Costs Going Up
Posted by Gail | Filed under In the News, Taxes
For those of you who would like to read the online chat I did at Yahoo! yesterday, here’s a link.
When my Ontario hydro bill came this month, it had an interesting attachment: the new prices that took effect May 1, and what’s coming down the road. Before the rise in rates, I was paying 5.7¢ per kilowatt hour (kWh). As of May 1, that went up 14% to 6.5¢. But that’s just the beginning. When the time-of-use meters click on, you will watch prices jump all the way to 9.9¢ a kWh… a 74% increase over the start-of-the-year price.
I know, I know, there are lower cost periods and doing your laundry off-peak will cost you 10¢ compared to the 20¢ it’ll cost on-peak (yup, double the cost babies). But the reality is that there are some things you can’t turn off. Lots of homes are heated with electricity, so there will be a lot of folks piling on the sweaters as they attempt to keep their heating costs from doubling. And while I have no problem with the concept of running my dishwasher at night so I spend 16¢ instead of 33¢, I don’t think my family wants to wait until after nine for me to turn on the stove and start cooking dinner (22¢ off peak versus 47¢ on-peak).
How the hell did Hydro get permission to raise rates by this much in one fell swoop? And what are all the people living on a fixed incomes supposed to do? Don’t tell me we’re in a low inflation period.
As if it’s not bad enough that our electricity costs are skyrocketing, the government has decided this is a good time to take the taxes we’re paying on hydro from 5% (GST no PST) to 13% (HST), so your bill’s gonna go even higher. Wow!
Electricity isn’t the only jump you’ll see when the HST comes into effect July 1. Costs are going up all over the place because of the HST is being applied to all sorts of things that were never subject to PST like:
dry cleaning services,
home service calls (that’d be the plumber) and maintenance (and the gardener) and renovations (and the roof repair man),
taxis, campsites, domestic travel of all kinds and hotels, so even staycations will cost more
magazines you buy by subscription
private resale of cars, including registration, along with GAS (are you kidding me? Gas isn’t taxed enough yet?)
vitamins and massages
golf green fees and gym memberships along with all the sports activities you have your kids in
everything you do to looook goooood (hair stylists, estheticians, fitness trainer)
cigarettes (time to quit) and nicotine replacement products (using your will power alone)
and they even get you when you croak since funeral services and legal fees are now subject to the 13% HST.
While some of these services are optional and you can find ways to manage your way around the increases (get your hair cut every 8 weeks instead of every 6), most people have to buy gas (aren’t we paying enough for gas now?) Expect to see other related costs like transit go up once the increased gas costs filter through. And the cost of running and maintaining a home are going up just as interest rates (and higher mortgage costs) are dinging people’s already tight budgets.
There will be tax credits similar to the existing GST tax credits for low income households in order to offset the effect of extending the HST to cover goods and services that were previously PST-exempt. If you’re an individual making less than $80,000 a year, you can receive $300 in Ontario Sales Tax Transition Benefit payments. If you’re in a family with an annual income below $160,000, you can receive a maximum of $1,000 in Ontario Sales Tax Transition Benefit payments. If you have a low or modest income, the Ontario Sales Tax Creditl offers up to $260 a year for each member of your family.
Don’t expect a hefty cheque that you can stick in the bank. These payments will be phased in, so you’ll be out of pocket until you get your money… if’n you do.
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If you haven’t voted on this week’s poll, go do it. I’m very interested to see how y’all are dealing with retirement in light of my new book, Never Too Late, which will be out at the beginning of 2011.
And if you haven’t let me know if you’re coming to the picnic, look at yesterday’s blog and lemme know.
June 23, 2010 at 6:44 am
Gail, it seems everything is going up. My home insurance went up 20%. The big red communications company just sent a notification that cable prices were on the rise by 5%. Although they were kind enough to say their costs had gone up significantly more, and they had ate the difference. (It didn’t make me sympathetic, knowing what kind of payouts some of their executives get).
While I’ve been cautious with the time-of-use rates over the last few months, and my hydro bill confirms that I use more electricity at the lowest rate than the highest, we’re still paying more.
I’ve wondered the same thing you wrote: How DO people on fixed incomes adjust to all this? I can’t think of a major expense I have that hasn’t gone up in the last year: public transit increased, groceries are costing more, pharmacies are threatening their prices will be hiked, interest rates on the rise.
If folks haven’t been listening to you by now and haven’t made a plan to reduce the debt and save for emergencies, I’ll bet they start to hear you now!
June 23, 2010 at 7:00 am
We just got our oil tank filled yesterday, to beat the HST and to be ready for next winter. With our fill up, I figured we’d pay an extra $34 with the HST on it. And that’s just our heating oil! I saw the same insert in our Hydro One bill and wondered the exact same thing – when do they ask for rate hikes and get told “no”? Never, it seems. I have a friend who is on disability allowance, and she struggles every month to make her money last to the end of the month. I’ve given her small loans before (which she has paid back), but it’s only going to get worse. Seems like Canada Day won’t be as happy this year with the start of the HST. Good luck to everyone out there.
