Categories
Taxation

Pressure to decrease gas taxes is misguided

Inevitably when the price of gas rises, drivers cry foul and the call comes to governments to alleviate the pain, in the form of reducing taxes on gas.

However, the idea that governments should lower taxes on gas in response to globally increasing demand outstripping an increasingly unstable supply is a misguided approach that treats the symptom but ignores the cause of the problem: our reliance on oil.

Technologies like hybrids and modern diesels will help us reduce our reliance on oil for our personal transportation, and should be embraced by the public. I drive a Volkswagen TDI and it gets amazing mileage. I average between 900 and 1,000 kilometres per 55L tank. Generally it costs about $45 at today’s prices to fill up.

Categories
Taxation

Busy season comes to an end!

I celebrated the end of accountants’ busy season last night with our firm’s annual “tax party”, which was held at a local watering hole and we had an entire section reserved for us. Free drinks and free food, it was a heck of a night. Great way to celebrate a job well done from January through April.

Taxes are due this Monday because April 30 of course falls on a Sunday this year. I’ve had mine done for a few weeks now, waiting on a big refund due to all my carried forward education and tuition tax credits. I need the influx to pay for all the unpaid time off I’ll be taking this summer to study for the dreaded UFE!

Congratulations to my fellow Canadian accountant bloggers and all the accountants out there for making it through!

Categories
Taxation

The ideal tax system

“The ideal tax system … is neutral to business activity. In such an ideal system, individuals and businesses would base their economic decisions solely on the merits of the transactions, without regard to tax implications. In reality, tax-induced economic distortions are a fact of life, and a more realistic goal is to maximize the occasions when businesses and individuals are guided by economics, and minimize those cases where economic decisions are micromanaged or even dictated by a tax system. Therefore, the most competitive tax systems, and the ones that score best in the SBTCI, are those that create the fewest distortions by enforcing the most simple tax system based on broad bases with low rates.”

This is an excerpt from a great article on simplifying the tax system in ways that don’t automatically mean a flat tax. The tax system’s complexity doesn’t stem from brackets. It is caused by the overabundance of various tax credits and other deductions applicable only to certain groups of people in certain specified situations.

Categories
Taxation

Keep the income tax cuts, ditch the GST cut

I read in the Star yesterday that the income tax cuts enacted by the Liberals before their fall from power and effective January 1, 2006 may be kept by the Conservative government, which has all along threatened to reinstate them to make room for their GST cut.

I have always been in favor of income tax cuts before consumption tax cuts. Income tax cuts encourage saving and investment, and put more of our earnings in our pockets (at least initially). The only way I save money from the GST cut is by spending money, which is a weird way to think about saving. With an income tax cut, the saving is built right in.

The Liberals love telling you the Conservative GST cut will help the rich more than the poor, where their income tax cuts help the poorest first. This is just wrong.

The very poorest members of our society already pay no income tax due to the basic personal exemption. Cutting the rate on the lowest bracket has no effect on them, and they pay the 7% GST just like the rest of us. The GST cut reduces taxes for everyone, including those who make so little they aren’t paying income tax, and the GST is the more regressive tax so cutting it makes the system theoretically more progressive.

Categories
Taxation

H&R Block messed up their taxes

Shares of H&R Block fell on Friday after the tax preparation and software provider admitted it had miscalculated its own state income taxes, understating its liabilities by $32 million as of April 30, 2005. The Irvine, California-based maker of TaxCut software said Thursday it would need to restate its fiscal year 2004 and 2005 results, as well as its previously reported results for fiscal 2006. The restated results will reduce Block’s fiscal year 2005 earnings by $0.02 per share and $0.02 per share in fiscal 2004.