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Kim G C Moody’s Musings – 1-1-1 Newsletter For April 10, 2024


One Comment About Taxation – Has The Overall Canadian Tax System Hit a Tipping Point?


I’ve been concerned about this for quite some time.  I try hard to not “cry wolf” but at the same time try to shine some light on some very serious concerns.  What are some of those concerns?  There are many but below is a short and incomplete laundry list that includes some of the bigger ones and most recent:

1.     Incomprehensible legislation – when seasoned tax specialists consistently struggle with new legislation, you know there’s a problem.  Combine this with the fact that anyone can call themselves a “tax specialist” (when in fact they’re not and the public is left to fend for themselves) then the consequences of being wrong are not good.  The development of a rigorous tax designation to protect the public would be a step in the right direction but unfortunately this has had a choppy history and not likely to happen anytime soon.

2.     The shortage of accountants – accountants dominate the tax profession in Canada.  There is a significant shortage of them with many qualified candidates not being attracted to the challenges of accounting as a career.  This is causing significant holes in the ability to properly administer the rigorous demands of Canada’s tax administration and the ability to properly and efficiently dispense tax advice to Canadians and will likely continue until the profession deals with these issues head-on.

3.     Introduction of legislation that is poorly thought out and will encourage non-compliance – when legislation is introduced that treats otherwise good Canadians in a fashion that is extremely punitive, such legislation does not encourage people to comply and instead can do the opposite.  The new legislation on short-term rentals (which will deny otherwise legitimate expense deductions against rental income to the extent owner / operators are engaging in rentals in an area that prohibits such activity) is a great example.  This kind of legislation is so obviously designed to try to be a short term political “win” for the government to try to make them look good to their voter base while ignoring good public policy.  This is dangerous for Canada.

4.     The introduction of tax legislation and then some immediate back-tracking – for those who followed the Underused Housing Tax and “bare trust” reporting debacles, you will know that poorly thought out legislation was introduced which ignored the concerns and feedback of many in the tax community only to have the government back-track on some of the sharper edges of both pieces of legislation in some form or fashion.  In both cases, the back-tracking occurred very late in the process after massive amounts of effort were wasted by taxpayers and their advisors.  These two examples are a poster-boy examples of how not to introduce tax legislation that affects the masses. It needs to change.

5.     Our country’s personal tax rates are much too high – such high personal tax rates are extremely punitive and discourages many from taking much needed entrepreneurial risks.  High rates discourage the best and the brightest from coming to Canada and has caused a flurry of successful Canadians to leave Canada.  Such high rates are a real drag on our country’s serious productivity challenges and it needs to change.

Beyond simple rates, there is lots of “tinkering” that governments do to increase a person’s marginal tax rates.  For example, the proposed amendments to the federal alternative minimum tax are a great example of this.  If enacted into law, such amendments could increase a “rich” person’s tax load if such person has certain income – like capital gains – or uses certain deductions and credits (like charitable donations).  These amendments are poorly thought out.

The Manitoba provincial government’s recent budget is another example where it announced that beginning for its 2025 year, the basic personal exemption amount will be phased out for Manitoba resident individuals with incomes between $200,000 – $400,000.

These recent examples are shameful attacks on high income earners that increase their marginal tax rates and encourages behavior to avoid such attacks.

6.     The use of the tax system to massively redistribute wealth by the introduction of many credits / cash rebates (such as the Canada Child Benefit, GST credits, carbon tax rebates, “phramacare”, “dental care”, etc) which all require the filing of a tax return in order to be eligible to receive such credits.  Such credits, while lauded by some, are simple “Robin Hood” wealth redistribution schemes that ultimately use the tax revenues generated from the “rich” to re-distribute to lower income residents.  Without automatic tax filing, many of the lower income people who would likely be eligible for such credits do not receive such amounts since many are intimidated by the tax system.

So, what is the result of all of the above concerns?  Well, continued unchecked, the negative consequences could be increased non-compliance, significant pushback on further legislative amendments, governments that realize significantly less “revenues” because of such non-compliance and behavioral changes by affected residents to avoid the negative implications of our tax system.

What’s the solution?  Well, throwing more money at our already bloated civil service is certainly not the answer.  Instead, the solution is multi-faceted and will involve significant courage, reflection and policy changes to ensure Canadians are well served.