June 23, 2010 at 7:05 am
Is that Ontario Sales Tax replacing the previously existing GST credit that would be paid out in July/Oct/Jan/Apr?
I’ve gone from getting $94.50 every four months to getting $0, yet our costs are going up!
June 23, 2010 at 7:44 am
We have had HST in Nova Scotia for many years now. The tax rate dropped from 15% to 13% a year or so ago, but as of July 1st, it’s back up to 15%.
There are no breaks!
Those on fixed incomes suffer where it hurts the most – food. They play the waiting game with utilities and are just making partial payments. Those who have access to credit will end up using the credit cards to live and go further and further into the hole.
Our hydro (Nova Scotia Power) is a monopoly. We have no other choices for service unless we want to go off the grid, which is very expensive to transition to. It is very frustrating when you have no choices. We need to have power. Thankfully energy efficient appliances help a lot. I shut down my computer when not using. Open the curtains and turn off the lights. Line-dry the clothes when you can. UN-plug stuff.
I’m worried about where gas & oil costs are going to rise to. With this BP Oil crisis, it’s the consumers who will end up paying financially. (I don’t say that to get political – I recognize the environmental implications and the effects this will have on our fisheries and coastal communities.)
I’d love to have more children, but how can people afford it? We have a reasonable income, but if we want to stay out of debt, I can’t see how we could afford childcare for a 2nd child – not to mention food, clothing & shelter.
I will offer a tip! My father recently booked a flight to Alberta from Nova Scotia. He booked one way, then booked the return flight separately. He saved the tax on the return flight by booking a 1-way fare from Alberta due to Alberta tax savings. This was over $60 savings for 2 tickets.
June 23, 2010 at 7:48 am
I received my first family installment of the HST rebate last week, so people should be getting it soon, if they don’t have it already in their bank accounts. You get 3 payments, this july, December (I think it was) and next july. So you’ll get either the 100$ or the 333.00$ at those times. I already complain about my hydro bill every month – and was hoping it might go down wiht the time of use rates, – but this post/responses seems to indicate the opposite! Have to figure out how we can stop being such energy hogs at our place!
June 23, 2010 at 7:49 am
I can see more and more people making the jump to self-employment where they have the potential to earn more. With prices going up and for the most part salaries being frozen or slight increases, yesterday was the time to get your financial house in order to be able to weather the storm that will be coming.
The tax grab of the HST will be great for business owners, but as consumers we’re going to pay big time. Not sure how Dalton sees the economy growing when consumer costs are getting higher, interest rates increasing and savings being depelted.
Great article Gail on opening up our eyes to the big picture.
June 23, 2010 at 7:58 am
Well I work in transportation hauling all the goods we at one point will buy at the store. Up until now, transportation cost was only subject to GST in most provinces other than the Maritimes it was subject to HST already. Starting July 1st, all shipments exiting or coming into Ontario will be subject to HST. That means an 8% increase on transport alone so plan on the cost of goods going up to compensate……
June 23, 2010 at 8:01 am
When Hydro One was the Hydro Electric Commission of Ontario back in the early twentieth century, it was known as the “People’s Power”. Adam Beck, the chairman — although he had his enemies — made it his personal mission to give the people power at cost.
With this latest increase, it seems that Hydro has forgotten the “people” in the power equation.
June 23, 2010 at 8:07 am
I’m wondering how this will affect the rent I pay. Currently ultilities are included in the rent so I can see this going sky rocketing or the place just not being kept up to current standards.
regards,
Jason
June 23, 2010 at 8:40 am
@ Jason -
If you are protected under “rent control”, your landlord can only increase your rent by a certain amount (pre-determined by the Landlord and Tenant Board each year) and he/she must give you proper notice before doing so. (For 2010, the increase is set at 2.1% – which means if you’re currently paying $1000/month for rent, an increase could not be more than $21/month). Most people are protected by “rent control”, however there are certain conditions that exempt some buildings (something along the lines of when the building was first built and when it was first rented out).
If he/she sees that the costs for utilities do go up, an increase can be justified… but I think it needs to be reasonable when doing so – in other words, I’m pretty sure you can’t be gauged.
Check out http://www.ltb.gov.on.ca/en/STEL02_111281.html for more info… good luck!
June 23, 2010 at 8:53 am
And all of the increases are happening when kids are out of school and for some of us, that means groceries are going to be hoovered down during weekdays when the parents aren’t around to remind the kids that’s their 4th granola bar, why not have a cheap banana! And then there’s the added cost of keeping the house from getting overwhelmingly hot for the kids, the added electricity from the games (I do intend to have my kids outside and hanging with friends, yes, but come on…they’re going to want to play the x-box-y stuff on their Summer vacations still), etc., etc.
I’m so sick and tired of everything going up and basically nothing being in our control. Yes, I could control the grocery budget if we were a family that didn’t care how healthy we ate, but we do (minus the granola bars, I know, I KNOW!). Laundry still needs to be done, dishes still need to be washed, vehicles still need gas to get to and from work and the odd visit to family members, the house still needs to be bearable at night when it’s hot so everyone can sleep and function the next day…gah, so we’re all lab rats that get pushed around in mazes that company execs and government intellimugent people think is going to make our lives better. Huh?
