Why is income tax so complicated?

I was born and raised in England. I started paid work at the age of 14 and have paid my taxes as required ever since. However, in England we have the Pay As You Earn (PAYE) program which means that my taxes are automatically withheld by my employer at source and that I don’t have to do a tax return every year, unless I’m self-employed. The good news is that I don’t have to do that return and don’t end up with an income tax bill as the with-holding is worked out exactly all year-long. The bad news is that I never get a refund either!

In fact. if you have the same employer and the same rate of pay then you get exactly the same net income every month. There is none of this paying for some ‘taxes’ until you reach the maximum and then not paying for the rest of the year. It’s all aggregated out over the entire year. It makes budgeting much easier.

Here in Canada, we have to do a tax return. Theoretically it’s for the calendar year. However, just to make things more fun we can include some contributions that were made in the first 60 days of the next Calendar year. Such as contributions to certain types of pension plans (RRSPs).

This year, I was employed regularly, on Employment Insurance sickness benefit, paid medical leave and then long-term disability insurance as sources of income. As you can imagine, my tax return is complicated.

Thankfully, having immigrated to Canada in 2003 I learned years ago to hire an accountant and hand off the folder to him each year and pay for his services gracefully. Doing so has more than made up what got missed when I used to use one of the bigger tax return services.

For those of you that prepare, and submit, your own tax returns my hat is off to you!

However, my question is simply why on earth don’t more countries use PAYE? Australia and England have piloted it for years for you successfully. It works! It makes life much easier for the majority of employees who have just one employer. It even works when you have multiple employers either at the same time or sequentially. Believe me, as a student, I did hold multiple jobs and often at the same time.

So what am I missing? The number of jobs that would be lost if people didn’t have to do their own tax returns, and therefore often pay others to do it for them? Is it that big of an industry?

Is the income tax refund something that people actually rely on each year? If so, why should the government get to keep my money and earn interest on it instead of me?

It all seems unnecessarily complicated to me!

Charity Shops, Thrift Stores and Recycling: Over pricing is driving people away…

Growing up in England Saturday mornings were often filled with a trip to the street market followed by a round of the local charity shops. Street markets open early in most towns and sell pretty much anything that you can imagine.

In spring I’d be looking for the first bunches of freesia. Cut flowers were a lot cheaper in England than I have ever seen them here in Canada, and even when I was on an incredibly low income I could usually afford to treat myself to a bunch of flowers every now and then.

As an avid reader, I was a friend of every bookstall holder, and probably one of their best customers.

As the market would start to get busy I’d move to the High Street where there would be numerous speciality shops and haberdasheries. Often there would also be 3-5 charity shops, frequently located near each other. These shops are usually staffed by volunteers, stocked with donations, and all ‘profits’ donated to the specific charity of choice.

So in one morning I could easily support Cancer Research, Oxfam, the Royal Society for the Prevention of Cruelty to Animals (RSPCA) and the British Heart Foundation simply by spending a few pennies or a pound or two.

On moving to Canada I initially couldn’t find anything to match these experiences. In time, I found that there are similar markets such as the Old Strathcona Farmer’s Market in Edmonton, Alberta and smaller farmers markets in other places. While these don’t tend to have the same variety of offerings, and often open much later in the morning, they are still a fun way to spend some time on the weekend. Also, like in England, they are a good way of supporting local farmers, and businesses.

However, I initially found it almost impossible to find the equivalent to charity shops, until a friend introduced me to the concept of ‘Thrift stores’.

My first visit to a Value Village was a novel experience. I had never seen such a large ‘charity’ store before. You could probably fit 5-6 English Charity Shops within a single Value Village!

For the first few years after my arrival in Canada, Value Village became my ‘go to’ store when looking for ‘new’ items for my home. When you start over again, it’s the odd things that you miss the most, such as a specific size mixing bowl, or a casserole dish. Value Village is great for acquiring those odd items. It still is a store that I can wander round for a while when just looking for ideas or needing to get out for a bit.

I also enjoy supporting recycling and have found some great bargains over the years. I also like the fact that while Value Village is a national brand each store supports local charities.

However, a few years ago I noticed that their pricing seemed to increase a lot. Initially, it was their books that I found over priced. Occasionally I’ll still find a good bargain but much of the time now I wait until they have a specific book sale on, before I’ll buy books there now. When I can often buy the same books brand new for less than Value Village is charging it isn’t cost effective for me to shop there anymore.

