90 replies to this topic

[spanky123]

I admin watching long bonds is only marginally more interesting then watching paint dry but they are up again today. Short term interest rates are going to have to increase sooner rather than later if this keeps up.

[VIResident]

Comment: Be wary of wonky and wicked municipal taxation

"......In our view, we don’t need to pay more municipal taxes post-pandemic to balance the books, deal with increased debt and retain quality services. A much better alternative is to aggressively consolidate services to get better value for our tax dollars.

 

It’s municipal budget time across the region, so be wary of how many pockets your local politicians decide to pick to pay the bills."

Be wary of smaller municipalities that are subsidized by next-door neighbours in larger municipalities.

 

We all love Metchosin, but their big city cousins support that bucolic charm.

As a community of less than 5,000, total policing costs amounted to $240,000 in 2019, thanks to subsidies. That’s four per cent of their total budget, the lowest in the region.

By comparison, nearby Victoria spends $48.6 million, or 23 per cent of their budget, on policing, Saanich spends $32.2 million or 16.0 per cent, and Esquimalt spends $8.2 million or 22.9 per cent.

In 2019, Metchosin received about $1.1 million (for municipal purposes) in lieu of taxes, most of which is for federal government properties including William Head prison, Rocky Point Ammo Dump (DND), Mary Hill Battery (DND), and Mount Helmcken Radar Site (MOT).

It also received a provincial Small Community Grant which is unconditional, intended to augment the operating budgets of small municipalities in B.C. It received $526,241, or 9.6 per cent of 2019 expenditures of almost $5.5 million.

This is all about to change: The province is gradually shifting all of the cost for E-Comm 9-1-1 service to RCMP-serviced municipalities like Metchosin. Now that the RCMP is unionized, staffing costs are also increasing substantially.

Be wary of the wicked taxation brought on by the new assessment policy in B.C.

It uses the “highest and best use” approach in determining property value. If for example, you own a corner store downtown — where a skyscraper would fit in nicely — your property taxes are closer to a skyscraper than a corner store.

The concept of valuing properties as if they are ready for development tomorrow is inappropriate for property taxation purposes. It has been a wicked windfall for the municipality.

The province finally understood the implications of this taxation policy and provided a partial solution through the interim Business Property Tax Relief Exemption. ­Owners, though, have had to pass on substantial tax increases to any tenants.

Read entire article at Times Colonist https://www.timescol...tion-1.24287381

[Mike K.]

I chatted with a local business owner yesterday, who runs dining establishments in downtown Victoria and on the West Shore. He says the way the government monies are being distributed puts businesses like his into a limbo state of having to maintain depressed incomes in order to qualify for subsidies. He says if he starts making too much, he'll lose his subsidies, while staff remain reticent about going back to more normal levels of patrons and output.

 

He has also said that there is a plethora of money available to him, and he has surpassed well over a third of a million dollars thus far, most of which will not require repayment.

[spanky123]

^This is the point I made a few months back. Smart business owners can make FAR more money now running reduced hours and wages then they ever did previously. All they need to do is open during their most profitable times and close as soon as they hit 70% of the income threshold. Most can do that with about 40%-50% of normal hours and costs. Many staff don't care because anything they lose with shorter hours can be topped up with the CRB. Another screwed up Liberal disincentive to work strategy. 

 

Here is the rub though. In June it all ends (except CRB which is extended). I can't see the Liberals extending the CEWS (unless hyper focused) as the rest of the country is well into vaccinations. In addition, the 5 year bond rate I keep harping about has added $6B+ a year in debt servicing costs to the Feds in the last 30 days alone.

 

THERE ARE ALMOST 500K businesses in Canada collecting the CEWS and 25% OF THE WORKFORCE being paid by it.  There is going to be a huge sucking sound come late June when those businesses and employees now have to fend for themselves.

[Mike K.]

A classic example of bureaucrats meddling in the market. There are businesses that are being lost in translation or falling through the cracks because they are not setup the way Ottawa requires them to be setup. In serious trouble are going to be independent contractors, independent suppliers and the nuts and bolts of our industries who contract their services and fill important roles that we don't normally see, but which are essential for business to thrive and grow.

