kim@watsup.waterloo.edu (T. Kim Nguyen) (08/13/89)
I just heard about the federal sales tax which goes into effect January 1991. 9% on just about everything you can think of, and more... houses, cars, guitar lessons, haircuts, books (egads, textbooks!?!), ... what else!?? I can't believe the gall of the govt, to tax someone 9% on a 6-figure price for a house! So much for tax avoidance and shelters. This one there's no escape from. If we are indeed paying the price for all those benefits "we" get, then I'd like to be convinced that that price is as low as it might possibly be. Other tax hikes that p*** me off: the fed. sales tax on phone bills, a ridiculously high 10% to start off with, now 11%. Gasoline taxes. Alcohol taxes. How many days does that push back Tax Freedom Day for us??? -- Kim Nguyen kim@watsup.waterloo.edu Systems Design Engineering -- University of Waterloo, Ontario, Canada
mason@tmsoft.uucp (Dave Mason) (08/13/89)
In article <KIM.89Aug13013635@watsup.waterloo.edu> kim@watsup.waterloo.edu (T. Kim Nguyen) writes: >I just heard about the federal sales tax which goes into effect >January 1991. 9% on just about everything you can think of, and >more... houses, cars, guitar lessons, haircuts, books (egads, >textbooks!?!), ... what else!?? I can't believe the gall of the govt, >to tax someone 9% on a 6-figure price for a house! Most of that house is currently covered by an 11% FST. It's really only the final assembly (Gee, sounds like Free Trade :-) that is newly taxed. While this is not insignificant, it is not really much of a bump on an already overinflated house price. Moreover, it will not apply to resale homes, and there will be a rebate to make it ``revenue neutral'' for reasonably priced homes. It's really only in the Toronto market (and possibly a few other overheated city markets) where it will make a noticeable difference. It will also make building your own home more attractive. >So much for tax avoidance and shelters. This one there's no escape >from. I wish. Unfortunately there's already a whole bunch of exceptions... the aforementioned housing tax rebate, some food (not that I disagree with this exception), Stock broker commissions, etc. (see recent Financial Post for details). >Other tax hikes that p*** me off: the fed. sales tax on phone bills, >a ridiculously high 10% to start off with, now 11%. Gasoline taxes. >Alcohol taxes. As these are mostly discretionary expenditures, it seems reasonable to me that they should be taxed. Before you say that long distance & gasoline are not optional for some people, let me point out that the poorer parts of our society certainly are not known for the large amount of money they spend on these items. >How many days does that push back Tax Freedom Day for us??? I think ``Tax Freedom Day'' is an extremely misleading way to look at taxation and government spending. While I would very much like to see the deficit eliminated, and I feel that there are certainly cuts in government payrolls that would contribute to this, I consider the taxes I pay (appreciable) a reasonable cost when evaluating the total ``living in Canada'' package. ../Dave
afscian@violet.waterloo.edu (Anthony Scian) (08/13/89)
In article <KIM.89Aug13013635@watsup.waterloo.edu> kim@watsup.waterloo.edu (T. Kim Nguyen) writes: >I just heard about the federal sales tax which goes into effect >January 1991. 9% on just about everything you can think of, and >more... houses, cars, guitar lessons, haircuts, books (egads, >textbooks!?!), ... what else!?? I can't believe the gall of the govt, >to tax someone 9% on a 6-figure price for a house! There are rebates for homes under $400 000. Does anybody know any specifics regarding the sales tax rebates? Do we have to save every sales receipt to get the most rebate we can? >Other tax hikes that p*** me off: the fed. sales tax on phone bills, >a ridiculously high 10% to start off with, now 11%. Gasoline taxes. Phone less. Drive less. >Alcohol taxes. Drink less. Anthony //// Anthony Scian afscian@violet.uwaterloo.ca afscian@violet.waterloo.edu //// "I can't believe the news today, I can't close my eyes and make it go away" -U2
bdb@becker.UUCP (Bruce Becker) (08/14/89)
In article <15884@watdragon.waterloo.edu> afscian@violet.waterloo.edu (Anthony Scian) writes: |[...] |>Other tax hikes that p*** me off: the fed. sales tax on phone bills, |>a ridiculously high 10% to start off with, now 11%. Gasoline taxes. |Phone less. Drive less. |>Alcohol taxes. |Drink less. Yeh, especially beer. I hear the next thing in the works is going to be a piss tax 8^)... -- __ Bruce Becker Toronto, Ont. w \cc/ Internet: bdb@becker.UUCP, bruce@gpu.utcs.toronto.edu `/r/-e BitNet: BECKER@HUMBER.BITNET _< \_ Does a bovine bricklayer == a mu meson? - E. Farmi
tom@mims-iris.uucp (Tom Haapanen) (08/14/89)
