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71 -WHfIY FREE PRESS, 'WEDNESDAY, JANUARY 25, 1989o PAGE 17 TArTM Whi*tby Free Press Financial Planning Report Tax reform's first imnpact didn't hurt most -taxpayers The initial impact of the first phase of tax reform was reasonably painless for most Canadians when iL took effect, appropriately, on Canada Day, July 1. Many tax- payers found their tax bill somne- what reduced on that date and thecre were few tears on that account. The number of tax brackets was reduced from 10 to threc (or effec- tively four in Ontario) with basic federal rates of 17 per cent on tax- able income under $27,500, 26 per cent on the next $27,501i to $55 ,00 and 29 per cent on $55,001i and Up. In conjuniction with the conver- sion of some exemptions to tax "credits", the government forecast a reduction in revenue of $11 bil- lion over five years when the measures were tablcd in June, 1987. 850,000 home free At that ime, Finance Minister Michael Wilson said replacing ex- emptions and deductions with credits would mean $850,000 tax- payers, including 250,000 senior citizens, would be dropped from the income tax rolîs entircly, helping Wilson's objective: "to target assis- tance more effectivcly to thoscwith lower incomes and reduce the after- tax value of transfer paymcnts to those with higher incomcs."' Phase two to corne Now, of course, Canadians are waiting for the second shoe to drop. That's the potentially ominous Phase Two of tax reform, seen as the essential couniterbalance to Phase One and involving some kind of national sales tax at the retail level. Very litile definite information is available and no draft legislation or discussion paper has appeared. But essentially the plan is believed to entail a Canadian form of the Value Added Tax commonly employed in Europe. It would involve replacing the ex- isting federal sales tax of 12 per cent on many manufactured goods which many Canadians don't even realize they're paying because i's levied ai the manufacturer level. Fundamentally f lawed Wilson didn't mince words about the existing tax in his 1987 state- ment, calling it, "fundamentally The success of* this year' s Canada Savings Bond Campatign.i which raised a whopping $1,4.962 billion - the third hiehest sales in the 42-year history of CSBs - cornes as fo surprise to stock rnarket analysts. "Sat'ety is stili a big factor with investors. The big neltdown ini the stock market lasi year is stili very rnuch on peoplesrninds and that bas made Canadians very safety conscious,' observed one senlior Toronto analyst. "Retail investors." said another analyst, "are very cautious -about re- entering the rnarket. They're not Iooking for quick capital gains and they're not chasing rates for a haîf or even a full percentage point." Investors. they point out, are bet- ter informed today. flawed and hidden, arbitrary and capricious." He said iL "hurts our economy. It puts more tax on Canadian-produccd goods than iL docs on cornpe ting i mportcd good s. IL puis a hiddcn tmx on our exporis that makes thcm less competitive (and) docsn't make much sense in a country that trades as rnuch as we However it evolves, the new na- tional sales ax apparently would apply at the retail level to every- "A lot of' tle rnoney that went mbt CSBs ibis year also had a hard look at GICs on the way through. .but with their instant cash feature. it was relatively easy for account executives 10 convince clients to put th'eir rnoney into Canada SavinIzs Ronds." said another analyst. This year's very imaginative mnarketing effort was also a factor, he said. Investors were prirned 10 look at fixed incorne securities and the 1 988 advertising prograni only reinforced this view. It wvas also a tremnendous year for the CSB Payroll Savings Plan. which enables individual investors to buy Canada Savings Bonds through payroll deductions where they work. This year a record $2. 135 billion was bought on the Payroll Savings Plan - up 7 per cent from 1987. In- dividual purchases were also higher - an average of $1, 530 per applica- tion compared with $1.461 for the previous year. Atlantic Canada led the way with a 13 per cent increase in sales over 1987 followed by the Prairies. which posted a 12.6 per cent in- crease, British Columbia. with 9.4 per cent; Quebec, with 7.9 per cent; Ontario, 7.7 per cent. thing we buy, except food, and to evcry service we use, including such items as haircuts and drycleaning. 20 per cent or more It's also reported that unless there's somne kind of a deal with the provinces, the new tax would be in addition to existing provincial sales taxes and could run total sales tax levies to 20 per cent or more in some provinces. Clearly, it's highly sensitive politically. One politician on the govemment side might have let the caL out of the bag during. the cc- ion camnpaign in guessing out loud that the tax would produce an extra $10 billion revenue. This was vigorously denied and no more was heard. Now, however, back in power with a majority, the govemment is said to be moving rapidly with sales tax plans - as indeed iL will have to do if less revenue is forthcoming as a result of Phase One and if the mammoth deficit problem is to bc addressed. Tax servicee offers- experience and professional help With Finance Minister Michael Wilson's tax reforms going into effect this year, seeking profes- sional help to fil out the 1988 tax return may not be a bad idea for many people. One such fh-m offering profes- sional help is Whitby Tax Service Ltd. located a t 965 Dundas St. W.. suitA 9.09.. "The forms are more complica- ted thisé,ear with a riumber of changes, according to manager Robert Gerry. Gerry and supervisor Margaret Stacey decided to open their own business after ha ving worked for a similar operation in Scar- boroueh. "We wanted to go on our own," says Gerr, adding that they choose Witby because "there are similar businesses in Osh- awa and Ajax but very little in between." Tax returns are due May 1 this year. Gerry expects the ser- vice to start getting busy around the middle of February when T4 SIp becomne available. Hfe prefers appointments, but Stacey notes that clients will not be turned away if they simply show up. A staff of seven people will be preparing returas in offices where Stacey says "confidentia- Iity" will be assured. "Returns should be back within an hour unless it is corn- plicated. Then we may want to keep it for a few days,» says Gerry. Costs will1 range from $30 to $150. He says taxpayers may receive a slight increase in their returns this year due to the new tax laws. "But people may need somne hel pon their forms," says Gerry. The office is open now for questions and to make appoint- ments. Hours will be from 9 a.m. to 9 p.m. Monday to Friday and 9 a.m. to 6 p.m. Saturdays. Gerry expeets Saturdays to be busy since many Whitby and Durham residents commute to work in Toronto on weekdays. The phone number is. 430-' 1166. e R.ER. SP.'S e Treasury Bis e M ut ua IFunds # Stocks 2 Sîmcoe St. S. Suite 740 Oshawa Ont. L1H 7L1 7th Floor, Bank ai Commerce Building, Simcoe & King Ph: 576-3321 Â '8retinnis almost easy Pg. 18 Timely tax tips Pg. 18, 19 Donations bring tax relief* Pg. 19 Safety makes CSBs popular investment WOOD GUNDY