Rate Increase

 

We here in BC have some of the lowest hydro rates in the world, not only in real terms but relative to wages and salaries. However, because of aging infrastructure and the fact that the government takes a dividend on BC Hydro income (that is why I have tagged this post under 'taxes') a rate hike is inevitable.

The announced increase is 28% over the next five years. BUT, and that is a big but, it is compounded. That is, each year's increase is a percentage of the previous year's rate. Here is what it looks like in reality. If your 'equal payment plan' hydro bill is $60.00 per month, one might think that a 28% increase after 5 years would be $16.80 making it $76.80.

Here is what it will be:

Year 1  9%  of $60 = $9.40      $69.40

Year 2  6% of $69.40= $4.16    $73.56 

  Year 3   4% of $73.56 = $2.94   $76.50   

     Year 4  3.5% of $76.40 = $2.67   $79.07  

     Year 5  3%  of $79.07 = $2.37    $81.44  

Now that 25% increase  over 5 years has become a 36% increase over 5 years. And this morning I heard that there will be continued 3% increases for the five years following these initial five years. In the above example then, the monthly Hydro bill would be, ten years from now, $94.42  a 57% increase.

 

 Trust a crown corporation, which is an extension of government, to put a spin on it.  And like that spider in my photo, the cost of living keeps creeping up on us. Hydro would like to keep us in the dark as to what the real increase will be. We might all have to keep ourselves in the dark so we can afford the deceit.  

Tax Deadline

Have you ever paid income taxes on money you never received? I have, and in both countries. The rules in both countries state that you must pay income taxes for money earned in that taxation year. For example, if you have a simple term deposit in your local bank, you are required to declare the income that deposit made even though your account may not be credited until the following year. It gets complicated because the information slip you get from your bank is based on the income in the year it was paid.

In my case, it gets stranger still. I had 'X' amount of dollars credited to my investment account as 'interest earned' and paid income tax on it every year for many years, even though I never had access to the account. It was to 'mature' and then be paid out. I would then pay tax on the capital gains, but will have already paid tax on the interest it earned in the meantime. Confused yet? But now the whole thing is in the tank, in receivership. I will get nothing from my original investment nor will I get the interest that was paid. This is both to the IRS and Canada Revenue Services. I will be seeing my accountant and paying him the big bucks to determine if I can get the money back that I paid on the money I never saw.

 

We need a tax revolt. A much simplified system is overdue. Years ago, when the Reform Party of Canada was in the political wings, waiting to form government, one of their policies was to introduce a 'flat tax'. Would somebody please resurrect this idea? I know the accountants will hurt because their work load will decrease, but the simplicity of it and the fairness of it will benefit all of us who try to earn a living.

That Time of Year

Suffering from post Canuck Fever and Income Tax time.

Today is the tax deadline. I am most happy to report that last Thursday my last information slip arrived in the mail, I dashed to my accountant that night, and now that the time is up, my return has been e-filed and all is right with the world again. This was only possible because I got all my stuff together early this year, about mid March, and at the last minute, there was only a small entry to be made on the software program and it was all done.

Now, another whole different story is the numbers. But we do not want to talk about that. Depression over the Canucks hockey season is plenty bad enough.  

Disgusting

I caught this image beside our driveway earlier in the summer and just now 'found' it. It is much prettier than the following story.

How much income did you earn last year, how much tax did you pay, and how long (pages) was your tax return?

I am just asking so you have a reference point from which to judge the General Electric numbers.

Profit generated: $US14 Billion

Taxes paid: $US 0 (Zero)

Length of tax return in pages: 57,000

To give a little more perspective, five years ago, the length of the return was less than half. It leads one to think that the more rules and regulations regarding tax law, the more loopholes and the more tax accountants it takes to avoid paying any taxes.  

Deja Vu All Over Again

It is fair and square. We democratically voted and we will now go back to our old tax system of PST/GST to replace our present HST.

The big plus to all of this is that the referendum legislation of BC, which was designed to fail, but has never really been tested, has  shown us voters that if we really are disgruntled about the direction our leaders are taking us, we do have recourse apart from a provincial election every four years. This should help to stave off any more stupid moves in the future.

But now what. It is interesting that a new tax can hit us over night, but getting rid of an onerous tax will take 18 months. This is about how much time it will take to gather enough money to pay back the feds the incentive money they gave us to get on the HST bandwagon in the first place. Why are we squawking about paying it back? There is only one tax payer, the worker. There is only one government, but divided into federal, provincial, and municipal. If my tax dollar, that I gave to the provincials, is now being given to the federals, it is still my money going to government. So lets get over that aspect of it. What remains to be seen is how the old system, after 18 months of set-up will eventually change to reflect the much needed, but lost revenue of the HST. It will be political suicide to handle this issue badly. And then it will be the downfall of us all if the NDP get in because we are still angry about taxes. Let's be smart here. We all know that as us 'boomers' are aging, the implications to government spending are huge regarding health care and the fact that we will collect pension and will no longer pay into the CPP. As selfish demands for more services keep coming, it will have to be paid for, either with more taxation, cuts in other areas, or with debt. None of these options is palatable. Had we kept the HST, at least it would have been streamlined, and streamlining is all about efficiency, something that is sorely missing in all levels of government today.