Don’t tell me that manufacturers are going to pass their cost savings to consumers, that’s a crock of crappola. They need to pay extra taxes when THEY buy groceries and gas and heat/cool their homes too, so they’ll need increases in salaries which eats up the savings they may have realized when they built/put together their doohickies for us to buy from them in the first place. It’s a vicious cycle that is going to leave us consumers holding the bag and broke.
June 23, 2010 at 8:57 am
The point I am not seeing raised by many in the media is that contrary to the hype put out by the government everything will raise by a further 8% because the tax will be applied directly to gas and anything that needs to be shipped will use gas. I believe that will effectively counteract any possible savings he thinks will be passed along by companies. Since gas is already so highly taxed this is nothing short of a cash grab. The way I see it, it could mean compounded increases on some things. Makes me very angry. I live in a border community and it will force quite a few people over the border to fill up their tanks. Even paying the tolls both ways there is mega savings.
June 23, 2010 at 8:58 am
I dunno Gail, this seems like inconsistent messaging with your general theme. I mean, you’re the one who tells people to take responsibility for their actions, and own up to paying the full cost of what they do.
Well… hydro is expensive to generate at peak periods (when offices and factories are working). Charging people the full cost of their power generation (i.e. at “cost” just like Adam Beck did) will make them more conscious of just how much energy they are using. Someone has to pick up the tab somewhere, it might as well be us now… or of course the government could pick up the tab, but… hmm… then they’d have to raise taxes. I guess Gail wouldn’t object to that…
And please… you should be welcoming the very sensible changes the HST is bringing to our tax system. Remember, unlike PST in Ontario, the HST is a fully refunded tax to all businesses, which means the taxes stop hiding in the prices. There will be a small jump in prices in July, and then there will be a long delay in prices going up again, as the hidden taxes dissolve out of the system, and companies pass the savings on to customers. Also, this is a trade off: income tax is going down, sales tax is going up (marginally, most purchases you won’t notice the difference). Income tax cuts means that the money you EARN isn’t taxed, the money you SAVE isn’t taxed: only the money you SPEND is taxed.
For crying out loud Gail: the province and federal government are encouraging people to spend sensibly (and use energy wisely) and you’re complaining! What do you want? Who do you think should pay for it?
Richard.
June 23, 2010 at 9:00 am
So agree with this post Gail – I do some work with seniors who are on fixed incomes and I am extremely worried about the upcoming increase in hydro and the HST. I think it’s going to have a profound effect.
I also disagree with the HST being applied to things that keep people fit and healthy – that’s a disincentive if ever there was one! For eg, HST will now apply to yoga classes – making it quite expensive to take a class at a studio – I certainly won’t be able to go to as many as I used to.
Ironically, someone told me that Tim Horton’s has had some exemptions applied to their services – that HST won’t be applied to a small drink and a donut! I don’t know whether this is true (I haven’t checked) but if it is, it seems ironic that they can get off in comparison to services like yoga which promote health.
June 23, 2010 at 9:12 am
Wow the government and sensible spending in the same sentence never thought the day would come. Maybe that is true, but really is this just their way to comensate for reducing the GST from 7% to 5%? Could maybe those members of government who make 3 or 4 times what the avarage person makes in a month join reality and live off a normal salary for a few months to see what it is really like.
June 23, 2010 at 9:30 am
Out here in Sask we haven’t hit the HST yet but utility rates are on the rise. Can someone from Ontario please explain what Gail meant by two rates for peak /off peak hours. Where is the dividing line on the clock? Her example was laundry. Just curious
thankss
June 23, 2010 at 9:35 am
@ Richard Thank you! I needed that laugh…. I was rolling on the floor with tears streaming down…
“business will pass on the savings….” oh and this one was hilarious too “province and federal government are encouraging people to spend sensibly”.
Too funny! oh wait? you’re serious? hmmmm, still funny.
If the businesses pass on the savings, I’ll dance naked in the middle of the street with a mexican hat of fruit on my head singing “Daulton McGinty isn’t a weasel ferret and Hydro One is a benevolent fiefdom”.
And saying that complaining about hydro rates is contrary? When exactly will Canadians stand up and say “ENOUGH”. The gap between the rich and the poor is ever expanding, and the middle class has the same future of the dodo bird.
Taxing new home purchases when housing is already so high? Taking fitness trainers when obesity rates take a large toll on the system that our taxes pay for?
Ridiculous.
June 23, 2010 at 9:37 am
@ Lis – the federal government (conservative) reduced the GST, it’s the ontario government (liberal) that has introduced this HST.
What I find interesting is that no one recognizes that the people get the government they elect. Maybe finally in the next election we’ll put Dalton McGuinty out of business… but I doubt it.
June 23, 2010 at 9:40 am
@ Richard – you really believe the companies will be passing the savings to customers?? Really?
I don’t agree with that – I have already seen prices at the fitness center, hairdresser, hydro etc go UP before the HST has even begun. I don’t believe that any company at any time has passed on savings to customers. They will pocket any savings Richard.