Kim Nguyen <kim@watsup.waterloo.edu> writes: > I just heard about the federal sales tax which goes into effect > January 1991. 9% on just about everything you can think of, and > more... houses, cars, guitar lessons, haircuts, books (egads, > textbooks!?!), ... what else!?? I can't believe the gall of the govt, > to tax someone 9% on a 6-figure price for a house! It's 4.5% on houses up to $300,000 (or was it $400,000). On cars, it's 9%, down from 13.5%. So look for a drop in the price of cars. > Other tax hikes that p*** me off: the fed. sales tax on phone bills, > a ridiculously high 10% to start off with, now 11%. Gasoline taxes. > Alcohol taxes. Federal tax on phone bills will be down to 9%, as well. Our alcohol taxes are not terribly high, relatively speaking. Ditto for the gasoline taxes. It's not that I like taxes, but somebody's got to pay the bills... \tom haapanen "now, you didn't really expect tom@mims-iris.waterloo.edu my views to have anything to do watmims research group with my employer's, did you?" university of waterloo
kim@watsup.waterloo.edu (T. Kim Nguyen) (08/15/89)
In article <1989Aug13.161201.7535@tmsoft.uucp> mason@tmsoft.uucp (Dave Mason) writes: In article <KIM.89Aug13013635@watsup.waterloo.edu> kim@watsup.waterloo.edu (T. Kim Nguyen) writes: >textbooks!?!), ... what else!?? I can't believe the gall of the govt, >to tax someone 9% on a 6-figure price for a house! Most of that house is currently covered by an 11% FST. It's really only the final assembly (Gee, sounds like Free Trade :-) that is newly taxed. While this is not insignificant, it is not really much of a bump on an already overinflated house price. Moreover, it will not apply to resale homes, and there will be a rebate to make it ``revenue neutral'' for reasonably priced homes. It's really only in the Toronto market (and possibly a few other overheated city markets) where it will make a noticeable difference. It will also make building your own home more attractive. Is the FST applicable ONLY to new houses??? I was under the impression that ALL house sales were subject to the new tax. Another point I'd like to make concerning the FST: it will add up to a lot more than 9%, since the tax is applied at ALL levels -- so if you buy a new house, the builder pays FST on the materials, FST on various other services he purchases, and *THEN* you pay another round of FST on the total price. This (I believe) will apply to all goods which go through distributors, wholesalers, retailers, etc. -- Kim Nguyen kim@watsup.waterloo.edu Systems Design Engineering -- University of Waterloo, Ontario, Canada
mart@csri.toronto.edu (Mart Molle) (08/15/89)
In article <KIM.89Aug14155657@watsup.waterloo.edu> kim@watsup.waterloo.edu (T. Kim Nguyen) writes: >Is the FST applicable ONLY to new houses??? I was under the >impression that ALL house sales were subject to the new tax. It is ONLY on new houses. Resale houses are exempt. (I've seen this stated explicitly in the Toronto Star several times over the last week.) >Another point I'd like to make concerning the FST: it will add up to >a lot more than 9%, since the tax is applied at ALL levels -- so if >you buy a new house, the builder pays FST on the materials, FST on >various other services he purchases, and *THEN* you pay another round >of FST on the total price. This (I believe) will apply to all goods >which go through distributors, wholesalers, retailers, etc. No, you've got it all wrong. At each step in the chain, say: manufacturer -> distributor -> retailer -> retail customer there is indeed a 9% tax being paided by the purchaser and collected by the seller, but the seller GETS TO KEEP THE AMOUNT HE PAID WHEN HE BOUGHT IT, and pays only the INCREMENTAL AMOUNT (on the value added) to the government. For example, suppose a widget costs $100 to manufacture, and each of the distributor and the retailer set their selling prices by adding a 50% markup to THEIR COST. manufacturer's price to distributor: $100.00 9% tax collected: $9.00 Ottawa collects tax on initial value: $9.00 distributor's price to retailer: $150.00 9% tax collected: $13.50 distributor keeps tax he's already paid: -9.00 Ottawa collects tax on value added: $4.50 retailer's price to consumer: $225.00 9% tax collected $20.25 retailer keeps tax he's already paid: -13.50 Ottawa collects tax on value added: $6.75 So, in effect, the consumer pays $225.00+20.25 and Ottawa collects a total of $20.25, just as if it were done in the obvious way by simply adding a 9% retail sales tax. The only real difference is that Ottawa gets part of its money early, if the goods set in a warehouse for two years while the distributor tries to figure out what to do with an overabundance of out of season left-handed widgets. BTW, I saw a fascinating article that predicted an unusual side effect to this incremental tax collection a few weeks ago. The Star was attributing to someone at Revenue Canada (or perhaps some independent consultant -- it's been too long...) the claim that it would go a long way to allowing the Feds to catch people trying to cheat on paying taxes by bartering, etc. The basic idea is that it makes it much less attractive for your dentist to go to the widget distributor offering to clean his teeth for free in exchange for a free widget, so