Trying to Make a Comeback

A Double Crested Cormorant at Fishtrap Creek Park

They are very shy and when I tried to get too close, he took flight.

He only settled down again when he thought I was at a safe distance.

I have a number of hobbies and one of them is this blog. There has been so little time, lately, to do this thing, but I am trying to make a comeback. Funny how work interferes so much with life. Yes, work is picking up, like it does every spring, but this time around, the jobs are many and small. Doing five small jobs in a week is a lot more time consuming and inefficient than doing one five day job. As well, there is not very much money in small jobs. I usually like them because they are a filler for the between times for large jobs, but lately it is all that is out there. We were spoiled last year with a six month job, the largest one I had ever done. 

We went to a "Heat" game a few days ago. They are our AHL hockey team, one tier down from NHL. It is good hockey, but, our guys, even though they were the better team, lost by one goal. The half full arena reminded me of the fact that the sport of hockey in our town is heavily subsidized by the tax payer. If I had not had a free ticket, I would have been paying double for the seat. 

My accountant has finally waded through my financial situation and told me how much money to send to the government. When I peruse the PDF files of my tax return, I cannot believe the complexity of the whole tax thing. In my world, simplicity is the key to efficiency. Inefficiency is the key to costly ways of doing things. I cannot help but think that there are thousands of pencil pushers in the civil service who have to justify their huge pay cheques, so they come up with more and more convoluted ways of figuring what the tax payer owes. But, it does feed the accounting industry and those guys have to eat too. My Accountant tells me that there about 250 changes to the tax act each year and it is their job to know which changes are relevant to which client. We paid our taxes today, but are now six weeks behind in our installments for 2011 and this week I have to send in the HST that I collected for the government, off the backs of my clients, in the last three months.  It just never ends.     

Getting Tired

                                                             Ten man church in the Nicola Valley

Was I not doing this just a few minutes ago? That is what it feels like as I dig through the paperwork, sorting, discarding, filing, calculating, and tabulating. The time I saved not doing it in bits and pieces throughout the year is lost on me as I spend days doing the preparation for my tax return. So much of it only comes together right at the end of the year, and then there are all those 'slips' and receipts that only come at the end of Feb. My accountant gets on my back and wants my 'stuff' in early, so the pressure is on. But he tells that to all his clients so he is not up all night every night the week before tax deadline. 

I am doing all this as I fight off a flu/cold bug that I picked up at the last house I was working in. All my clients kids were home with head lice, her father-in-law was in and out with a cold, and her husband came home in the middle of the day with a bad case of the 'pukes'. What was I supposed to do, stop breathing?  So, in the midst of a headache fog, piles of soggy Kleenex, and cups of hot tea with lemon, I am fulfilling my obligation to my government, and in the end? My reward will be that I get to write out a humongous cheque to those who do not appreciate what I had to do earn all that money. And, in not appreciating it, they will spend it frivolously on their fat pension schemes and pay most of it on interest on the national debt. 

Now, if I could keep it all, I would enhance my own pension fund, and pay down my own debts, and then in my old age, they would not have to look after me.    

Help!

It is time to start thinking about tax preparation.

Deadline

I have had an investment since 1996 that has been a thorn in my flesh almost from day one. It has looked at times like the greatest thing since sliced bread and at other times abysmal. It is a US investment and in that country they have accountants that are lazy, different deadlines than we do, and a continually fluctuating dollar differential. Every year at tax time my accountant hounds me for the paperwork from the US investment and every year it shows up at the very last minute. Again this year, I have filed just under the wire. But this lateness costs me. For the last two years I have been promised a fat payout, but so far, nothing. In the meanwhile I am paying US and Canadian taxes on money I have not seen. I even got a tax refund last year for taxes that were paid on my behalf, but I never saw the income that was promised. If I gave you more details, you would shake your head like I shake mine. So, once again my tax woes are behind me, except for my accountants invoice which I received today. I cannot blame him as he spends an inordinate amount of time looking after my interests, but I would really like to put this thing to rest. When it happens, I will blog about it.

HST Referendum

I took the time today to sign the anti-HST referendum. I am against the HST (Harmonized Sales Tax) because I remember well what happened in 1991 when the GST (Goods and Services Tax) was implemented. As a business person who provided a service that was suddenly taxed, I was not very popular when I handed the customer the invoice at the end of the job. Many refused to pay it, and yet, I had to submit that tax, even if out of my own pocket. Then people got wise and offered to pay cash so I would not have to declare the income and therefore not tax it nor pay income tax on it. They told me it was a win/win situation. They assumed I was dishonest, which I was not. Soon, I had to build the GST into my service charge just in case they refused to pay, or they insisted on paying in cash. To this day, 19 years later, I still fight that sort of thing.

