High Speed Rail: London - Kitchener-Waterloo - Pearson Airport - Toronto

[dunkalunk]

We're your family.

I like this :3 Good resolution team!

 

[mrxbombastic]

The budget may list high speed rail and lot of other transit projects, it doesn't mean that they actually will get built. I think that the government is going to be forced to cut a lot more than Kathleen Wynne wants because Ontario will soon get hit with a credit downgrade. Borrowing massive amounts of money without raising taxes is a really foolish thing to do. Unless Ontario's economy drastically improves, since the GTA has one of the highest unemployment rates of a big city in North America now (much higher than most US cities now). The government can easily delay projects until 2020 (which is the same as cancelling them if they are controversial). As for the pension plan, I think that regardless of its merits (people saving too little for retirement), people will absolutely hate having their paycheques reduced to pay for it, and trying to raise taxes on anyone other the wealthy at the same time will make the Liberals unpopular. Wynne has stopped talking about transit taxes even though she has a majority and can implement it if she wants.

i think the parking space 0.25$/day parking space levy was the most reasonable thing. Those spots are pure profit to parking lot owners/authorities seeing as they are often automated and require little to no maintenance. Plus as many of us already find parking to be expensive and simply accept the state of affairs as they are, I cant see many people barking at the idea of a 0.25$ levy, or deciding not to park.

Those $350million seem like easy pickings for a government trying to even out its revenue and expenses, while showing signs that they are somewhat serious about having us pay for transit.

 

[innsertnamehere]

$0.25 a spot was for every non residential spot in the GTA, whether that be downtown parking garages or the unused back lot at some vaughan Wal Mart.

It also had legal issues with municipalities forcing developments to have minimum parking requirements but then charging them for those minimum requirements.

 

[gweed123]

$0.25 a spot was for every non residential spot in the GTA, whether that be downtown parking garages or the unused back lot at some vaughan Wal Mart.

It also had legal issues with municipalities forcing developments to have minimum parking requirements but then charging them for those minimum requirements.

Indeed. I made a post a while back detailing that very same thing. I've designed some commercial site plans, and I can tell you that I had to put in more parking than the developer thought they needed, simply because of the minimum parkings standards in place at the time. If they start getting charged a daily rate per space, there would be a lawsuit filed in every municipality the law took effect in very quickly.

It would be easy to simply remove the minimum parking standards (or make them a "suggestion"), but there are thousands of commercial site plans already constructed with superfluous parking. There would need to be a one year grace period or something where owners could convert some of their un-needed parking spaces into islands or green space or something.

 

[1overcosc]

The government is already hiking income tax on people who make $150k a year or more. One thing I could see the government doing if their budget projections don't happen in reality, is lowering that threshold down to maybe $90k or so. That would significantly increase revenue. While the vast majority of Ontarians make less than $90k, the number of people in the $90k-$150k range is still sizeable.

Another thing the government could is plug up all those nasty loopholes that let the rich cheat on their taxes. Eliminate the capital gains issue by replacing the "capital gains is half off tax" rule with a new rule that capital gains are only half off for the first $10k of capital gains income, the rest is taxed at the full rate. That protects people's pension & RESP investments while forcing the millionaires to actually pay a decent tax rate on their dividends and stock options. Some sort of mechanism needs to be looked at to deal with the corporate expense issue as well. Many wealthy people who own businesses cheat on their taxes by lowering their own salaries, then compensating for it by giving themselves bigger benefits from their company (eg. having their company pay their rent for them), a move that lowers their on-paper income. Some sort of reform to fix this issue would help. Other things that could be looked at without breaking any promises are inheritance taxes, provincial development charges, the corporate tax rate (caution has to be taken with this one, but an increase of half a percentage point is probably fine), resource royalty rates, LCBO pricing. I sincerely think Wynne is actually planning on that, because notice that whenever the issue of taxes comes up, she's very clear to say "No increases in HST, gas taxes, or income taxes on low & middle income earners", never given a blanket "no new taxes".

In any case, Wynne's budget projects, while firmly on the optimistic side, are not that crazy. The deficit is definitely going to go down significantly with her plan as currently promised. She's budgeted a freeze in program spending in the 2015-16, 2016-17, and 2017-18 fiscal years, which can actually be done without any impact to transit spending (the spending growth required to fund it was already done in 2014-15) and is overall realistic considering the legislative changes coming to the arbitration system that will help with reigning in wage costs. With a freeze in program spending and increases to debt servicing costs (the budget actually predicts a credit downgrade in 2015 and budgets for an increase in debt serving costs as a result--downgrades will not break the fiscal plan), revenue will have to grow by some $5B a year in each of those three years to hit balance. Without tax hikes, getting that will be challenging, but if Wynne does get creative with taxes, it should no biggie.