[Matt R.]

I chatted with a local business owner yesterday, who runs dining establishments in downtown Victoria and on the West Shore. He says the way the government monies are being distributed puts businesses like his into a limbo state of having to maintain depressed incomes in order to qualify for subsidies. He says if he starts making too much, he'll lose his subsidies, while staff remain reticent about going back to more normal levels of patrons and output.
 
He has also said that there is a plethora of money available to him, and he has surpassed well over a third of a million dollars thus far, most of which will not require repayment.

I think most businesses would rather be back at 110% and not eligible for subsidies, I know I sure would! The only way you lose subsidies is by having 100% of last years sales in the given period.

Now what I want to know is how the feds plan on calculating subsidies going forward, as we enter year two of this. Right now, you base your claim on how much your sales have decreased in the same period last year. What happens in April when everyone is UP over last April? I hear they will be clarifying this on Monday. I’m hopeful we are able to compare to 2019.

I’d say that $300k isn’t that big of a sum for a business with multiple outlets.

Matt.

[Matt R.]

^This is the point I made a few months back. Smart business owners can make FAR more money now running reduced hours and wages then they ever did previously. All they need to do is open during their most profitable times and close as soon as they hit 70% of the income threshold.

Why would they close when they hit 70%? Asking for a friend.

Matt.

[VIResident]

 

 

THERE ARE ALMOST 500K businesses in Canada collecting the CEWS and 25% OF THE WORKFORCE being paid by it.  There is going to be a huge sucking sound come late June when those businesses and employees now have to fend for themselves.

 

THIS.

[VIResident]

A classic example of bureaucrats meddling in the market. There are businesses that are being lost in translation or falling through the cracks because they are not setup the way Ottawa requires them to be setup. In serious trouble are going to be independent contractors, independent suppliers and the nuts and bolts of our industries who contract their services and fill important roles that we don't normally see, but which are essential for business to thrive and grow.

 

Mike, for the sake of having historical content around this post-COVID econ topic,  would you mind adding a few of the types of indy contractors/suppliers, nuts & bolts, that fill important roles that are essential and are in peril?  

[Victoria Watcher]

THERE ARE ALMOST 500K businesses in Canada collecting the CEWS and 25% OF THE WORKFORCE being paid by it.  There is going to be a huge sucking sound come late June when those businesses and employees now have to fend for themselves.

 

i think you might be surprised.  people seem to adapt.

[spanky123]

Why would they close when they hit 70%? Asking for a friend.

Matt.

 

As you know my friend the original cut-off for CEWS eligibility was a 30% decline in revenue. 29% and you got squat. That has since changed to a declining scale but there is a point where it makes sense to close and take the money then stay open and pay people for a small incremental increase in revenue.

[Mike K.]

Mike, for the sake of having historical content around this post-COVID econ topic, would you mind adding a few of the types of indy contractors/suppliers, nuts & bolts, that fill important roles that are essential and are in peril?

Oh sure, people like consultants, owners/operators of niche businesses, professionals who contract to businesses, even independent operators of logistics operations, etc.

[VIResident]

Governments have prevented 'zombie' companies from declaring bankruptcies — but a reckoning may come soon

Opinion: Zombies with debt overhangs and liquidation are both threats to the recovery

 

Author of the article:

 

".....In Canada, corporate insolvencies fell 14.5 per cent in the third quarter, compared to the same period last year."

 

".......This immediately raises two questions: why have bankruptcies been subdued and can it last?"

 

"The reason companies are surviving is not that businesses are in good shape; financial vulnerability is at a record high."

 

"....bankruptcy wave as delayed, not avoided. That poses a double danger. One is that without preparation, a cascade of bankruptcies causes deeper economic damage than it needs to. The other is that policymakers delay bankruptcies for too long, tying up labour and capital in “zombie” companies and activities that will never be viable again."...

 

https://financialpos...g-may-come-soon

 

 

Edited by VIResident, 27 February 2021 - 05:11 AM.