Now the tax that I have to collect (HST) will increase the tax line on my invoices by 120%! Is this going to be any easier? I know it will only make the underground economy flourish and encourage dishonesty. Besides that issue, which is huge, I am against any new taxes that are disguised as being good for us. Certainly having one tax instead of two will simplify matters for most businesses that were collecting both, but the cost of the GST only taxed part of the economy now suddenly goes up in price, everything from a haircut to a restaurant meal. There will be much resistance to the tax, especially in the beginning, and those of us who have to now charge the new tax will have a drop in business.

There was a steady flow of people lining up to sign the petition this morning. If they sign 10% of the voters in every political riding in the province, the Referendum and Recall legislation says that it must be considered by the sitting government. However, the bill also states that the sitting government is not under any obligation to enact the wishes of the petitioners. It is toothless, however, this will be a test for the Liberal Government as they have snubbed their noses at the public too often since they took office. I read yesterday that Randy White, the most popular Conservative politician ever, from our area, is spearheading a resurgence in the Provincial Conservative Party. Look out Gordon Campbell. A perfect storm is brewing.

One final thought. Most of the people lined up to sign the petition were grey haired. What does this tell us. 1. Bill Vanderzalm still has a large and loyal following (he is the former Provincial Premier who started this protest) 2. We should look to the wisdom of older more experienced citizens and if they see something sinister in the HST, perhaps there is something to pay attention to here. 3. Those grey hairs are living on fixed retirement incomes, mostly, and they know their consumer choices will decrease when the tax is enacted. They can no longer go out and earn extra money to make up for this added cost of living. It is a penalty on them, the folks who built this country. Shame on the tax collectors!

Who Really Knows?

The big Health Care Reform Bill was just passed in the USA. I have not followed the debate as closely as I should have, but now that it is a 'done deal', I thought I would do a bit of research on exactly what this all entails. Why can I not get to first base? One side says that this will ruin America and the other side says that is the greatest thing any president has ever done in the history of the country. There seems to be little if any of the reforms taking place in the immediate future, and just what those reforms are seem to be open to interpretations and debate. It does not appear, at least on the surface, to be a universal health care system like we have in Canada, but more like restrictions and rules being put on health care insurers to assure that all will be treated fairly and equitably by the system. One thing is agreed on and that is that it is expensive. Well, so is our system here in Canada. In our province, 82% of our budget goes to health care. If this same figure will eventually apply to the USA budget, it will be a disaster. The only way to sustain it then will be with massive tax increases and that is one thing the Americans do not take kindly to. Whatever it turns out to be, there will have to be a lot of education on healthy lifestyle or the system as well as the country will go bankrupt. Actually, they are going bankrupt with or without health care. There has probably been a billion dollars worth of blood pressure medication taken just during the debate.

Black

Black birds, in particular Ravens and Crows, are often used as bad omens in certain literary and artistic endeavours. The Blackbird does not usually have this reputation, but as I saw these two birds yesterday they represented for me, two black clouds that have been hanging over my head for a while now. The first one is the year long project of up-grading my home for energy efficiency. First there was the research, then the inspection, then the acquiring of estimates and contractors to do the major jobs, and finally, the inspection that will qualify me for the grants and rebates that were offered. Tomorrow, the final inspection takes place and I will see how successful I have been in increasing the energy efficiency of our home. I will get back to you on that.

The other black cloud is the annual agony of tax time. Today I finished my part. I chip away at it all year, but in March I have to actually sit down and document, itemize, and file all the information so my accountant can make sense of it all. The cloud is not really lifted until my accountant's computer spits out the 'bottom line', but at least I can say there is now a silver lining around this dark cloud and it is beginning to thin a bit.

Oh, and a third cloud, but not as dark as the others, and that is a dental appointment first thing in the morning. As usual, the pain will be in the wallet and not so much in the mouth. I am ready for some clear skies for a change.

Deceit

Maybe our provincial government is hoping that in the afterglow of the Olympic Games we will not notice that as things get back to business as usual, that they are telling us a big fat lie. The announcement on the morning news today (March 3) is that BC Hydro, our electrical utility here in BC, is applying to the utilities commission for a 9% increase in rates. The news release states that the additional revenue is required for 'infrastructure'. What a coincidence that our provincial government tabled a budget just yesterday with zero tax increases. I heard a government 'insider' say on the radio this morning that BC Hydro was called by the minister in charge and asked to increase its revenues to the general budget of the province by $250,000,000.00. Not only that, but the expected increase for next year will be 10%! So, my friends, when you pay your hydro bills in the future, you are not just paying for the electricity you use, you are paying a huge hidden tax.
There is only one source of revenue for any government, and that is you and me. Why can they not be honest and just call it a tax? It is a lie on top of a deceit.