These are stories Report on Business is following Tuesday, Aug. 12, 2014.
Death and taxes
We spend more on the government than we do on our necessities, a new study suggests.
Indeed, the Fraser Institute said today, most people probably think their top expense is housing, but in fact it’s tax.
The average family, according to the group, brought in $77,381 in 2013, paying out 41.8 per cent of that in total tax, and 36.1 per cent on necessities such as food, clothes and housing.
Compare that to 1961, when the numbers were $5,000, 33.5 per cent and 56.5 per cent, respectively.
The Fraser Institute calculates that total taxes for the average family have surged 1,832 per cent since 1962, compared to 1,375 per cent for shelter, 620 per cent for clothes and 546 per cent for food.
It's not the first time that the group has said this in its ongoing look at taxes, and it points out that the total tax outlay has increased at a much faster pace than that for basic necessities, at the same time far outstripping inflation. Having said that, tax as a percentage of cash income has declined since the late 1990s, as has that for basic necessities since the early 2000s.
The Fraser Institute tracks everything from income, payroll, health and sales taxes to those for fuel and autos.
“Over the past five decades, the total tax bill grew much faster than the cost of basic necessities, so now taxes eat up more income than any other single family expense,” Charles Lammam, who specializes in economic policy for the Fraser Institute, said in the study.
“With more money going to the government, families have less to spend on things they care about, to save for education and retirement, and to pay down household debt.”
The Fraser Institute’s tax reports have sparked controversy before, and today was no exception.
“Before you get worked up about this, consider that 1961 was over half a century ago, before the time of universal health care that we all benefit from, before the Canada Pension Plan and the Guaranteed Income Supplement that hugely reduced poverty for seniors, before the Canada Child Tax Benefit which is helping lower child poverty (though not enough!)” wrote Iglika Ivanova of the Canadian Centre for Policy Alternatives.
She also questioned the methodology, saying the group is overestimating the average Canadian tax bill, partly because it includes business taxes, import levies and resource royalties in its total.
(For trivia’s sake, 1961 was just five years before The Beatles released the song Taxman. Favourite line: “If you take a walk, I’ll tax your feet.”)
The Fraser Institute study comes on the same day as a survey showing many Canadians believe they’re heading into retirement shy of their goals by hundreds of thousands of dollars.
On a national basis, according to the BMO Nesbitt Burns study, members of the so-called sandwich generation feel they’re short by $560,000 in terms of the lifestyle they’d like to lead when they stop working.
There are geographic differences, of course: Those in the Atlantic region believe they’re short by $673,000, those in Quebec by just $267,000, those in Ontario by $649,000, those in Saskatchewan and Manitoba by $334,000, those in Alberta by $479,000, and those in British Columbia by $814,000.
More than three-quarters of those surveyed in the group, or those between the ages of 45 and 64, who have to help care for both parents and children, see the “stress of everyday living” as eating into what they need for an “ideal” retirement lifestyle.
“There’s a sense among those in the sandwich generation that they’re getting squeezed and are being forced to balance a plethora of financial priorities, from paying down their mortgage to saving for their child’s education to saving for retirement,” BMO regional manager Sylvain Brisebois said in the study.
“The stress that comes with caring for children and aging relatives, balancing a career and generally keeping up with daily tasks can make it hard to focus on the future and saving for retirement.
- Follow our coverage of personal finance in Globe Investor
- Janet McFarland: Rise in asset values pushes up Canadians' wealth
Jobs report incorrect
Statistics Canada has found an error in the disappointing jobs report that surprised markets last Friday.
The federal agency, whose jobs report have long raised questions, did not specify the error as it disclosed the mistake today.
New estimates will be released this Friday, The Globe and Mail's Bill Curry reports.
“Statistics Canada takes this matter very seriously and is immediately launching a review of the data verification processes in place,” the agency said.
Friday’s report showed Canada lost 59,700 full-time jobs in July, while gaining 60,000 part-time positions, for an overall flat market.
- Bill Curry: StatsCan's job report for July contains error
- Kevin Carmichael: Surprisingly negative jobs report supports low-rate stance
Target Canada chief moves to fix woes
Target Corp.'s new Canadian chief has drawn up a detailed plan to fix its raft of problems from too many items getting jammed into its warehouses to pricing that is too high because 1,000 of its products failed to go through the retailer’s price comparison checks.
Mark Schindele, who took over as Target Canada president in late May, said the U.S. discounter’s hasty launch of 124 stores and three warehouses last year “led to some unintended consequences that we’re unwinding now.”
They include bare store shelves and some prices that he has now discovered were higher than those of the same product at Wal-Mart Canada Corp., The Globe and Mail's Marina Strauss reports.
Mr. Schindele, a veteran Target U.S. executive who is leading a new top team in Canada, has set to work to find the “root causes” of the problems and “action planning” to turn around the results. He’s now aiming to win over shoppers by lowering some prices, introducing goods available in its U.S. stores as well as products for Canada only and streamline bogged-down distribution systems to get merchandise to store shelves faster.
He predicted that Target Canada “will be measurably better in the fall.”
Crawford dies at 82
Veteran Canadian businessman and corporate director Purdy Crawford died today, a representative of his law firm confirmed Tuesday. He was 82.
Mr. Crawford was chief executive officer of conglomerate Imasco Ltd. from 1985 to 1995, which was a holding company that controlled Canada Trust, Imperial Tobacco and Shoppers Drug Mart at the time.
He was also a lifelong lawyer with Toronto law firm Osler Hoskin and Harcourt LLP, and was known for his leadership in resolving the crisis following the collapse of Canada’s market for non-bank asset backed commercial paper in 2007, The Globe and Mail's Janet McFarland writes.
Mr. Crawford leaves his wife Beatrice as well as six children and 17 grandchildren.
Crude prices appear “almost eerily calm" despite mounting turmoil in oil-producing regions, the International Energy Agency says.
Citing troubles in Iraq, Libya and Ukraine, and sanctions against Russia, the group noted today that there’s an “uneasy comfort” in the market, and trimmed its forecast for an increase in demand next year.
“Despite armed conflict in Libya, Iraq and Ukraine, the oil market today looks better supplied than expected, with an oil glut even reported in the Atlantic basin, where surprisingly steep demand contraction recently compounded the effect of relentless North American supply growth,” the group said in its new projection.
It now forecasts an increase in demand of 1 million barrels a day this year, and 1.3 million barrels a day in 2015.
Blouin to retire from MTS
Manitoba Telecom Services Inc. says its long-time chief executive officer, Pierre Blouin, plans to retire some time this year.
Mr. Blouin, who has held the top job at the Winnipeg-based regional telecommunications provider since 2005, will remain with the company until a successor is found and a formal retirement date is set, The Globe and Mail's Christine Dobby reports.
MTS said it will consider both internal and external candidates to replace him and has begun a search for a new CEO with the help of executive recruiters.
It highlighted Mr. Blouin’s accomplishments during his tenure, pointing to operating metrics such as leading market share and profit margins in MTS’s home market and wrestling with the company’s pension funding issues and cleaning up its balance sheet.
Streetwise (for subscribers)
ROB Insight (for subscribers)
- Apple suppliers begin production of new iPad tablets, report says
- Rona returns to profit despite weaker sales
- Kevin O'Leary quits CBC for Bell Media's TV, radio shows
- German investor confidence plunges, survey shows
- France remains in top spot for tourist numbers in 2013