As for your comments on Hydro – yes, energy is getting and will continue to get expensive. We do have to recongnize that and will have to adjust our usage however, when people see execs and CEO’s making millions and millions it’s difficult to understand and justify the rate of the rising costs. Some of those millions could have been used to help offset all the increases coming.. Oh well, perhaps they will wake up one day and decide to pass along their increases in wages to offset rising costs to customers lol.
Please. Please spare me… the same McGuinty government tried to tell us at first that savings will be passed on to customers and recently I read in (The Star) that he admitted HST will end up costing more per year to the average family – up to $480 a year. Here’s the link if you are interested.
http://www.thestar.com/news/ontario
/hst/article/820554–liberals-admit-hst-will-cost-families-up-to-480-a-year
We have already adjusted to NOT using the dishwasher. I’m only washing clothes on the weekends/ hang drying where I can and my goal is to use the dryer once a week on the weekend. I’m also trying to cook most meals on the weekends so I just need to warm up food during the week. Any appliance that draws power due to a clock or whatever being included has been unplugged and will only be plugged in when it’s needed.
Small changes yes – I’m not only doing it to save the money though. I’m doing it to try and do my part for the enviroment.
June 23, 2010 at 9:41 am
Just read the Yahoo link. You know what I love about Gail? Once you’ve got the debts paid off and the RSP’s/emergency fund/TFSA filled, she gives you the go-ahead to spend and enjoy your money and have a great life. I love that! Some finance sites just talk about growing/saving even more money with little talk about what we all want – the freedom to do what we want when we can. I’m 38. Once my mortgage is paid (in 4 yrs) and that ‘mortgage money’ goes to max out my RSPs and TFSA, I plan to vacation twice yearly and renovate my bathroom (paying cash of course). Then at age 55 I plan to either retire on my defined benefit pension or work part-time, whatever I feel like at the time! That’s what I call freedom. The key parts to my plan: have a plan and execute it, and stay in our modest house (and pay it off quickly) instead of up-sizing like many people I know.
June 23, 2010 at 9:48 am
Congrats Lori!! We are in a similar boat. A few years ago I had wanted to move but my husband (and Gail) convinced me it would be better to stay and pay off the house. I’m so glad we did!! We’re not far off now and my husband is looking forward to retiring (if he wants to) at 55. That is true freedom. Seeing that the weight has been lifted from him in just knowing he has that choice is better then any new house I could have moved to.
June 23, 2010 at 9:57 am
Richard we all heard that argument when the GST was introduced – business will pass on the savings to the consumer – not!
The shift from corporate taxation to individual taxation is relatively complete. There was a time when corporate taxes were a much larger share of government revenue than individual taxes. Over the last 25 years, the level of corporate taxation has gone done substantially (we need lower corporate taxes to stay competitive they cry!) and the tax burden has shifted to the individual.
At the same time, individual taxation has become more regressive – with lower income people paying more and higher income people paying less.
Consumption taxes like the HST hit lower income people the hardest because a greater proportion of their income is spent on consumables (rent, food, clothing etc). Those on fixed incomes get it the worst.
June 23, 2010 at 10:01 am
@Melaniesd – HST is only charged on food that is prepared (eg. restaurants, lunch counters). Doing your actual groceries does not get HST. We are still at 13% in NB for now (gov’t says it doesn’t intend on doing an increase – there is an election this fall).
As an aside, we don’t get near the exclusions of HST than what the ON gov’t is providing (eg. kid’s clothes). When they started the HST here, it was a decrease on some items (PST charged onto GST).
June 23, 2010 at 10:01 am
Taxes, taxes, I am sooo confused! We moved just over the boarder to Gatineau but my husband still works in Ottawa. I admit we didn’t do our research, but got a beautiful home that we could never afford in the city plus the taxes are way cheaper(no services..)…that being said gas is more expensive, farther commute, local grocery store prices are way too high! We just have to track our spending and adjust the budget…plus even though we will spend alot of $ on the Ontario side we won’t be getting the next two rebates!
June 23, 2010 at 10:03 am
When I was a kid growing up in Newfoundland the taxes at one point were 19%. At least it’s not gonna be that high. But I can imagine our produce is gonna go up (it’s already much higher than the mainland) when they factor in the increase in gas to ship it here. Eatting healthy always seems to get more expensive.
June 23, 2010 at 10:53 am
@C, When I said that those on fixed incomes would suffer when it comes to food, I meant that their food budgets would hurt because that money would have to be allocated to other expenses.
@Jolie, we do not have peak/no peak options with our Hydro either. My understanding is that if you use your appliances in non peak times (businesses are closed etc) the cost of doing so is reduced.
June 23, 2010 at 11:42 am
b’ah, we’ve had HST in the Maritimes for the longest time. I doubt if most people will notice it anymore after 6 months. The Government and Provinces are running huge deficits, and no one likes to see services cut, so the money has to come from somewhere.