At first I thought Wynne's approach will be to extend the timeline for balance by a year or two, but she's making it clear that's not the game plan.

Some things may come along to help. The forecasted downgrade may not happen. Some credit rating agencies give Ontario a negative outlook, others a stable one. The medium-term fiscal plan is sound, even if Wynne can't balance by 2017-18, the debt-to-GDP ratio (the number that actually matters) will definitely stop growing by 2017. Some credit rating agencies may decide that's fine and retain their rating with a caution (which will increase serving costs, although only by about $100M as opposed to the $600M cost of a downgrade), others probably won't.

 

[TOareaFan]

^that got real confusing to me when, somehow/magically, changing the rules on capital gains taxation (which I think is actually a federal decision) somehow changed the rate of taxation people paid on dividend income.....couldn't focus on the rest.

 

[muller877]

So many issues with this post. Clearly you don't understand tax policy and economics.

The government is already hiking income tax on people who make $150k a year or more. One thing I could see the government doing if their budget projections don't happen in reality, is lowering that threshold down to maybe $90k or so. That would significantly increase revenue. While the vast majority of Ontarians make less than $90k, the number of people in the $90k-$150k range is still sizeable.

This creates a huge disincentive to work. Paying almost 50% income tax, CPP an Ontario PP, Health Tax, EI, etc. will not encourage people to work harder. It will also be more difficult to attract/retain the creative class.

Finally a high tax rate actually creates incentives for tax planning and/or tax cheating. It's not woth it to avoid a 40% tax but to avoid a 50% tax...psychologically the richer will find ways to LEGALLY defer/reduce their income tax bill. Such things as investing in RRSP's...which in itself is a good thing but if too many people save it actually reduces spending and hurts the economy.

ILLEGALLY people will move to to underground economy which will also hurt tax revenue (and yes...even bartering without reporting it to the government is illegal).

Another thing the government could is plug up all those nasty loopholes that let the rich cheat on their taxes..

A loophole is not "cheating". The loopholes are the law. You may think its immoral but it definitely is not cheating. One "loophole" that those nasty rich people use is donating to charities. The horror! Another loophole that the working class use is paying for union dues. Those bastards!

Eliminate the capital gains issue by replacing the "capital gains is half off tax" rule with a new rule that capital gains are only half off for the first $10k of capital gains income, the rest is taxed at the full rate. That protects people's pension & RESP investments while forcing the millionaires to actually pay a decent tax rate on their dividends and stock options...

Canada has an integrated system of taxation that clearly you do not understand. Dividends and capital gains are set in a way so that a person earning the money individually (versus by a corporation) should pay the same rate of tax.

For example, if I decide to set up a plumbing business. If I earn the money individually, I will have to pay 48% tax. Every $100 I earn I will take home net of tax $52. If I decide to incorporate to limit my liability (if I get sued I do not want them to take my house) I should take home the same amout of money. I would earn the same $100. I then would pay $26 in corporate tax (leaving $74). If I had to pay 48% when I took the money out of the corporation, personally I would have to pay $36, leaving $38 for myself (disincentive to incorporate).

That's why there is a lower rate on dividends and capital gains. If I decide to sell the company for the cash left of $74, I would have a 24% personal tax rate (48% x 1/2) which is $18. This leaves me with $56 (pretty close to the $52 I would otherwise earn personally. Same goes for dividends. The "gross up" and "Dividend tax credit" result in a similar rate of tax...take home of around $52.

Some sort of mechanism needs to be looked at to deal with the corporate expense issue as well. Many wealthy people who own businesses cheat on their taxes by lowering their own salaries, then compensating for it by giving themselves bigger benefits from their company (eg. having their company pay their rent for them), a move that lowers their on-paper income. Some sort of reform to fix this issue would help.

If the wealthy pay themselves a salary they pay tax at 49%. If they try to pay their kids which earn less then them it is still taxed at 49%. If they get a benefit such as rent, a car, etc they also pay tax on the "taxable benefit" at 49%. So taxed at the highest rate...what reform is needed here????

me things may come along to help. The forecasted downgrade may not happen. Some credit rating agencies give Ontario a negative outlook, others a stable one. The medium-term fiscal plan is sound, even if Wynne can't balance by 2017-18, the debt-to-GDP ratio (the number that actually matters) will definitely stop growing by 2017. Some credit rating agencies may decide that's fine and retain their rating with a caution (which will increase serving costs, although only by about $100M as opposed to the $600M cost of a downgrade), others probably won't.

The downgrade WILL happen. Until the rating agencies see a commitment to reduce costs, we will be paying more interest.

