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(April 24, 2008) The Fraser Institute, an independent non-profit research think-tank, has released a new book examining what Canadians have paid in taxes since 1961. The findings show that the total tax bill of the average Canadian family has increased by more than 1,700% in the past 47 years.

The new book, Tax Facts 15, also states that a Canadian’s total tax bill now accounts for more of the family budget than food, clothing and shelter combined. In contrast to the jump in taxes, the average family’s expenditures on shelter increased by 1,063%, food by 505% and clothing by 455%.

“Taxes have crept into virtually every aspect of Canadians’ daily lives,” said Niels Veldhuis, co-author of Tax Facts 15 and director of fiscal studies at the Fraser Institute.

In 2007, the average Canadian family earned $66,496 and paid $30,213 in total taxes. On a percentage basis, the average Canadian family gave 45.4% of its income to governments in the form of taxes while spending 34.9% of its income to provide itself with food, clothing and shelter.

Back in 1961, the average family earned $5,000 and paid just $1,675 in taxes. That works out to 33.5% of its income spent on taxes while 56.5% was spent on food, clothing and shelter.

Tax Facts 15 provides a wide-ranging overview of Canada’s tax system and the amount of taxes Canadians pay, including direct taxes such as income taxes, Employment Insurance and Canadian Pension Plan contributions, and indirect or “hidden” taxes such as sales taxes, excise taxes on tobacco and alcohol, amusement taxes and gas taxes. The book also contains an update of the popular Canadian Consumer Tax Index, which tracks the total tax bill of the average Canadian family over time.

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B.C. appoints three commissioners to securities regulator

(April 24, 2008) Three new independent commissioners joined the British Columbia Securities Commission today.

Based on recommendations put forth by the BCSC, the provincial government announced today that Bradley Doney, J.D. (Don) Rowlatt and Shelley Williams will all join the securities commission to serve three year terms, set to expire on March 31, 2011.

These new appointments bring the commission’s board to eight — all of whom will be involved in the making of regulatory rules and policies, and will preside over administrative hearings.

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Canadians not using loonie to their advantage: RBC

(April 24, 2008) According to a new RBC poll conducted by Ipsos Reid, most Canadians ignore possible savings when making cross-border trips and purchases. Nearly half of all Canadians, 45%, who travel across the border purchase U.S. dollars whenever they need them, regardless of the exchange rate, according to the 2008 RBC Account Habits Poll.

The RBC poll asked Canadians how they manage their U.S. dollars, and despite the significant number of Canadians who travel abroad and use U.S. dollars, only three in 10 Canadians regularly save them in an account for travel purposes. Among those Canadians who do save U.S. funds, 64% keep their U.S. cash at home. In fact, just one in three Canadians who use U.S. dollars abroad monitor exchange rates and wait to purchase U.S. dollars when the rate is favourable.

Interestingly, 43% of Canadians aged 54 and older are more likely to keep their travel funds in a U.S.-dollar bank account, compared to 32% of those aged 35 to 54 and 29% of 18- to 34-year-olds. In addition, men (43%) are more likely than women (30%) to keep their money in a U.S.-dollar bank account, while women (59%) are more likely than men (45%) to keep it at home in cash.

Almost 720,000 Canadians travel across the border or to another country that accepts U.S. dollars at least once a month, while one-fifth of respondents travel abroad to countries that accept U.S. dollars a few times a year. About 20% of Canadians travel to U.S.-dollar-accepting countries about once a year.

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Global economy growth weakens

(April 24, 2008) The April Monetary Policy Report, released by the Bank of Canada, acknowledged what many economists have said recently: that the growth in the global economy has weakened since January, reflecting the effects of a sharp slowdown in the U.S. economy and ongoing dislocations in global financial markets.

The report also adjusts previous predictions to say that the U.S. economic slowdown will be deeper and more protracted than initially anticipated.

According to the report, growth in the Canadian economy was moderate, buoyed only by the growth in domestic demand and supported by high employment levels and improved terms of trade (all of which were substantially offset by a fall in net exports). The BoC notes that both total and core CPI inflation were running at about 1.5% at the end of the first quarter, but the underlying trend of inflation is judged to be about 2%, consistent with an economy that is running just above its production capacity.

Despite the moderate growth currently experienced in Canada, the BoC report predicted that the deterioration in economic and financial conditions in the United States will have direct consequences for the Canadian economy. First, exports are projected to decline, exerting a significant drag on growth in 2008. Second, turbulence in global financial markets will continue to affect the cost and availability of credit. Third, business and consumer sentiment in Canada is expected to soften somewhat. As such, the Bank projects that the Canadian economy will grow by 1.4% this year, 2.4% in 2009, and 3.3% in 2010. The emergence of excess supply in the economy should keep inflation below 2% through 2009.

In line with this outlook, some further monetary stimulus will likely be required to achieve the inflation target over the medium term. However, the timing of any further monetary stimulus will depend on the evolution of the global economy and domestic demand, and their impact on inflation in Canada, says the report.

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Bank ratings feel the credit crunch pinch: Fitch Ratings

(April 24, 2008) The ongoing illiquid and volatile conditions in global financial markets are continuing to put pressure on bank ratings, says Fitch Ratings in a new report.

According to the report, the operating environment for banks in 2008 is likely to remain challenging, and further pockets of negative rating actions are possible.

In the first quarter of 2008, the negative shift in the ratio of positive to negative outlooks continued, while the number of negative rating actions taken during the quarter remained at a comparatively high level, the rating agency said.

“Some of the major U.S. banks have been hit particularly hard,” says Alison Le Bras, managing director in Fitch’s Financial Institutions Group. “Although measures by the U.S. Federal Reserve have improved short-term funding, several of the major U.S. commercial and investment banks now have negative outlooks or watches.”

Banks in emerging markets, on the other hand, have fared better to date, according to the report, despite some exceptions such as in Kazakhstan. Nevertheless, the ratio of positive to negative outlooks in emerging markets declined further during the quarter, suggesting that the more positive rating trend in these markets may be coming to an end.

(04/24/08)