Also, I don’t think we pay enough for gas at the moment. When hummers are still for sale and the average commute for Canadians is over an hour, I think fuel is pretty darn cheap. We should be taxing it more and using that money to find out what we’re going to use after it’s gone. Or to help connect smaller urban centers so everyone doesn’t have to drive in to ‘the city’.
Personally I’d rather pay higher taxes now then rack up huge debts for my children to pay. I’m working toward being debt free forever, and I want my government to do the same.
June 23, 2010 at 11:44 am
Oh, and for comparison, Britain is raising their sales tax to 20%.
June 23, 2010 at 11:54 am
Not to mention we are still paying the debt reduction charge on our hydro for the mismanagment of the money in the first place by all those CEO’s!!!!!!! The defination of insanity is doing the same thing over and over again and expecting different results! We isn’t that what the government does with all this lower and increasing of taxes every few years?!?!?!?!?
I’m just thankful that we are gettting that indoor “lake” for G20 Summit cause there certianly aren’t enough lakes in Ontario already. Taxpayer money well spend, eh?! Just like the businesses will pass the savings on to the consumer right Richard?!?!?!
June 23, 2010 at 12:02 pm
For reference for those asking/interested. Here are the peaks for Hydro One.
http://www.hydroone.com/TOU/Pages/default.aspx
June 23, 2010 at 12:15 pm
I have posted this before but it really has worked well for us. My way of dealing with the yearly inflation that always hits us is to save for it. We are fortunate that my husband gets a 2% cost of living raise every year. I laugh because this of course does not come near to covering real inflation but every bit helps. Once our debts were paid off we started a column on our budget sheet that is called “Inflation and Transfers”. We put 2% of our net monthly income into this column and let it build for a year. Then when inflation hits (our property tax went up $160 this year) I just transfer the money to make up the difference and then I adjust (increase) the budget for property tax for next year. This way we are never short when prices and costs go up. I can’t say the increases are unexpected because I know everything goes up but the amount and when it happens is always unknown. Over the past 4 months we have had increases in property tax, water, garbage, sewer, telephone, cable and house insurance and of course in groceries and bouncing gas prices.
June 23, 2010 at 12:26 pm
So because other countries and provinces keep raising the tax rate, we shouldn’t care? Ummm no.
Also, if the government is running at a deficit, how about cutting spending? How about getting efficient?
What I don’t understand, is what makes it okay to tax the crap out of someone getting paid *minimum wage* which is 21K a year so that the *pensions* of people getting paid well over 50K can be maintained, and cost of living raises etc.
Why does someone doing garbage in Toronto deserve $30 per hour while someone doing it somewhere else with no pension gets $15 per hour?
I think the next union that strikes for higher pay, when the average income is over 40K PLUS pensions, vs. the average income of their customers around 25K with no pensions should be fired (I’m looking at you TTC!).
The whole reason why Greece is about to collapse as a country is because of the “false” style of living they created — 6 weeks holidays?
If Canada was a couple on til debt do us part… would she be letting them do what the government does? I see sissors… I see cutting…. I see someone crying (Stephen Harper).
Hey Gail! How about posting a blog entry about what you would do for this country’s deficit?
June 23, 2010 at 1:24 pm
Gail — Your poll didn’t cover my category…. been saving forever, but still sweating because “they” say it’s not nearly enough! So I had to click on the “who can afford retirement!” box. I’m 38 and been saving 5-10% of net for over 15 years…. depending on outside forces. Too many times of under-employment to make a huge nest-egg. Unfortunately, we have tonnes of contribution room for RRSPs.
The HST is springing into action here in BC too. Not sure what it will do to our bottom line. I am bracing myself, but like gas prices, I don’t really have much control with it, do I? All I can do is what how much I can get away with NOT spending, and it up when it has to be done.
The 2 tier usage rate for Hydro has been going on at my house for a while. And it is painful to see that bill sometimes! Working at home during the day got more expensive, that’s for sure!
June 23, 2010 at 1:32 pm
My problem with this is if the governments were actually using this extra money to do the things Kenny suggested then I could accept ’short term pain for long term gain’. But past history has shown that the government does not plan ahead and in fact reacts as situations arise. This ‘reaction’ often includes raising taxes on people who are trying to keep their heads above water.
I too wish that the government would get its spending in check to ensure that we don’t leave huge deficits for our children. But what I see happening every day (and I work in municipal government) is that painful cuts or tax increases are made but the money is re-directed into some plum project of the day and not planning for the future needs.
That’s why I say this is nothing short of a cash grab that they are trying to justify as being ‘neutral’ to the average taxpayer. Like I said before we are going to pay 8% extra on things (compounded) that aren’t even on the radar of most people yet.
June 23, 2010 at 2:47 pm
Did we EVER have such a big deficit in our entire history in Canada?
No! Not even close!
Harper and Co really need to read Gail’s book.
[ But right now even better would be to kick him to the curve because enough is enough ]
June 23, 2010 at 2:57 pm
I hear you Leslie P. There seems to be a point with some government employees where after working for so long forget that the money being spent is coming out of their own pocket. Instead it becomes a game of “spend anything left in the budget”. (not saying you’re one of them
)
I’d really like to see more incentive programs to encourage not spending every penny allocated in the departments budget, and more long-term planning. Maybe then we’d get better value for our taxes.