My daughter likes ‘name brands’. I have never personally understood the attraction of paying significantly more for a logo on an item of clothing that often doesn’t last even half as long as the equivalent item without the logo. However, initially, I was willing to help her have what she wanted within the realms of Value Village pricing.

Consequently, over the years she has had closets full of Aeropostale clothing, and other brands that have value to her individually. Most often they appeared to be brand new, and often she grew out of them and we’d donate them back to Value Village in much the same condition, that they were when I bought them for her.

However, in the last year or so I have noticed that the pricing in my local store has become very inconsistent. Some days, items are still a good find, but on other days they are unrealistic and over priced.

Now, I don’t know brands and which are specifically popular (other than those my daughter likes at any one point in time) but I just can’t see how Value Village can justify this.

Most people who shop in Value Village are looking for a good deal. They’re counting on the fact that everything has been donated to the store, so they expect prices to be reasonable and just as they hope to find a deal they also want to feel good about themselves by supporting a local charity at the same time.

Just like I do, many people who shop there will also donate so the reuse, recycle process continues.

Shoppers expect to pay a little more for the items that are obviously brand new or a name brand, to pay a little less for the more worn and generic items. However, I would think that if they had hundreds to spend on a jacket they would be far more likely to shop at Wal-Mart, or one of the other box stores.

For people on a low income, Value Village has traditionally been the only place that they could afford to shop. However, as prices are rising where will these people go? It seems that those that need it the most are being priced out of the market.

At first, I thought that it was just our local store but a quick Google™ search reveals that these rising prices are being seen across Canada, and people are unhappy.

Photographs are being posted of items with their original price tickets, side by side, with the Value Village price and bizarrely the Value Village price is far higher.

In response to customers’ increasing dissatisfaction, Value Village offered a statement in November 2015

“Full statement from Value Village’s director of communications, Sara Gaugl:

It is our goal to provide great value and selection for our customers. Over 95 per cent of the items sold in Value Village stores are under $10 and less than one per cent are over $20. Each store places up to 10,000 items on their sales floors daily and each piece of merchandise is individually sorted and evaluated by our team members based on the condition and quality of the item, and then priced accordingly. However, mistakes can happen. We encourage our customers to bring any inadvertently mispriced item to the attention of our store managers so we can quickly address it.

It is also important to understand that we do not receive the goods we sell in our stores “for free.” Value Village is a for-profit business that is proud to purchase clothing and household goods from community-based nonprofit organizations to stock our store shelves. This means that whenever members of the community drop off items they no longer need or want at Value Village stores, we pay the charitable organizations we partner with for those goods at a mutually agreed upon rate (including items not suitable for resale). Our company’s payments to nonprofit organizations result in a steady revenue stream that supports their missions, totaling nearly $200 million last year alone.”

This is a beautiful piece of marketing.

Basically, they’re saying that everything that is over priced is a mistake so just take it to a manager.

Well, I don’t know about your local store, but in ours, if you do that they just take the item off the shelves and rarely re-price it there and then. So you either pay the price labeled or you do without.

They then go on to say that they don’t get anything for “free”. Well, they certainly don’t pay me when I drop off bags of donations so I think that their definition of the word ‘free’ requires some examination.

What they mean, of course, is that their business model is such that they make payments to their specified non-profit charity partners based on the volume donated to them, regardless of what is actually sold or how much it is sold for.

Hmmmmm…. Let’s think about that for a moment and work through a very simplistic example.

Let’s take 10 items and assume that for every item donated Value Village pays their local charity $5, a total of $50.00.

Now, let’s go with their statement of 95% of all prices being $10 or less and only 1% being over $20. So lets assume that they sell 9 items for $10 and 1 item for $25; they will then bring in $115.00 in revenue.

Now let’s increase the prices the way that many of us are seeing in our local stores. As a result they only sell 5 items, and 5 are unsold. The 5 items sold ranged in price from $15-$50 resulting in revenue of $140.00.

We can easily see that in the first scenario they clear $65.00 after making their charity payment, but in the second they clear $90.00.

Of course, we’re ignoring all the overhead costs in this very simple example model. However, it’s pretty obvious that the key phrase in Sara Gaugl’s statement is “Value Village is a for-profit business”.

As such, it is actually in Value Village’s best interests to raise the prices on items and sell less.

 Which leaves an ethical dilemma: Are a for-profit business’s core values more important than making as big a profit as possible?

Value Village states that their values are as follows:

“Core Values

Personally, given their business model of making payments to charity partners based on donations, not on actual sales, I think that they are currently not meeting these values. They don’t increase their donations if they make a bigger profit.

So where does that increased profit go?