 

[Hank]

Another thing the government could is plug up all those nasty loopholes that let the rich cheat on their taxes. Eliminate the capital gains issue by replacing the "capital gains is half off tax" rule with a new rule that capital gains are only half off for the first $10k of capital gains income, the rest is taxed at the full rate. That protects people's pension & RESP investments while forcing the millionaires to actually pay a decent tax rate on their dividends and stock options. Some sort of mechanism needs to be looked at to deal with the corporate expense issue as well. Many wealthy people who own businesses cheat on their taxes by lowering their own salaries, then compensating for it by giving themselves bigger benefits from their company (eg. having their company pay their rent for them), a move that lowers their on-paper income. Some sort of reform to fix this issue would help. Other things that could be looked at without breaking any promises are inheritance taxes, provincial development charges, the corporate tax rate (caution has to be taken with this one, but an increase of half a percentage point is probably fine), resource royalty rates, LCBO pricing. I sincerely think Wynne is actually planning on that, because notice that whenever the issue of taxes comes up, she's very clear to say "No increases in HST, gas taxes, or income taxes on low & middle income earners", never given a blanket "no new taxes".

As TOareaFan mentioned, a lot of this doesn't make sense. The capital gains tax rate isn't a "loophole"; it's lower for various reasons including the fact that part of the gain is likely related to inflation (which wouldn't be fair to tax since it's not actually a "gain" in real terms) and, for corporate shares, part of the gain is likely related to corporate retained earnings that have already been taxed once (in the corporation), meaning that it would be unfair to fully tax the gains again in the hands of the shareholder. It's not a perfect system, but that's why it exists. Also, RRSPs (I assume that's what you meant, not RESPs, although they're tax-deferred as well) are tax deferred anyway, so I'm not sure where you're going with the concept of protecting them. As was also already mentioned, dividends aren't capital gains, so changing the rate on capital gains won't affect dividends at all (and, while dividends are taxed at a lower rate than regular income, this is because they're already been taxed once at the corporate level so again, not a "loophole").

There is already a mechanism to deal with people that put personal expenses through their businesses: reassessment, penalties, and potentially jail time. Put simply, it's tax evasion and it's illegal. People do it, sure, and you might say that the CRA should step up enforcement (although they already do a reasonable job), but it's not like it's some sort of perfectly acceptable "loophole" for the rich.

I also definitely wouldn't support an estate tax like they have in the US (or elsewhere). It's a nightmare to administer and is the perfect example of something the rich are much more able to avoid than the poor. It's also sort of unfair...all that money has already been taxed, so why should the government get their hands on it again just because you're dead? Canada has a system where you're taxed on all of your unrealized capital gains on death, which in my opinion is sufficient.

I completely support raising the HST and I also support the proposed pension system. It's too bad that it doesn't look like we're going to go the HST route. I like the idea of lowering the corporate tax rate to 10% just because that's the rate where we get perfect integration with the federal rate and dividend payments, but given that we already have one of the lower corporate tax rates in North America I'm not sure that it's necessary (although I don't necessarily support raising the rate either).

 

[TOareaFan]

The real, main, reason that dividends are taxed at a lower rate than, say, interest is to encourage people to invest in companies/businesses rather than passively buying, say, a GIC.

If I buy shares in a company that pays dividends that money is part of the capital that company has to grow/expand/invest in their business and that often results in people having jobs. There is, however, an element of risk as the value of the shares when I liquidate may be lower than what I paid.

If, however, I could earn the same return in a guaranteed investment certificate and the taxation was the same and there is the word "guaranteed" attached to my principal investment there is less incentive for me to take that risk. That sort of passive investment does not tend to create jobs.

The perception that is most clearly wrong here, however, is that only super wealthy, multi-millionaire businessmen take advantage of this. They used to refer to solid dividend paying stocks (like our banks and companies like CN and Bell) as "widows and orphans" stocks because that is where a prudent stock broker/planner would park the money of people with a defined amount of investment funds who would then rely on the regular dividend payments to live on.

Anyway, it is not just the rich and, certainly, is not at all impacted by any change (real or fantasy) applied to the treatment of capital gains.

 

[EnviroTO]

This creates a huge disincentive to work. Paying almost 50% income tax, CPP an Ontario PP, Health Tax, EI, etc. will not encourage people to work harder.

I agree with most of what you have said but I have never understood this train of thought. Unless someone is comfortable with the amount of money they make I can't see tax as being a disincentive to work unless the jump is much much higher than the previous tax bracket, or there is an alternative way to make money that the person is reasonably likely to accept over working.

I completely support raising the HST and I also support the proposed pension system. It's too bad that it doesn't look like we're going to go the HST route. I like the idea of lowering the corporate tax rate to 10% just because that's the rate where we get perfect integration with the federal rate and dividend payments, but given that we already have one of the lower corporate tax rates in North America I'm not sure that it's necessary (although I don't necessarily support raising the rate either).