Also I agree that this shouldn’t punish people barely making ends meet. Here the HST rebate cheques arrive regularly. The first OSTTB of $335/family is suppose to arrive this month up there. The next in December. That should help.
June 23, 2010 at 3:19 pm
Hi – after reading Gail’s article and everyone’s posts, I thought these links would be helpful and clear up some questions.
Ontario Ministry of Revenue’s website http://www.ontario.ca\taxchange
What’s Taxable Under the HST and What’s Not http://tinyurl.com/24duj2q
What You Should Know About the HST (Video) http://tinyurl.com/25tayyx
June 23, 2010 at 3:19 pm
When I finished my contract this year and had time available during the weekday, I went with my mom to plan and pay for her funeral. I figure it is cheaper for her to do it now then later, when I would have to deal with it. The price is locked in, so if you funeral costs more than what has accumulated in your funeral account, the funeral home pays the difference. Of course paying ahead had the benefit of avoiding the additional tax, which can really add up depending on your choices.
June 23, 2010 at 3:26 pm
The problem with government department budgets is that they live and die by how much they spent last year. The whole system needs a change. As the end of the fiscal year approaches departments go on a massive spending spree to get rid of any of the budget they did not already spend. Why? Because if they don’t spend it they know that their budget will be cut the following year – even if they need more to do the job. They are not allowed to save it or redirect it. My husband just went through this. He did not spend all of his helicopter budget last year so it was cut for this year – the year when he has even more to do. He ran around in March spending money on things that he did not need immediately because he was not allowed to move money from one area (equipment) to another (staff). He could have used all that “wasted” money to hire another university student for the summer. I use the term “wasted” loosely because you would have to know my husband. He shops around and treats his department money as if it were his own – thanks to being reformed by Gail. In fact he annoys the finance department because he returns items when he finds them at a better price. They told him he is the only one.
June 23, 2010 at 3:35 pm
i’m looking at this from outside, since here in the lovely state of california we have but 1 source of power, the mighty pg&e. i really detest them; as a monopoly i cringe every month when the bill arrives. and no, they’ve never requested a rate hike & been turned down. i’ve found that i’ve become quite aware of my energy costs and have implemented many of the suggestions already made (dry my clothes outside, unplug the wasteful toaster, blender, etc). while i dislike the idea of not using my ceiling fans, and having to watch that thermostat, i like even less the idea of paying more and more each month to pg&e. so frankly, my ability to economize in this area is driven by the pure anger i feel having to pay so much to a company which has no rival. it’s a case of “whatever it takes” for me. i’ll be damned if i’m giving them an extra penny!
when i saw this blog my first thought was wow! another clear example from gail emphasizing why i need a budget, an emergency fund, a savings account, and NO debt.
while it sucks the big one, it is, unfortunately, reality…and no matter how hard or loud the complaining, it’s one of those things that has to be worked in to the budget. begrudgingly or otherwise. while i am not suffering your collective pain & anger, i can absolutely empathize. (and hold on tight for pg&e’s next rate hike!!!!)
June 23, 2010 at 3:45 pm
Thank you Richard. I agree 100%.
June 23, 2010 at 4:54 pm
Just don’t forget the HST the next election; it’s time to send these clowns back their “Hard Medicine”
June 23, 2010 at 5:06 pm
Well it’s not all bad news today. I have my German team back. And Klose is back!
June 23, 2010 at 5:08 pm
@Richard: I totally agree. There are a lot of whiners on this entry, including Gail. Basic food and shelter remains HST-free. Gas is taxed (and written off or tax-free if used for business purposes – so no – it won’t impact the prices of everything) but transit passes are tax free. In fact, they’re a tax deduction. If you live in a major city, which most of us do, there is no reason to drive the car every single day. Electricity prices actually shocked me when I bought a house a couple years ago and started paying them. The way people complain about them I expected to be paying more than double what I do. I earn enough money to pay for my yearly electrical expenses in my first 4 days of work of the year. There is no way that covers the cost of generating the power and maintaining all the infrastructure for the electrical system.
People on here have said previously that they would prefer consumption taxes to income taxes, but now that consumption taxes are rising slightly for a few items, look at the whining. Is it any wonder that no government can get elected if they admit that they’ll have to raise taxes to maintain service levels? Grow up people.
June 23, 2010 at 5:20 pm
It doesn’t matter who is in federal office or provincial office… the fact is that it is all the same shyte, just a different bucket.
June 23, 2010 at 5:42 pm
Caroline,
The HST shouldn’t cause transportation costs for businesses to increase, at least not generally. While it is true that your customers (who I presume from your post are retailers) will have to pay HST (at least if they’re in either Ontario or BC) on the cost of transportation, they should also, generally, be entitled to an offsetting input tax credits. So the net effect of the HST on their transportation costs should be nil.
