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Kim G C Moody’s Musings – 1-1-1 Newsletter For February 26, 2025
One Comment About Taxation – Have You Ever Thought About How Much Government Taxes, Fees and “Levies” You Actually Pay?
When people talk about paying taxes, there is usually an automatic assumption that the topic is about income tax. However, have you ever thought about all of the other types of taxes and government fees / “levies” that erode your income and wealth?
Technically, taxes are mandatory with no direct benefit to such payments. Fees charged by government are usually in exchange for a type of service or other direct benefit. A levy is often imposed on an industry or activity but can encompass a broad category of costs. In real life, the distinction between “fees” and “levies” can be very blurry.
Here’s a quick list of some of the more obvious tax and fees / levies that Canadian families will pay in a year:
1. Federal and provincial income taxes – the rates vary by taxable income and province of residence for individuals but range from a low of 0% to a high of roughly 54%. These taxes include taxes on employment, capital gains, property income, business income, etc;
2. CPP, QPP, EI – these are a form of a payroll tax since such contributions by the taxpayer are mandatory;
3. GST / HST – Canada’s value-add consumption tax. While there are some exceptions to the GST / HST, it can range from a low of 5% (in AB, NU, YK and NT) to a high of 15% in most of the Atlantic provinces;
4. PST – BC, MB, QC and SK also charge a separate provincial sales tax since they are not harmonized with the GST. This adds obvious confusion in those provinces as to what is taxable for PST purposes vs for GST purposes;
5. Federal / provincial excise taxes on gasoline and other fuels with additional “carbon taxes”;
6. Federal / provincial excise taxes on alcohol;
7. Federal customs duties / tariffs on certain imported goods;
8. Federal “luxury taxes” for certain automobiles, airplanes and boats;
9. Air Traveller Security Charge – levied on a per passenger basis depending on the type of flight;
10. Provincial vehicle registration fees / drivers license fees – all provinces charge a fee to register vehicles / have a drivers license in their applicable province;
11. Municipal property taxes – each municipality in Canada will charge you a lovely tax for the pleasure of owning real estate in its jurisdiction;
12. Property transfer tax – some provinces – like B.C and Ontario, for example, will charge land transfer taxes each time a property’s title is transferred;
13. Life insurance premium tax – you own a life insurance policy in Canada? Well, you’re indirectly paying a provincial premium tax that the life insurance carriers pay;
14. Development charges – often paid by land developers to municipalities to fund various infrastructure (schools, roads, etc) that are passed on to the purchasers of the property;
15. Municipal landfill fees – if you want to dump your garbage off, there’s often a cost for that;
16. Municipal parking fees and fines – you want to park in a city? There’s a cost for that;
17. Toll roads and bridges – some provinces, like Ontario, charge fees to access certain roads and bridges;
18. Short-term rental fees – some municipalities charge registration fees for the pleasure of renting out your property. Such costs are passed along to renters;
19. Business licensing fees – you’re starting or operating a business? Many municipalities will charge a fee for that;
20. Building permit fees – you want to build or renovate your house? There is usually a municipal permit requirement with a fee, of course;
21. Emergency services fees – you need an ambulance? There’s a price for that;
22. Vacancy taxes –Some municipalities, like Toronto and Vancouver, have vacancy taxes that can apply to residents if their property is sitting vacant too long;
23. Passport fees – you need a passport? There’s a fee for that;
24. Firearm fees – you want to own a firearm? There’s a cost for that;
25. Ontario Health Premium – maximum cost of $900 per year, depending on your taxable income. AB and BC previously had health premiums but abolished them.
I could go on and on. Hopefully you see the picture that taxes, fees and levies carry a huge cost for families.
The Fraser Institute conducts an annual survey of the tax load for an average Canadian family of four (married couple with 2 young children). The survey results, like the above list, is eye-popping. It shows that the taxation load for that average family in 2023 was 43% of their cash income. This percentage does not include some of the “fees” / levies listed above. And it’s also significantly higher than the costs for food, clothing and shelter combined.
When you step back and look at the full picture, it’s pretty clear our governments find ways to tax, fee, and levy Canadians with an insatiable appetite for more. Some of these charges are obvious, but many are buried in the fine print of daily life, quietly draining wallets. The fact that the average family’s tax burden exceeds their combined basic living costs should be a wake-up call to take a hard look at what you’re paying for and ask whether you’re getting good value in return.
In my opinion, the answer is an emphatic “no”—we should be expecting more for our hard-earned contributions. And it starts with demanding balanced budgets (and not playing accounting games to get to those balanced budgets / reduced deficits like Mark Carney is proposing to do – more on that below)and respect for taxpayer dollars by our politicians.
As the famous actor Bill Murray put it, “The best way to teach your kids about taxes is by eating 30% of their ice cream.” Except in Canada, the ice cream-eating percentage will be well over 43%. I’m confident your kids won’t feel like they got good value in return for you eating that 43%.
One Comment About Leadership – A Simple Leadership Rule – Tell The Truth, Be Consistent and Lead With Conviction
The leading Liberal leadership candidate, ‘er the appointed one, Mark Carney recently said one thing in English and just the opposite in French. Carney told an English speaking audience he would accelerate pipeline approvals across Canada – even using emergency powers – while telling a French audience he would not proceed without Quebec’s consent. It got me thinking about basic and core leadership principles.
Such a basic inconsistency violates the following basic leadership principles:
Always tell the truth, be consistent and lead with conviction.
Being truthful.
Leaders need to tell the truth, even when it’s uncomfortable. Honesty is the foundation of trust. If people don’t believe their leader is consistently truthful, they won’t follow him or her—at least not willingly or for long. Telling the truth means being clear, factual, not sugarcoating reality and admitting mistakes.
