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20 The Canadian Statesman, Bowmanville, Wednesday, May 11,1994 Section Two BUSINESS and FINANCE Tinkering with G.S.T. Migraine Barney Helps Open Newcastle Business Tilley Opticians celebrated their grand opening in Newcastle Village Village Saturday, April 30, with balloons, refreshments, games, and even a visit from Barney the Dinosaur and a friendly clown. Tilley Opticians is located at 16 Baldwin St. By Paul Pagnuelo When it introduced the GST the Mulroney government created a false expectation no government could deliver deliver on. The GST's greatest shortcoming shortcoming has been its apparent failure to reduce the federal deficit. Canadians strong hatred of the tax is due to the fact that it has been seen as the easy way out. In 1991, it was easier politically to simply bring in a powerful new tax lever. But times have since changed. In 1994, Canadian taxpayers want the Liberal government to deal with the root cause of their anger.. .namely excessive excessive government spending. For weeks on end the Commons Finance Committee has been holding special hearings on how the GST should be reformed. Trying to find the right solution won't be easy. But before they do, tiiey would be wise to listen carefully to what the average person on the street thinks. Because it's vital that people like you and me...the taxpayer...buy taxpayer...buy into their eventual choice. A recent random survey of the 85,000 members of our national organization, organization, the Canadian Taxpayers Federation, contained some interesting interesting insights on the opinions of average average Canadians. Of those surveyed, 79% opposed the GST when it was introduced. 42% told us they want the GST eliminated eliminated altogether. 39% favoured replacing replacing it with a different kind of federal federal consumption tax. 19% said keep it. 74% of survey respondents said if the GST were to be eliminated, the $16 billion in net revenues should be offset by cutting government spending spending in the same amount. Only 1% favoured favoured raising other , taxes. The remaining remaining 25% felt it should be offset through a combination of spending cuts and other tax increases. Recognizing that accountability is a critical factor in public acceptance, 46% said any replacement consumption consumption tax should be completely visible. 38% preferred to have it included in the sticker price, provided it was visible visible on the receipt or invoice. Only 16% want the tax to be completely hidden. If a replacement consumption tax is introduced, 46% prefer one with no exemptions and a much lower rate. 26% prefer a tax with fewer exemptions exemptions and a slightly lower rate. 28% oppose taxing more goods to lower the rate. The most interesting question was that which tried to find out whether people prefer income taxes or consumption consumption taxes. An astounding 70% said, in principle, they'd rather pay consumption taxes on what they spend, than income taxes on what they make. Finally, 80% said they support harmonization of federal and provincial provincial sales taxes, with a similar number number preferring only one level of government government administering both. . The likelihood of seeing the GST scrapped altogether is remote. Lost revenues of $16 billion when added to the annual deficit of $40 billion means Ottawa would have to cut $56 billion or about a third of its spending if we ever hope to finally balance the books. Whatever solution the government comes up with, chances are it'll fail to please the majority. Because despite despite all the good intentions, it will have succeeded only in tinkering at the edges. What this country really needs is radical reform of the complete tax system, coupled with a national dialogue dialogue on where spending should be cut. Anything short of this will only perpetuate tire national migraine Canadians Canadians are suffering from. One can only hope that our new government learns some important lessons from the past. "Let's Talk Taxes" is a feature service of the Ontario Taxpayers Federation. The Durham Regional Police Service's Service's Major Fraud Unit are advising the public to be aware of counterfeit bank notes. A large number of these bank notes have recently been passed throughout the south end of Durham Region, usually through small Retail Outlets. In the first three months of 1993, Police had 23 separate cases and in the same period of 1994 there have been 100 incidents. During the month of April 1994, 41 counterfeit bills have have passed, 14 of which were U.S. Sane of these bills appear to be brand new and others are well worn. A common feature is that the paper quality is not as good as real curren- DISCOUNTS FOR DOUBLE PARKING. m Liberty Mutual Insurance Company 68 King St. E., Bowmanville, Ontario L1C 3X2 623-8914 Insure two or more cars with Liberty Mutual and we'll reduce your rates. Call us today for more information. LIBERTY MUTUAL 0 1994 Liberty Mutual Insurance Group/Unlonvllle, Ontario 6 Durham cy, and red and blue security fibers normally present in bonified currency, currency, has been reproduced on the face of these notes by using ink. If these blue or red fibers can be lifted from the paper whole, then the bank note is probably good. If, however, however, the blue and red lines can be removed removed from the paper by scratching, these are probably mechanical repro- ductions of the security fibers on the bank note. A number of styles of this note are waxy and smooth to the touch. A real bill will have raised printing in several areas of the bank notes. . , In addition to these American $20.00 bank notes currently in circulation, circulation, there have been a number of $20.00 and $100.00 Canadian bank notes passed. Most of the $20.00, and all of the $100.00 denomination notes are being produced by the bubble-jet bubble-jet printer process. Careful inspection inspection of the background of these notes will reveal that instead of the proper printed background, the background background will be composed of tiny multi-coloured multi-coloured dots. Careful attention should be given to the curved lines immediately to the left of the Queen's head. These lines are not perfect as in a real bank note, and citizens citizens should be suspicious of the note. Conparison of suspicious notes to authentic bank notes in their possession, possession, is an ideal way to check the authenticity of a bank note. In addition, Canadian bank notes have green silk dots that can be removed removed from the paper of the bank note. Mechanical reproductions of these green dots will leave a printed dot on the top of the paper which cannot be removed from the paper in one piece. For further information call Detective Detective Jack Haze at the Fraud Squad, ext. 228. by Brian Costello WHAT TO DO WITH REBATE CHEQUE Isn't it great. Revenue Canada says it's processing our tax returns at a record pace. That means we'll get those fat tax rebates in record order as well. We, in turn, will be able to convert them into a windfall which will give us financial security in the future, right? Actually, that's not a bad theory. This is found money. We should be putting it to the best possible use. However, rather than simply thinking about a way to spend it why not think about ways to use it to manufacture even more tax relief which we can then spend. For some, the highest priority should be to look at their RRSPs. If you borrowed to contribute to your plan most financial planners would suggest you use your tax rebate cheque to pay off that loan. The interest on RRSP loans is not tax deductible. As a result, your real cost is well in excess of the interest on any tax deductible bans. But, why not use your rebate cheque to produce tax savings for this year? If you contributed the average rebate cheque (around $900) to your RRSP you would save about another $400 in tax for this year. In addition, the $900 would compound tax free inside your RRSP where it would grow much faster than outside. The $400 tax rebate could then be used next year to produce further tax savings. Actually, it can be used immediately. That's one of the biggest problems we face in the financial planning world. Most taxpayers feel they cannot get tax relief until the spring each year when they file their tax returns. However, if you can prove you are entitled to the tax savings now, a good financial planner can arrange for your employer to reduce the withholding taxes on your salary in advance. . The rationale when it comes to your tax rebate is that it's found money. Actually you just found your own. Revenue Canada isn't doing you any favour. They are simply returning your own money. The good news is that it's tax free. But, it should be. After all, it's simply the return of your own money. The key, then, is to use it to produce the most possible additional benefit. After your RRSP why not consider putting it into a registered education savings plan. We are allowed to contribute up to $1500 per child per year into one of these plans. We dont manufacture any tax relief but at least we will enjoy tax free compounding as the money grows tax free until we want to remove it for a child's education. At that time it will be taxed at the student's low tax rate. The best of the bunch, in my opinion, are the self administered RESPs that are available through independent financial planners and stock brokers. What about your mortgage? If you still have one you may not be high on the thought of paying extra against it given today's low interest rates. However, given the recent rate increases it makes sense to pay extra against your mortgage. One payment of $900 will save you interest on that amount every year for the rest of the life of the mortgage. The key, though, is that these are tax free savings so they are really worth much more in real dollars. If it were a choice of one against the other though, I'd opt for contributing to my RRSP as it manufactures a substantial tax reduction. I can always use the increased take home pay when I have my withholding taxes reduced to pay against my mortgage. This might be a good time to think about income splitting. You've just found some money. If you give it to your children they might be able to pay for their own education or at least get a leap start on their future when they start working. If the child is under age 18 though there's something called the attribution rule that you have to consider. If yoù give a minor money and he or she invests it you have to pay the tax. However, if the income produced is a capital gain there is no attribution back to you. It only applies to interest and dividends. So, why not invest your rebate in mutual funds or stocks that produce growth rather than income. Ten or twenty years down the road they will be worth a fortune. But, you pay no tax. Few people realize that you can do the same with a small business. If you give your child money that is invested in a business you don't have to pay tax on the share of active business income that is produced. It's taxed at the child's rate, if the child is taxable. These Ideas all sound firm and rational. However, maybe the best thing we can do with our tax rebate cheque is to treat ourselves. Why not take a trip, have a party, buy something you always wanted. If you do, though, don't forget when you are enjoying this bonus that it could be far more exotic, far more a enjoyable had you practised more financial planning.