the dentist can avoid paying sales tax on the widget and income tax on the cleaning money used to pay for the widget. This is because each widget now comes equipped with an audit trail, from which Feds can see that the distributor bought a widget but didn't resell it to a retailer. Also, the distributor has ALREADY paid Ottawa the 9% tax on his $100.00 cost, and he won't get it back from the retailer unless he sells the widget "through the proper channels". Thus, bartering the widget for a dental cleaning means the Feds get to keep $9.00 of HIS money that he would normally get back from the retailer. (So, in effect, the Feds are getting their 9% of the barter deal, I guess! :-) The article went on to give an estimate in the tens or hundreds of millions of dollars as the amount of tax cheating they expected to be able to catch in this way. Mart L. Molle Computer Systems Research Institute University of Toronto (416)978-4928 mart@csri.toronto.edu
rwwetmore@grand.waterloo.edu (Ross Wetmore) (08/15/89)
In article <KIM.89Aug14155657@watsup.waterloo.edu> kim@watsup.waterloo.edu (T. Kim Nguyen) writes: >Another point I'd like to make concerning the FST: it will add up to >a lot more than 9%, since the tax is applied at ALL levels -- so if >you buy a new house, the builder pays FST on the materials, FST on >various other services he purchases, and *THEN* you pay another round >of FST on the total price. This (I believe) will apply to all goods >which go through distributors, wholesalers, retailers, etc. >Kim Nguyen kim@watsup.waterloo.edu I think you must have missed something. The GST is a 'value added tax' which means that the intermediary pays tax only on what it consumes and effectively gets a rebate on any tax paid on materials which go into a final product. The final consumer pays 9% (period). But then again, maybe I've been missing something ... Ross W. Wetmore | rwwetmore@water.NetNorth University of Waterloo | rwwetmore@math.Uwaterloo.ca Waterloo, Ontario N2L 3G1 | {uunet, ubc-vision, utcsri} (519) 885-1211 ext 4719 | !watmath!rwwetmore
mason@tmsoft.uucp (Dave Mason) (08/15/89)
In article <KIM.89Aug14155657@watsup.waterloo.edu> kim@watsup.waterloo.edu (T. Kim Nguyen) writes: >In article <1989Aug13.161201.7535@tmsoft.uucp> mason@tmsoft.uucp (Dave Mason) writes: > > In article <KIM.89Aug13013635@watsup.waterloo.edu> kim@watsup.waterloo.edu (T. Kim Nguyen) writes: > >textbooks!?!), ... what else!?? I can't believe the gall of the govt, > >to tax someone 9% on a 6-figure price for a house! > > Most of that house is currently covered by an 11% FST. It's really > only the final assembly (Gee, sounds like Free Trade :-) that is newly > taxed. [...] >Is the FST applicable ONLY to new houses??? I was under the >impression that ALL house sales were subject to the new tax. Only new houses. The GST only applies to value added, and inflation/appreciation is not normally considered to be value. >Another point I'd like to make concerning the FST: it will add up to >a lot more than 9%, since the tax is applied at ALL levels -- so if >you buy a new house, the builder pays FST on the materials, FST on >various other services he purchases, and *THEN* you pay another round >of FST on the total price. This (I believe) will apply to all goods >which go through distributors, wholesalers, retailers, etc. No. If, for example a builder pays $100,000 for materials, she would pay $9,000 GST. Then let's say the house sells for $200,000 so she would collect $18,000 GST from the buyer and remit that to the government, but would claim the refund of the $9,000 previously paid re: that house, so only $18,000 tax would have been collected overall, but it would have been collected as the parts progressed through the system. The new taxation is basically on services (such as the building of the house above, lawyers, etc.). But the tax is not compounded. The only problem that I see is that this mechanism is rather unwieldy and expensive to administer (the government expects to hire 1500 people to collect this tax). It would seem to me that it would be simpler (though there would be a one time delay) to collect the tax only on the final product when it is being sold to an end user or being exported. ../Dave
oneill@teecs.UUCP (Sean O'Neill) (08/15/89)
In response to article <<KIM.89Aug13013635@watsup.waterloo.edu>>, article <15884@watdragon.waterloo.edu>, <afscian.violet.waterloo.edu (Anthony Scian)> writes: >>Other tax hikes that p*** me off: the fed. sales tax on phone bills, >>a ridiculously high 10% to start off with, now 11%. Gasoline taxes. >Phone less. Drive less. >>Alcohol taxes. >Drink less. What about the new 9% Funeral Tax?? Die less?? :-) No, that can't be the answer. The longer we live, the more tax we pay. I guess the government has got you coming and got you going. ---- "What have I, what have I, what have I done to deserve this?" - Pet Shop Boys
stephen@ziebmef.uucp (Stephen M. Dunn) (08/15/89)
In article <3249@watale.waterloo.edu> tom@mims-iris.waterloo.edu.UUCP (Tom Haapanen) writes:
[...]
