Saturday, November 28, 2009

Taxing our savings

One of the least talked about effects of implementing the HST is the impact on investments. Management fees charged by financial companies are now subject only to the %5 GST. If/when HST comes into effect there'll be another 7% (BC) or 8% (Ont) tacked onto fees for managing mutual funds and other investments. Management fees in Canada are already extremely high ranging from 1% to upwards of 3% of assets under mangement.

As this article explains the HST will hurt investors and their nest eggs:

... For a long-term investor, it will be the difference between an Audi and a Taurus, or golfing in Florida versus watching the Battle of the Blades on CBC.

We're talking multi-billions here. Why hasn't the issue been better publicized?

... There are compelling arguments and precedent for not further taxing Canadian's retirement capital, but unfortunately they've fallen on deaf ears because of bad timing and the wrong messenger.

... The timing relates to budget deficits. .... the response from a higher authority has been clear and consistent: “This is going to happen because we need the money. Focus on implementation and we'll talk about the inequities later.” Recessions are a bad time for rational arguments and good policy.

... the Investment Funds Institute of Canada (IFIC) [has] done a good job of laying out the arguments why the HST is bad for Canadian investors. But IFIC is an organization whose membership is made up of too many firms that charge world-leading fees, and have been reluctant to share the benefits of their scale with clients. IFIC's association with Bay Street's fat cats has hurt its credibility when arguing against HST....

Read on.
They tax our income. Then they tax our spending. Now they propose to tax our savings. It's time to seriously start considering a move to Alberta, or the Caymans.


Anonymous said...

Maybe Paul martin can give us tips on the CSL tax-Shelters it used to hide profits outside of canada's Tax-System that he was in charge of as Finance Minister under Chretien.

Anonymous said...

Don't forget the other forgotten taxes paid by savers. The artificially low interest rates that forces savers to take more risk and the inflation tax which is caused by government increasing the money supply. The inflation tax in particular has caused the dollar to loose over 90% of its value in the last 50 years.