While it’s not difficult to find details on the names of their Executives it seems to be much harder to find details of their actual financial statements. However, in 2015 NBC News investigated the proportion of annual revenue actually paid to the non-profit charity partners and estimated it to be just 8%.

As a result of this investigation and increasing concerns a number of charities will no longer partner with Value Village.

Now, I’m not advocating a boycott of Value Village. I think that it has its place and I must admit to personal admiration, as a Business School graduate, for the development of such a unique business model, which is very successful.

However, what I am suggesting is that we, as consumers, need to demand better pricing. We need to decide which is more important to us, our local community and values or the almighty dollar. I hope that it’s our values and local community.

There’s something inherently wrong, in my opinion, when those on a low income simply can’t afford to shop in a thrift store!

It’s time to vote with our voices and to refuse to allow these increasing prices to continue.

 In the words of Margaret Mead:

Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.

 

Happy Canada Day! Reflections of an immigrant.

So today marks just over 13 years since I immigrated to Canada from England. In June 2003 I shipped 10 boxes, 4 suitcases, a package of pictures and the contents of my office from the North of England to Vancouver, British Columbia, Canada.

My dog, Molly I, was meant to have made the trip with me but unfortunately a few months before, when having vet checks as part of the process for bringing her, it had become apparent that she was riddled with arthritis and in a lot of pain. Having been my faithful companion through a massive car accident in 2000 and supporting me through my long recovery, it was time for me to put her needs first, and so with her head on my lap she crossed the Rainbow Bridge.

So, a few month later, I came to Canada on my own. I’d been recruited by the University of British Columbia to join the Centre for Healthcare Innovation and Improvement. Unfortunately when I first arrived in Canada there was a delay with my work permit so I couldn’t actually start work until mid July. I had rented an apartment, with the help of the wife of one of my new colleagues, and was living in Coal Harbour within walking distance of Stanley Park.

Unfortunately in my reading up on Canada there were a few things that I had missed! The first I am now very embarrassed about. When I was applying for jobs, in 2002, I hadn’t actually realised that Canada and the United States of America were different countries. I’d grown up just labelling the continent ‘North America’ in geography classes.

Thankfully it didn’t take long for me to realise the difference and to understand that calling a Canadian ‘”American” can be as insulting as calling me European. I’m English. British if I have to be. But I’m not European. Which interestingly has far more meaning right now after the recent Brexit referendum.

The second fact that I’d missed was Canada Day!

So on July 1st 2003 I’d been in Vancouver for a few days and was slowly working things out. I’d got past the fact that all the light switches are upside down, that living rooms don’t have centre-ceiling lights (and that the light switches in living rooms work sockets that you plug lamps into instead). I’d even got used to driving an automatic vehicle on the wrong side of the road and that red lights, no longer meant stop until they turn green; they just mean stop until you can turn right, or left (if it’s a one way street).

However, somehow I’d missed the fact that July 1st was a special day. So that day, I got up and headed into the Children & Women’s Hospitals to carry on unpacking boxes in my new office. Which, by the way, had been used in the making of the X-Files!

Now, I did wonder a little where everybody was but, being a hospital and the fact that it was early morning I just assumed that my colleagues, as they were almost all medical doctors as well as researchers, were busy with morning rounds. As for the administrative staff, I knew that the Centre Admin Director was away for the weekend, as she’d mentioned it earlier in the week, so I really didn’t think twice.

A few hours later my office is starting to look pretty good and I decide to head home. This is when I start to realise that something might be up. In the few hours that I’ve been in the office the streets have turned red and white. There are people sat on the side of the road and chairs are lined up along the roadside. Street vendors are all over the place and balloons are drifting in the sky.

As I turn onto the street where I can usually access the underground parking for my building I come up against a barricade and see Royal Canadian Mounted Police in real life, for the first time. From the driver’s seat of a car, those horses are HUGE!! The RCMP officer waves me on. The problem is that I don’t know where I’m being waved on to.

Thankfully, he must have recognised my confusion and he waves over an officer on foot patrol who clarifies with me that I live just a few yards down and kindly explains that I should have received a notice informing me that the road was going to be closed for several hours that day, but that he’d make an exception and let me through the barricade to get home. I suspect that he realised that if he didn’t let me through I didn’t have a clue what to do or where to go and would probably cause more confusion in my ignorance!

A little later, and I’m home and decide that I’d best find out what all the fuss was about.  I soon learned that July 1st was “Canada Day” and that it is federal statutory holiday celebrating the anniversary of the July 1, 1867, enactment of the Constitution Act, which united three colonies into a single country called Canada within the British Empire.