$Federal tax on phone bills will be down to 9%, as well.
Yeah, but they're taxing the whole bloody phone bill! No longer is it
just your long distance calls that get taxed, but it's also your line
rental and phone rental, too! So tack another $1.00/month onto your phone
bill for line rental tax (approximate for the Toronto area), plus whatever
tax on your phone rentals.
--
-------------------------------------------------------------------------------
! Stephen M. Dunn stephen@ziebmef.UUCP ! DISCLAIMER: Who'd ever !
!---------------------------------------------------! claim such dumb ideas? !
! I have become comfortably numb ... ! I sure as heck wouldn't !Oliver@real.FIDONET.ORG (Oliver McDonald) (08/16/89)
In an article of <14 Aug 89 22:52:56 GMT>, mart@csri.toronto.edu (Mart Molle) writes: MM> manufacturer's price to distributor: $100.00 MM> 9% tax collected: $9.00 MM> Ottawa collects tax on initial value: $9.00 MM> MM> distributor's price to retailer: $150.00 MM> 9% tax collected: $13.50 MM> distributor keeps tax he's already paid: -9.00 MM> Ottawa collects tax on value added: $4.50 MM> MM> retailer's price to consumer: $225.00 MM> 9% tax collected $20.25 MM> retailer keeps tax he's already paid: -13.50 MM> Ottawa collects tax on value added: $6.75 MM> MM>So, in effect, the consumer pays $225.00+20.25 and Ottawa collects a MM>total of $20.25, just as if it were done in the obvious way by simply MM>adding a 9% retail sales tax. The only real difference is that Ottawa MM>gets part of its money early, Yup, and the accounting costs extra at each stage, and many distributors/ retailers will keep their profit margins at te same level, BEFORE figuring their 'rebate' increasing the price to the consumer. Much the same way that many retailers increased the prices of cigarettes in Alberta the day the tax went up, not when they got the new stock in.... Oliver. -- | Views? What Views? |Oliver McDonald - via FidoNet node 1:342/1 | They're mine, not anyone |UUCP: ...!alberta!ncc!real!Oliver | elses! |ARPA: Oliver@real.FIDONET.ORG Hubble's Law applied to computers: The act of running a debugger, changes the output.
brian@jtsv16.UUCP (Brian A. Jarvis) (08/16/89)
In article <1989Aug14.185256.1260@jarvis.csri.toronto.edu> mart@csri.toronto.edu (Mart Molle) writes: >In article <KIM.89Aug14155657@watsup.waterloo.edu> kim@watsup.waterloo.edu (T. Kim Nguyen) writes: > >>Is the FST applicable ONLY to new houses??? I was under the >>impression that ALL house sales were subject to the new tax. > >It is ONLY on new houses. Resale houses are exempt. >(I've seen this stated explicitly in the Toronto Star >several times over the last week.) Well, hey! If it was in the Toronto Star, it must be so! B{) Sorry. I couldn't resist! >Mart L. Molle =============================================================================== __ __ Brian A. Jarvis, / ) ...jtsv16!brian / ) J.T.S. Computer Systems Ltd., /--< __ o __. ____ /--/ Downsview, Ontario /___/_/ (_<_(_/|_/ / <_ / ( o My dog, Goof, still says "Hi!" "Lord, defend me from my friends; I can account for my enemies." - D'Hericault ===============================================================================
gerard@uwovax.uwo.ca (Gerard Stafleu) (08/17/89)
In article <1989Aug14.185256.1260@jarvis.csri.toronto.edu>, mart@csri.toronto.edu (Mart Molle) writes: > > The basic idea is that it makes it much less attractive for your dentist > to go to the widget distributor offering to clean his teeth for free in > exchange for a free widget, so the dentist can avoid paying sales tax on > the widget and income tax on the cleaning money used to pay for the widget. > This is because each widget now comes equipped with an audit trail, from > which Feds can see that the distributor bought a widget but didn't resell > it to a retailer. We must be approaching the final frontier of big government here. According to this view, the Feds would do the year-end inventory and accounting for the _whole country_! Wow. But it is true that tax evasion will have to become a bit more subtle, if not less effective. The trick is the following. The widget manufacturer will sell the widget to the dentist, in the normal way (he may give a discount). I rather doubt that it