Good leaders don’t tell people what they want to hear; they tell them what they need to hear. Winston Churchill, for example, didn’t promise an easy victory in WWII—he promised “blood, toil, tears, and sweat.” That honesty prepared the British people for the long fight ahead.
Good leaders also don’t speak in jargon, talk in circles or platitudes. Instead, they are truthful providing clarity of thought and purpose.
Be Consistent – Do What You Say and Say What You Do
Good leaders do what they say and say what they do. In other words, they are reliable. And principled. Their actions and messages don’t change depending on the day of the week and what their audience might think of them.
I saw a video the other day of the U.S’s new border czar, Tom Holman, who opened up his recentspeaking engagement by saying: “Let me start off today by saying if I offend anyone, I don’t give a shit….don’t care.” I love that. He is obviously a leader who is comfortable with his purpose, mission and mandate. And it’s obvious he will be consistent with his message no matter who he is speaking to. If a leader’s message changes depending on the audience, the day, or their mood, people stop listening because such people who flip-flop based on convenience aren’t leaders—they’re followers of public opinion. While leadership tactics might change, core values and beliefs shouldn’t waver.
Leadership consistency builds stability and helps to ensure their organizations can thrive…usually because of predictability of their leadership’s actions.
Lead With Conviction
Good leaders lead with conviction. They have a vision and stick to it. They are truly invested in the vision and willing to take risks to achieve it. They are willing to be criticized for such vision. Having such strong convictions is truly contagious amongst team members.
Leaders, don’t be like many politicians and stray from good leadership principles all in the name of securing votes.
Be better.
One Comment About Economics – Mark Carney’s Proposed Accounting Games to Reduce Government Deficits
Luca Pacioli – the Father of double entry accounting – was onto something when he contributed his wisdom in the 15th century to create what we know today. Out of his principles, we have income statements, balance sheets and cash flow statements. And out of that, centuries later, generally accepted accounting principles (“GAAP”) was “born”. And “IFRS”. Each country has slightly different principles and reporting requirements that encompass GAAP but for the most part, GAAP is GAAP around the world. In other words, accounting principles have not changed much over the centuries.
Given this background, when the Liberal leadership “appointed one”, Mark Carney announced a proposed new approach to government budgeting, my ears perked up. This is what he announced on his website:
“…a government led by Mark Carney will separate the federal government’s operating and capital budgets, and make major changes to each. It will balance the federal operating budget over the next three years, creating room for personal tax cuts so that Canadians can keep more of their hard-earned money.”
While the statement lacks further details, one can easily see what is being attempted here. Instead of applying “normal” accounting and budgeting principles, Mr. Carney and his cohorts will attempt to classify otherwise spending (which would increase the government deficit) into capital items so as to remove such spending from the deficit calculation. The obvious question, then, is what would be a capital item vs an operational expense? Ahhhh…..good question.
In an excellent article in the National Post on this topic, the author reminds readers that the Alberta Provincial government, led by then disastrous Premier Allison Redford, attempted this kind of budgetingexercise in 2013 and got thoroughly and rightfully roasted for this lame attempt to make the numbers look better.
From the article:
Trevor Tombe, an economist at the University of Calgary, says he immediately noticed the similarities between Carney’s proposal and short-lived accounting rules introduced by then Alberta Progressive Conservative premier Alison Redford more than a decade ago.
“That was my first thought,” said Tombe. “And it wasn’t a good thought, because it was a disaster when Redford tried that in the 2010s.”
The new accounting rules, first used in Redford’s 2013 budget, divided public expenditures into three categories: operational spending, capital spending and savings.
Redford and then finance minister Doug Horner said at the time the new rules would give Albertans a clearer picture of how their tax dollars were being spent.
Tombe says, with hindsight, the opposite was the case.
“When you ditch consolidated spending figures, and sort everything into these different buckets, that becomes a problem, because it makes it difficult to get a full financial picture,” said Tombe.
Tombe said the convoluted accounting in Redford’s 2013 and 2014 budgets left him and other economists having to add up some of the numbers on their own.
And it wasn’t just the ivory-tower eggheads who were rankled, as Redford’s contentious accounting rules soon became a political albatross.
Alberta’s auditor general slammed the two Redford budgets for failing to meet “basic public sector accounting standards” in a scathing mid-2014 report. Critics on the right linked the fast-and-loose accounting rules to the ballooning of the province’s debt under Redford’s watch.
“It’s fair to say that (Redford) made choices to hide the deficit,” said Tombe.
…
Economist and former finance official Jack Mintz says that capital-based budgeting schemes like the one floated by Carney tend to run into spending problems, largely because capital is a hard concept to define.
“One of the issues to get into is, how do you define capital? And some of the governments would go, like, if you spend money on teachers, you’re creating human capital. So that’s becomes capital,” said Mintz.
“In the end, it doesn’t matter, because if you take capital out, and you don’t have revenues to cover it, then you’re going to have borrow money, and your debt is going to go up.”
I totally agree with Trevor Tombe and Jack Mintz. Such accounting games are ridiculous. The bastardization of Luca Pacioli’s basic principles is usually debatable. In Mr. Carney’s proposals, they are simply nutty with the potential to be outright deceptive.
Canadians need to reject this kind of thinking.
Bonus Comment – Quote From Authors Howard Schilit and Jer
“Management can exploit the flexibility in accounting rules to deceive stakeholders—recording revenue too early, hiding expenses, or shifting liabilities off the books. Governments do similar tricks with budgets, just on a grander scale.”
Agree. And the proposal / “trick” by Mark Carney to deceive Canadians certainly falls into this category.
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