Being English I’d never celebrated a country’s independence before.

The closest I’d come would be Guy Fawkes and Bonfire night on November 5th.  Which is a little different, as Bonfire night is about commemorating the safety of King James 1st from the Gunpowder Plot in 1605. The event is celebrated every year with fireworks and burning effigies of Guy Fawkes on a bonfire.

Though, I do wonder, alongside many of my compatriots, whether we’re celebrating Fawkes’ execution or honouring his attempt to do away with the government!

Anyway, I headed out into Vancouver and thoroughly enjoyed the parade and celebrations.  However, in my naivety at that time I had no idea of the complexities and concerns of Canada’s history on this day.

A few years later and I’m studying Canadian history in preparation for my Citizenship exams. This is when I first started to comprehend the completely different cultural perspective on citizenship that exists in Canada to that which I had grown up with.

As somebody born in England, I’m English.  My ancestry probably includes Scottish and Irish heritage given my red hair and pale skin and if I go back far enough I’m sure that I can probably trace my family back to the Roman Empire via a few Vikings along the way.

In fact, I grew up learning history that included the Vikings, the Elizabethans, the Tudor and Stuarts, and the Romans; places like Stonehenge were all around me. History was all around me, always. I thought nothing of the fact that the first house that I ever owned was over a 150 years old and was a 2 up, 2 down row house built to house the mill workers over a century before. I was just grateful that one of the ‘2 up’ rooms had been split in two so that there was an indoor bathroom as we still had the outhouse/privy in the back yard!

My connection to my country was just innate. Nothing that I ever thought about or really considered. My roots were long and went back centuries.

Then I came to Canada and heard people describing themselves as Scottish or German, but when I asked they were often 2nd or 3rd generation Canadian, and had never even visited these countries that they claimed as their heritage. I found this confusing.

Now I was reading about First Nations and the European settlers and the resulting treaties. It sounded very polite to me. Where were the stories of rape and pillage? Where were the stories of continents being conquered and constant changes in monarchies?

It took time for me to understand. It took getting to know indigenous peoples on a personal level to realize that while it may be described as a far more polite process; the reality is that the same domination of one culture over another happened. That cultural genocide was taking place in what to me, before, had just been a small footnote in my history books.

I took the time to learn, to ask questions, to explore Canada’s history and heritage.  I learned about the First Nations Métis and Inuits who occupied Canada long before Europeans ever set foot in the country.

Then in 2009 I was offered a unique opportunity. I had moved from Vancouver, BC to Edmonton, Alberta in 2006 to be appointed as the first Research Chair in Western Canada in Health Informatics with the University of Alberta. Having spent 4 years running a multi-million dollar research group I was interested in a new challenge.

Algoma University had recently gained independence in 2008 and was looking to hire a Research Chair to establish and run a brand new Health Informatics Research Centre for 5 years. Algoma University has a unique history in that it is physically located in the buildings, and on the grounds, of the Shingwauk Residential School. As such it has been a place of education for many years but it is also the site of much historical trauma and loss.  Having benefited myself from attending a small university as a student the small size of Algoma really appealed to me. The opportunity to work with a community that I had grown to respect so much was incredibly engaging. So in 2010 I took up appointment here in Sault Ste. Marie, Ontario.

Six years later and it’s Canada Day once more. So I’m taking the opportunity to look back over my 13 years here in Canada and see how far I’ve come. Not only from the West Coast of the country, across the Rockies to Alberta and then through Manitoba and Saskatchewan to Ontario but in my understanding of Canadian Culture and heritage

So today it is with pride that I celebrate Canada Day, as a Canadian, while also respecting the fact that for many of my First Nations friends, colleagues and students today isn’t a day of celebration.

Having recognised that, I love the press release distributed by the Assembly of First Nations today. National Chief Perry Bellegarde drew upon the history of the First Nations contributions to this country, and all that live here, and then moved past the hurt and preponderance on past travesties to take us a step towards a united future with his closing statement: “This must be our goal.  A stronger, more just country for all of us will ensure that all the peoples of this land have reason to celebrate when we join together next year to mark Canada’s 150th birthday.”

Chief Bellegarde, I honour you, for recognizing that now is the time to move forwards together; that the time has come for us to unite.

In a week where the press has been inundated with the ramifications of the vote for England to leave the EU I am delighted to be able to say that I live in a country where diversity is recognized and appreciated.

Where our Prime Minister is committed to “…a country where everyone is equal”.

I will always be English, but today I’m also very proud to be Canadian.