will be recorded to whom he sold the thing, or if it is possible for the Feds to trace that. Even if it is, it doesn't really matter. What the dentist will do is charge the manufacturer for the cleaning job. But he will charge him less than the normal price. Finally, he will not report the job to the Feds, thus avoiding both income tax and FST. In other words, the dentist and the manufacturer split the gain of not paying taxes. The principle here is that while goods may be traceable (but don't hold your breath), services are as good as un-traceable. As a result, a "black" economy of services will develop. For example, if you want a plumbing job done in your house, you can call a well known, go-by-the-rules plumbing firm, and pay a lot of money. You can also call a handyman, who, in a careful balancing act, declares only part of his income. I'm not making this up out of thin air. In countries that have a FST-like tax, this system works quite well. For example, in the Netherlands it is estimated that 20 to 30% of the economy is black. In Italy, numbers as high as 50% are mentioned (together with the remark that the reason there still _is_ an Italian economy, is their black economy). I had a "handyman" do some things in my house in the Netherlands, and payed only about 60% of what an "official" job would have cost. So you can see how I'm expectantly waiting to see how Wilson is going to make his predictions about less tax evasion come true. You can probably also see why I'm not holding my breath. A final philosphical remark may be in order. The amount of tax evasion does not depend on the type of tax. It depends on the (un)willingness of the people to pay tax, which is directly related to the height of the taxes. As European countries have discovered, there is a limit (somewhere between 50 and 60% total tax pressure) beyond which taxes can literally not be raised. You can raise the rates, revenue, though, stops increasing (both because of evasion and because of stifling the economy). -------------------------------------------- Gerard Stafleu (519) 661-2151 Ext. 6043 Internet: gerard@uwovax.uwo.ca BITNET: gerard@uwovax
glee@sunray.UUCP (Godfrey Lee) (08/17/89)
In article <150002@teecs.UUCP> oneill@teecs.UUCP (Sean O'Neill) writes: +---------- |In response to article <<KIM.89Aug13013635@watsup.waterloo.edu>>, article |<15884@watdragon.waterloo.edu>, <afscian.violet.waterloo.edu (Anthony Scian)> |writes: |+---- ||+-- |||Other tax hikes that p*** me off: the fed. sales tax on phone bills, |||a ridiculously high 10% to start off with, now 11%. Gasoline taxes. ||+-- |+---- | |+---- ||Phone less. Drive less. |+---- | |+---- ||+-- |||Alcohol taxes. ||+-- |+---- | |+---- ||Drink less. |+---- | | What about the new 9% Funeral Tax?? | | Die less?? :-) | |No, that can't be the answer. The longer we live, the more tax we pay. |I guess the government has got you coming and got you going. +---------- How about this? Phone, Drive, Drink, and Die somewhere else. That's what the British did in the '60, drove all the high earners out of Britain! -- Godfrey Lee P.O. Box 9707 Cognos Incorporated 3755 Riverside Dr. VOICE: (613) 738-1338 x3802 FAX: (613) 738-0002 Ottawa, Ontario UUCP: uunet!mitel!sce!cognos!glee CANADA K1G 3Z4
glee@sunray.UUCP (Godfrey Lee) (08/17/89)
In article <1989Aug14.185256.1260@jarvis.csri.toronto.edu> mart@csri.toronto.edu (Mart Molle) writes: >the claim that it would go a long way to allowing the >Feds to catch people trying to cheat on paying taxes by bartering, etc. > >The basic idea is that it makes it much less attractive for your dentist >to go to the widget distributor offering to clean his teeth for free in >exchange for a free widget Most of the bartering involves the services side of business. Do my tax return for me and I will clean your teeth. With the amount of paperwork the government has burdened the professional or small business man, I would think that it would encourage bartering. You don't have the pay the tax on the service, and you save yourself some paperwork! -- Godfrey Lee P.O. Box 9707 Cognos Incorporated 3755 Riverside Dr. VOICE: (613) 738-1338 x3802 FAX: (613) 738-0002 Ottawa, Ontario UUCP: uunet!mitel!sce!cognos!glee CANADA K1G 3Z4