxes collected. I would much rather have a consumption based tax than an income tax as I know I can do a much better job with my money than the government can.

A person can only do one of five things with the income they earn

Save it
Spend it
Lend it
Invest it
Do a combo of the above

With an income tax EVERYONE looks for a way to avoid paying taxes – some legal (RRSP, TFSA, RESP, etc), some not (not declaring tips, paying cash for services). With a consumption tax, you pay … no avoiding the tax. Plus with a consumption tax the government doesn’t know anything about anyone. With an income tax, they know a lot!

Another thing about the HST, filing returns for businesses is simpler. Instead of having to file GST and PST returns, they now file just one HST. This should mean their cost of doing business is lower and they can focus more on the business. Anything that reduces the cost and reduces the red tape is a good thing. This should mean more resources to hire staff, lower costs to the consumer, or invest back into the business.

Finally, I don’t know if you have noticed but the baby boomers are starting to retire. This will mean lower income taxes for a government to collect. How will they replace this lost income? At least someone has the foresight to see the trend and make a unpopular and difficult choice today. I think they call that leadership.

Last comment about this, I was in line at a store a few days after the HST was implemented and the Sales Clerk rang up my items and made sure I saw the 12% HST on the bill, sarcastically thanking the BC Liberals. The person wasn’t embarrassed when I said the same was still the same price as before with 5% GST and 7% PST. They were still 100% positive the item cost me more.

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Apr

New CMHC Rules for Real Estate Investors – Good or Bad

Posted by: Phil Tags: Canadian Banking, CMHC, global melt-down, Real Estate, real estate investing, real estate investing in Canada, US Central Bank

How have the recent changes to Canadian mortgage lending affected single family real estate investors? The recent changes The Honourable James Flaherty, Minister of Finance, made were specifically directed to “reckless speculators”. But the new rules have impacted all the single family home real estate investors in a negative way and possibly increased the risks to banks, the very thing he is trying to avoid.

Three things have happened with the new rules. They have:

chased some potential real estate investors away
made it more expensive to become a real estate investor
made it more risky for people to become real estate investors.

Real estate is a way many people choose to build assets and increase their cash flow. Let’s face it the stock market is not for the unsophisticated investor and mutual funds make the mutual fund managers rich, not the investor. There are not a lot of options out there.

We are fortunate to live in Canada. Our banking system is sound and survived the recent global melt-down very well. The circumstances that occurred in the US did not happen here because of our rules and regulations. Banks in the US had loans that were 100% backed by the government so they could lend money to anyone with a pulse at no risk to the bank themselves. In Canada that was not possible as we already had the 5% down minimum from the CMHC.

Real estate speculators didn’t cause the crash. It wasn’t even Wall Street as much as people want to believe that. It was the US Central Bank and the US Government that caused the global melt-down by removing free-market conditions and keeping interest rates too low.

So why does a small real estate investor in Canada have to pay for bad US economic policy? Mr Flaherty even stated that there was no clear evidence of a real estate bubble in Canada yet he still introduced rules to increase the cost of real estate investing.

I was looking at a recent property and I was declined the CMHC mortgage. They identified that I had two risky rental properties (one at 5% down and one at 20% down, I was trying for 5% on this one) and under the new rules I would be unable to qualify for 5% although a couple of weeks earlier I had and the new rules had yet to come in effect yet.

I now have three options:

Come up with 15% more for a total of 20% down, bypassing the CMHC, increasing my financial commitment and lowering my ROI
Come up with 10% more and find a joint venture partner to come up with the other 10% for the down payment, bypassing the CMHC, increasing my financial commitment and lowering my ROI. This also increases the cost as I now have to spend money on lawyers’ fees to come up with the proper partnership agreement as well as this has increased my risk since I am no longer 100% in control of the property. I also have the added risk of the actual partnership.
Or just pass on the deal

I actually found a partner but as we worked through the deal too many questions arose so we decided to pass on the deal. Now, the rent-to-own tenant lost a beautiful house and the current owners still holds the property.

I think the Canadian banks and mortgage lenders were doing a good job of their due diligence lending money to single-family home real estate investors already. The new rules just increase the risk and cost to real estate investors. It might even increase the risk to banks as they may lax their due diligence and wind up with more bad loans just because someone has been able to come up with 20%.

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Jan

What in store for Canada? Email to Mr. Ignatieff (cc: John Cummins)

Posted by: Phil Tags: Bloc, Ignatieff

Mr. Ignatieff

First let me extend my congratulations to you on your recent appointment to Leader of the Liberal Party. I’ll be honest, without the support of a leadership convention, it doesn’t seem to be to democratic to me but congratulations, anyway. I am not affiliated with any specific party and have included Mr. Cummins since he is my elected representative.

I am writing to you because of a recent comment you made. It has me concerned as to the direction Canada may take in the coming days and months. The comment was related to a coalition the included the Bloc. I believe you stated the Bloc are Canadians. While that may technically be true but I don’t think that’s what they feel in their heart.

My understanding of the Bloc’s platform is to establish a sovereign Quebec. That sounds to me like they are Quebecer’s first and are focused on Quebec interests alone, not Canada’s. The Bloc are not a national party and really shouldn’t be allowed to even participate in National election debates but that’s a different issue.

I am okay with coalition governments. I have always felt that the elected officials should all work together for the common interest of Canadians. We have an opposition party that immediately puts our elected officials at odds against each other. I think a coalition government with the Bloc means that we would 50 individuals holding Canada hostage always wanting to know what in it for Quebec rather than the greater good for Canada.

Oh and saying the Conservatives tried to do the same thing doesn’t mean it’s right. They were wrong then as well. At no time should separatists have a controlling part in the Canadian government.

Please consider what’s best for Canada as you move forward into the upcoming Parliamentary session. We face enough challenges as Canadians. We are fortunate the governments we have had in the past (Liberal and Conservative) have put us in a position that we have not felt the wrath of the recession as bad as other countries. Continue to work on strengthening Canada.

Thanks for your time.

Phil Hoskins, a proud Canadian
Delta, BC
Delta-Richmond East

1 Comment

Nov

Shame on the Opposition Parties

Posted by: Phil

Mr. Dion, Mr. Layton and M. Duceppe … shame on you.

I did not realize that the Canadian taxpayer support each part at $1.75 per vote. What is even more upsetting is your sense of entitlement to this money. To be frank, if your political cause (party) cannot raise money and be supported at the grass roots level then it does not have the right to siphon Canadian taxpayer dollars. We do not get a better democracy because of this and it must end. Kudo’s to you Mr. Harper to end this type of taxpayer abuse.

What I find even more offensive is that (my) Canadian tax dollars are being directed to a party that sole purpose is the breakup of Canada. I am proud that we live in a country that allows the freedom of speech and thought but I do not appreciate that the Bloc get taxpayer dollars. It tough enough that they get time on national debates when they are not a national party … but that’s another topic.

You have all been elected by the people of Canada. Unfortunately our parliamentary system is an adversarial type system BUT you need to somehow figure out how to govern this country TOGETHER. We can ill-afford the cost of another election at these time … however, if you do bring the current government down, I am sure the Canadian voters would send a Conservative majority back to Ottawa punishing the selfish