[Mike K.]

Yes, lots of businesses qualify for government funding which were failing at the start of the pandemic. I suppose the argument could be made that government, not the market, forced their failure and that they were about to turn things around.

[VIResident]

Canada, BC, Vancouver Island, 13 municipalities will not be immune to this - I wish muni politicians would stop spending, even roll it back because we are going to get wacked over the head with taxes.

 

“The amount we have borrowed is comparable only with the amount we borrowed during the two world wars,” Mr. Sunak said. “It is going to be the work of many governments, over many decades, to pay it back.”

 

British government announces biggest corporate tax hike in decades in bid to help pandemic-hit economy

The British government has announced the country’s biggest corporate tax hike in almost 50 years in a bid to slowly fill the fiscal hole left by the pandemic.

Rishi Sunak, the Chancellor of the Exchequer, announced Wednesday that Britain’s corporate tax rate will rise to 25 per cent from 19 per cent in April, 2023. It’s the first time the rate has been increased since 1974 and comes after successive Conservative governments have lowered it from 28 per cent over the past decade. The government also plans to freeze several personal tax allowances for four years starting in 2022.  https://www.theglobe...-in-decades-in/

Edited by VIResident, 03 March 2021 - 03:14 PM.

[spanky123]

^ And of course companies will just pay the extra money and not look to maintain profitability by cutting jobs!

[VIResident]

“Only time will tell, but some are very worried about where this may go — maybe the elimination of the homeowner’s grant altogether.”

 

https://theprovince....homeowner-grant

[spanky123]

^ The reason why they want to start tracking SINs is because they are going to remove the capital gains exemption on the sale of a primary residence and this gives them an easy way of cross referencing ownership.

[spanky123]

Here comes the justification, speculators are responsible for housing price increases and must be stopped by taxing them! https://www.bloomber...=premium-canada

 

The truth of course is exactly what I said it was back last March in that asset bubbles are being created by incompetent Government policy and will only further divide the have and have nots.

[Victoria Watcher]

The new normal: Don’t expect a return to pre-pandemic life, experts say

 

as soon as i read that headline i laughed.  could hardly wait to hear what the "experts" have to say.  and how they can be experts on a once-in-100-years pandemic.

 

https://www.timescol...-say-1.24294201

 

Homer-Dixon said the planet’s economic, ecological and social systems are wound so tightly together these days that the likelihood of more pandemics and other significant system shifts has increased.

 

“The idea we are going back to the way things were, well there are just too many things in motion now on this planet,” he said.

 

 

 

 

what?  the fact that we developed multiple effective vaccines in a record time signals to me more the end of pandemics than any increasing frequency.

 

 

 

 

But it could be particularly painful for the cruise-ship industry. “I have long felt that Victoria has made an unwise bet and a massive economic commitment to this industry,” he said, noting the sector has proven for years that it’s vulnerable to disease. “I was not surprised it was the first industry to be hit by the pandemic.”

 

Homer-Dixon expects a rebound for tourism, though not likely to pre-pandemic levels, and says there could be a fundamental shift in the region’s economic focus, with construction and real estate emerging as bigger players.

 

 

 

 

what.  is.  this guy talking about?  what "massive economic commitment" have we made to the cruise ship industry?  as far as i can see we have made almost none apart from some federal money for docking dolphins etc.   it takes care of itself with no drain on our resources.

 

 

 

 

 

 

But as for fundamental change, Grouzet is less sure.

 

Humans are terrible at predicting the effect big events will have on them, he said — positive events often don’t make them as happy as they thought for as long as they hoped, while they end up getting through negative events they were convinced they would never survive.

 

“We adapt very quickly, which is good, which is why we survive a lot of things, including the COVID-19 pandemic,” he said.

 

Because humans adapt quickly, he said, significant changes often don’t register as big moves.

Despite big plans to be part of societal changes, most people will focus on the effects on themselves, which tends to mean massive change gets put aside, he said.

 

 

 

 

^ now that guy speaks some sense.

Edited by Victoria Watcher, 14 March 2021 - 09:34 AM.