In the greater scheme of things, the shift to the HST from the PST is a good change, as it will increase the competitiveness of businesses in Ontario and BC. Certainly, there is an abundance of academic research suggesting that the shift to the HST in the Atlantic provinces resulted in significant increases in business investment and, in the long-run, lower prices for consumers, making it a win-win proposition. While both the Campbell and McGuinty government’s have not done a good job of convincing their citizens of the merits of the HST, its the right move by both governments.
Having said that, the McGuinty government is going to take a beating, rightly, over the effect of the HST on gas prices. Currently, gasoline isn’t subject to PST, but is subject to a separate gas tax. It’s perfectly correct to impose the HST on gasoline if you reduce the existing gas tax accordingly (as they are doing with other goods subject to the PST). But the Ontario government isn’t doing that (neither is the BC government, but they’re providing an exemption from HST), presumably because it can’t afford the lost revenue on gasoline taxes currently paid by businesses (who, as I noted above, can claim input tax credits for HST). I see where they’re coming from, but given that, they should have followed the BC example.
June 23, 2010 at 6:00 pm
I wouldn’t mind the consumption tax increases if my salary was being increased at the same rate. Wages have been effectively declining over the past 20+ years due to inflation and low or non-existent raises. This is what worries me the most (apart from being retired and not having a salary at all and facing these continual increases).
June 23, 2010 at 6:09 pm
I am also a Californian looking from the outside in and have the wonderful PG&E for both power and gas. In the last couple years they have been replacing old meters with “Smart”meters. Come to find out some of them were double and triple charging owners for the amount of power. When homeowners complained PG&E refused to even look into it since the stock answer was “it is just a hotter summer”. It is so bad several local municipalities are looking into starting local controlled power companies. This had PG&E so scared they put a proposition on the ballot to require 2/3-voter approval to start a local company. PG&E spent $1,000 promoting the proposition for every $1 the opposition spent and it still went down in flames. We currently have rate tiers so your rates depend on how much each meter uses which sounds good on face value. After a review areas which have relatively nice weather (and higher incomes) do not even pay enough to cover the generation of power while the areas with 100+ heat (and typically lower income) pay more than their share to produce the power. Since the smart meters will be in statewide soon I foresee them also adjusting rates by time of use. Last year they almost had a requirement in the building code to have RF transmitters in the thermostat so PG&E could override your settings on the thermostat (make it higher in the summer and lower in the winter). As to taxes, those will definitely be going up (at least in the US) on the federal level on top of the addition state taxes, state sales taxes and local sales taxes. This of course means at some point the price of all goods will go up because manufacturers, corporations and businesses will pass them on down the line to the consumer. In the end this is one of the reasons your budget isn’t static but fluid. I have set up my utility costs to the worst-case month (usually July or August).
One tidbit to think on….Both the federal and state governments have added taxes to gasoline since they feel the average consumer will buy gas no matter what. This creates quite a disincentive for them to push or mandate better gas mileage or alternate fuels. The less gas we need to buy the less they bring in on taxes. State and local municipalities used to do this with the phone company since everyone had phones but that well is drying up as more people are switching to Voice Over IP and cell phones.
June 23, 2010 at 7:09 pm
@ Tim
“I earn enough money to pay for my yearly electrical expenses in my first 4 days of work of the year” that must be nice, but is certianly not the case where I live/what I earn in 4 days.
Last year my hydro cost me $2072.60 which works out to be $172/month(we have electric heat, also have a wood stove to help compensate it.. but when no one is home, there is no one to maintian the fire…)
and now Smart meters have kicked in officialy May 1st and then there’s going to be an 8% increase on the tax portion. Electricity & gas are the 2 things that really irk me the most about the HST.
GAH! makes me mad to think about it…stupid billls lol
June 23, 2010 at 7:32 pm
Is the increase in tax going to pay for our severely understaffed medical system? To hire more medical professionals, train more of them, and treat them nicely so they stay? I don’t think so.
I would love to hang my clothes out to dry but thanks to the humidity here, my sanity was leaving me since I have children in cloth diapers and do 3 loads a day. Nothing ever dried on time so I gave up trying and use the dryer.
We could only qualify for the off-peak power rates if we first bought a $5000 heating system. Only then will the power company install the 2 tier meter. You of course have to buy the system from them.
June 23, 2010 at 7:55 pm
The gov’t did spend all that money they didn’t have to stabilize our economy when the recession hit, so now it’s time to pay the piper.
Of course if people didn’t have debt and didn’t live outside their means the recession probably wouldn’t have hit.
June 23, 2010 at 9:38 pm
It’s just sad. It’s really hard for people just starting out. Save for retirement, save for a wedding, save for kids, save for a car, save for a house, all while paying ridiculous amounts of money on gas and services….and working a low-paying job. Life is really expensive!
June 23, 2010 at 9:44 pm
yes geoff, you get the wondrous english team. wonder who will come out on top in that one? too much history & neither team playing to its collective best yet. hurray for your man klose; now we can watch 2 full squads pull out all the stops. wishing your team the best (i am pure unadulterated 100% netherlands. always have been, always will be)!
stephanie
June 24, 2010 at 9:18 am
@Tim: Good on you for making enough money in 4 days to pay for your annual hydro consumption. A year ago I could’ve paid mine in about the same timeframe too, but ended up losing that job and taking one at less than half the income, so I’d say be careful of getting to comfy cosy in that job, even if you own the corporation.