I agree. HST makes sense over personal taxes because it keeps our pricing competitive on exports and allows taxation to the end consumer on imports, unlike payroll taxes or corporate taxes which lead to higher costs which would need to be recouped on the price of exports. Personally I have never understood corporate taxes because a corporation is a legal document (article of incorporation) which gets no benefit from money in itself. However, in the absence of a tax which would prevent a foreign company from owning a domestic company and siphoning the money out of the country tax free (their foreign executives not paying Canadian income tax) it is probably necessary to have some tax on corporations to tax the entity which is domestic.

Another thing the government could is plug up all those nasty loopholes that let the rich cheat on their taxes. Eliminate the capital gains issue by replacing the "capital gains is half off tax" rule with a new rule that capital gains are only half off for the first $10k of capital gains income, the rest is taxed at the full rate.

Loopholes aren't cheating. Cheating is not claiming your income, such as people making tips as a significant portion of their income and not claiming them fully, or a restaurant getting customers to pay in cash and not recording the sale, or a contractor getting paid under the table. If you tell the government all the money you made you are compliant and not cheating at all. That isn't to say the capital gains rate is the correct rate, but it would make no sense to make the capital gains rate identical to income tax rate for all the reasons mentioned in other posts.

 

[DKsan]

So the HSR project has claimed its first victim

Delay in Kitchener's Margaret Avenue bridge reconstruction

 

[nfitz]

So the HSR project has claimed its first victim

Delay in Kitchener's Margaret Avenue bridge reconstruction

All they've done so far is delayed the construction by 6 weeks.

However, if you know the area, Margaret Street is a single city block from Ahrens Street, which is not actually closed off for walking downtown. It's fully open for pedestrians (it's been only closed for vehicles). For those walking in the other direction, St. Leger Street is also fully open (including for cars) only a block in the other direction. Any extra walking required is marginal ... heck, given the other two are level crossings, I suspect many of those walking would prefer to use Ahrens or St. Leger. Personally, I've walked over Ahrens, Weber, and Duke, but never walked over at Margaret. Margaret tends to be favoured by cars ... and not local cars either.

It seems quite reasonable to delay construction, rather than building a bridge that they may have to rip out in a few years. Who knows, the province may quickly find an extra $1 million they are asking for, to make it wide enough for the extra track.

 

[mrxbombastic]

Indeed. I made a post a while back detailing that very same thing. I've designed some commercial site plans, and I can tell you that I had to put in more parking than the developer thought they needed, simply because of the minimum parkings standards in place at the time. If they start getting charged a daily rate per space, there would be a lawsuit filed in every municipality the law took effect in very quickly.

It would be easy to simply remove the minimum parking standards (or make them a "suggestion"), but there are thousands of commercial site plans already constructed with superfluous parking. There would need to be a one year grace period or something where owners could convert some of their unneeded parking spaces into islands or green space or something.

Fair point I hadn't considered those legalities. I suppose we could retroactively look to see how much parking was overbuilt relative to the minimums of the time and perhaps just charge for the number of overbuilt spots in developments while excluding the minimums. Though I suspect this would be mired in bureaucratic delay and process

I'm curious if either of you know whether other jurisdictions have faced this problem and if so how they have dealt with them. I'll look to see if i can find some solutions not yet mentioned afaik.

 

[dunkalunk]

However, if you know the area, Margaret Street is a single city block from Ahrens Street, which is not actually closed off for walking downtown. It's fully open for pedestrians (it's been only closed for vehicles).

I know the area quite well. Last time I tried crossing at Ahrens, the crossing was blocked by a fence; they've closed it for the train platform. Unless someone cut a hole in the fence, I don't think it's open for pedestrians. Having walked it, it definitely is a significant detour on foot.

In the grand scheme of things though, the Margaret Ave bridge wasn't supposed to be finished until winter of next year. 6 weeks isn't that bad.

 

[nfitz]

I know the area quite well. Last time I tried crossing at Ahrens, the crossing was blocked by a fence; they've closed it for the train platform. Unless someone cut a hole in the fence, I don't think it's open for pedestrians. Having walked it, it definitely is a significant detour on foot.

That's odd ... I thought the last time I drove around there (and discovered I could no longer drive down Ahrens) I thought I saw that they'd left a pedestrian crossing; clearly though I'm wrong. Shame there's nothing recent in Google Streetview.

Yes, I can see it would be a bit more of a walk without Ahrens. Seems to me there's a perfectly easy solution. Put in a temporary pedestrian crossing at Ahrens until the bridge is fixed. Though here's an article about that in The Record. Sounds to me like someone has their head up their ass if they can't figure out how to quickly put in a temporary crossing in their somewhere without spending a lot of money.