As author and speaker, Andy Stanley, has said: “A single act of courage is often the tipping point for extraordinary change”.

While it won’t happen under this current federal government, disappointingly, that single act of courage that is required to fix our tax system is tax reform and review.

It needs to happen to counter the negative consequences of our tax system being tipped over.


One Comment About Leadership – Leaders Say the Stuff Out Loud That Many People Are Thinking


Being a good leader takes courage.  It is true that human beings often like to follow the crowd / herd and many are afraid to speak up, ask questions, question the norm or to challenge other leaders.  However, it is my experience that most human beings are intelligent and do have questions about what is going on around them but most are afraid to speak up or ask questions.  In the words of former Australian PM Tony Abbott: “there is a significant shortage of character, courage and conviction in leadership.”

One of the roles, I believe, of a good leader is to help those people speak up or to speak up for them.  Or to ask questions for them.  While I love the study and practice of leadership, I still have lots to learn.  One thing that I continue to learn is that often what I am thinking is being thought of by someone else.  In other words, I’m not unique in my thinking or observations of a situation.  If I speak up or question something – let’s say through a LinkedIn post – I routinely will get a direct message back from some readers who tell me something along the lines of “thank you for speaking up and asking the questions that I want to but cannot”.

The foundational reason for such readers not being able to speak up is usually about the fear of being criticized or “cancelled”.  Most people do not like to be criticized and take such criticisms personally.  It’s normal and not a good feeling so very understandable.  But leaders need to be able to feel comfortable asking the tough questions or speaking up when necessary and deal with the usual criticism.

Having said the above, speaking up or saying things out loud without thoughtful consideration can backfire.  In other words, it takes practice to know when to speak up and to be quiet even if the decision to speak up or keep quiet is not obvious.  Sometimes you’ll regret speaking up.  But in my experience, such regrets are good learning experiences for the next time.

Staying quiet or going along with the herd is not good leadership.  Say out loud what your audience is thinking.  It takes courage, character and conviction but the people you lead will thank you for such courage.


One Comment About Economics: Jack Mintz Article About Increasing Provincial Deficits


Jack Mintz, one of Canada’s preeminent economists, is a prolific writer on economic matters.  I admire his thoughts. His article in last week’s Financial Post is a good reminder of the dire financial shape that our provinces are in.  From the article:

With Manitoba presenting this fiscal season’s last provincial budget on Tuesday, we now see that most premiers, whatever their political stripe, are squanderers at heart: doling out more than they can afford even in the absence of recession. They obviously either haven’t heard or are choosing to ignore former United States Federal Reserve Board chairman Alan Greenspan’s view that “deficit spending is simply a scheme for the hidden confiscation of wealth.”

Except for Alberta and New Brunswick, which are running small surpluses, the provinces show little interest in controlling their deficits, never mind balancing their books. The three largest — Ontario, Quebec and British Columbia — expect their deficits to total $26.5 billion next year, up sharply from $10.4 billion this year. For the provinces as a group, deficits are expected to total $43 billion, an added debt burden of $1,050 per capita or $4,200 per family of four.

Carrying that almost trillion-dollar collective provincial debt requires interest expenses totalling $39 billion across provinces in the coming year. That’s more than total provincial spending on public order and safety, more than half of all provincial education spending and about one-sixth of provincial health-care spending.

In its recent budget, Ontario shows interest payments already averaging $4,000 per household and seems unfazed adding another $2,500 per household and stoking inflation and interest rates with its robust debt-financed spending.

Margaret Thatcher liked to say “the problem with socialism is that you eventually run out of other people’s money.” That quote should be displayed on every MP’s desk when the finance minister gets up to present the 2024 federal budget.

Yep – this is very concerning. As the article further states (not replicated here), Canadians are generally not interested in debts and deficits as a polling issue and one can understand that when they struggle to pay bills.  Unfortunately, though, this is a very important and serious issue that will cause significant reductions in Canadians standard of living.  Spread the word.


Bonus Comment – Quote From Plato– Ancient Greek Philospher – About Speaking Up


Your silence gives consent.


Yep, totally agree!  Leaders, are you being silent?  Or speaking up?

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