It’s not a matter of whining as you say, it’s stating facts. Fact: people’s incomes are NOT rising at the same rate as groceries, gas, household bills, property taxes, etc per year. Fact: People on fixed incomes (not talking welfare when someone is physically and mentally capable of working, I’m talking about seniors and people on disability that will never be able to work again) are NOT enjoying comparable gains in their disability and/or pension cheques to the amount they have to spend. Fact: When the cost of a barrel of gas goes down, it takes an inordinate amount of time for consumers to see the change at the pump vs the seemingly 24 hour turnaround it takes when the cost of a barrel increases.
People are trying to save, trying to stay one step ahead, and Richard/tlily/Tim, if you guys have beat the system a long time ago or never found yourselves in a situation where you had to take a lesser paying job, been disabled, have parents on gov’t only pensions that worked bloody hard every day of their lives and can now barely afford to heat their hard-earned homes, then I guess I understand where you’re coming from because you haven’t had to be cognizant of the increases. Your salary obviously increases with each added dollar to property tax, loaf of bread, cable bill, electrical or gas bill, etc. But for others, please don’t assume that we’re just a bunch of whiners with nothing better to do than complain about more money going out when I guess you think our salaries auto-increase accordingly…not so for the average jane and joe.
June 24, 2010 at 11:46 am
If you’re that upset about the HST you can send McGuinty a strong message. I donated my cheque to the NDP! I get 75% of it back as a tax deduction and McGuinty is basically funding his own opposition. It essentially costs them 75% more as well, considering it cost them $100 for the cheque and an additional $75 tax dollars they won’t be getting from me.
I think I’ll move to Alberta next year.
June 24, 2010 at 3:42 pm
And for those that think Ontario Hydro is not wasting money, think again…
1 1/2 years ago, they came to replace our old meter with a “Smart Meter” — they did this without notice, and found it on the side of our house, on Halloween. Our bill the next month was outrageous — our hydro usage was more than double than normal, and we had no way to argue it because of starting a new reading on the new meter.
Remember, only 1 1/2 years ago…
Hydro came back this past March to replace our meter once again. The last “smart meter” was temporary, and would not actually work for time-of-use billing, so they replaced it AGAIN! Granted, it took them about 10 seconds, but multiply that labour by how many houses, and how much for new equipment? That’s wasteful.
@ Tim: I also have an issue with:
. I earn enough money to pay for my yearly electrical expenses in my first 4 days of work of the year.
Good for you… that would not hold true for the norm, I’m sure. Our bills average $150/month… that would be more than 3 weeks of my take home pay.
Maybe we can stop whining when others stop rubbing in all of their ‘haves’. And you ARE on this blog for a reason, right? So don’t think you’re any better than the rest of us.
And, If the government thought HST would go over with minimal effect on families, and without complaints, they wouldn’t give out HST rebates — complaining and whining does make a difference; it already has (just not a BIG difference, maybe).
I can’t believe that people scoff at Gail for making a complaint and a fact known. I’ll bet many people weren’t even aware of the hydro increases, and certainly many are unclear on the HST implications — she’s also showing us that we need to budget for it. Gail gives us advice FOR FREE, and you (those who did) criticize her for making a criticism??? She’s trying to help many people get on track — this will result in people who were finally starting to get ahead, take a step backward. I’d be pretty frustrated too — she knows that the elderly and others on fixed incomes can’t easily go out and increase their incomes to accomodate these additional expenses.
I say: Good post as always, Gail!
June 24, 2010 at 9:29 pm
[...] This post was mentioned on Twitter by Advanced Logistics , 2 Cents. 2 Cents said: Costs Going Up – http://b2l.me/5zjcd <- Great rant on the ridiculous rise in electricity rates from Gail Vaz-Oxlade. [...]
June 28, 2010 at 3:07 pm
when you only make and x amount of money and do not receive and annual pay increase something has to give in the budget to pay for the extra tax burden. Be it 5cents or 5 dollars, it has to come from somewhere.
June 28, 2010 at 4:31 pm
Cas, I wouldn’t say anyone “scoffed” at Gail. In the comments above, I read respectful disagreement to her point of view.
June 28, 2010 at 4:37 pm
and Michelle, I have had my share of crappy jobs and hard times. No one called you a whiner.
We pay high taxes in this country, in large part because of the social programs available to everyone. I did not end up on the street and was able to educate myself because of these social programs. Now I’m paying it back and gladly.
July 8, 2010 at 5:25 pm
[...] Gail Vaz-Oxlade is not pleased with rising costs. It’s not just the HST; she is also paying more for electricity with time-of-use metering. [...]
July 9, 2010 at 9:12 am
[...] Gail Vaz-Oxlade is not pleased with rising costs. It’s not just the HST; she is also paying more for electricity with time-of-use metering. [...]
July 12, 2010 at 9:07 am
I have no problem with the increased electricity rates. We haven’t been paying for the true cost of electricity for years – eventually it was going to catch up with us.
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