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NB Telegraph-Journal ~ The Bottom Line ~ Equalization ~ May 29, 2006 - 29 May 2006 by TaxHelp
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My first real job was pumping gas at a corner garage in my hometown in the days before self-serve. In addition to the three islands with two twin-headed pumps each, we also sold stove oil and diesel. My employer had mastered the concept of doing more with less before it became fashionable, as many a Friday evening I worked alone. He was kind enough to point out that I shouldn’t be shy to accept the oil change or tire repair jobs that would occasionally pull in, since I could complete those in my spare time.
In more than one winter snapshot I’d had nine or ten cars on the lot being filled, a truck at the diesel station and a forlornly looking fellow standing for kerosene while someone would impatiently be waiting for their flat to be fixed. Invariably, some prankster would drive up in a VW bug and ask me to check the water in the radiator, thinking they could put one over on the kid. General Motors products were the worst. The filler cap was found behind the hinged license plate in the back below the bumper. Bending down continually, my jeans would end up being soaked from the slush and I would spend the shift freezing.
On those evenings, when I finally made it back to home, my sleep would be punctuated by nightmares of the air hose bell ringing, and I would find myself sitting up in bed, in the darkness, wishing my name was Rockefeller. Although all the guys of my generation probably used the Rockefeller name as a touchstone, it was particularly important to me as he had founded Standard Oil. Never heard of it? State the first initial of each word in the company name out loud and listen to what you’re saying!
My trip down memory lane detracts from the point of the story – while the early seventies don’t seem that long ago – you could tank your car with a fin as we were selling gas for 39.9 cents a gallon. The Alberta Tarsands as a business model wasn’t, as crude oil was a princely three or four bucks a barrel (Friday’s close - $71.37).
Anyway, you might have heard that the federal equalization payment formula is currently being renegotiated. This program represents the money Ottawa sends to reduce the disparate wealth between the have and have-not provinces so that Canadians across the land pay about the same amount of taxes for the same amount of public services.
There are a number of funding formulas on the table including one supported by the provinces simply referred to as the 10-Province Standard. Equalization is a federal government program. In calculating the relative wealth, provinces like Alberta and Saskatchewan do not want their resource value to be included. Alberta Premier Ralph Klein has gone so far as to suggest that he will pull his province out of the national program. Reportedly, he believes that oil and gas royalties are exempt and Alberta pays enough with its residents sending $12 billion to Ottawa in taxes. In a welcome show of collegiality and solidarity by our Premier Bernard Lord, he has invited Opposition Leader Shawn Graham to attend the western premiers meetings being held in Gimli, Manitoba this week.
Here are a couple of points our guys might like to mention in their discussion with Mr. Klein. Last month’s unemployment rate in the province was 9.1 per cent whereas Alberta enjoyed a nation leading 3.5 per cent. Alberta’s Basic Personal Tax Exemption is almost twice as much as ours, while they pay a flat ten per cent personal tax rate. For the latest tax year available (2003), 48 per cent of New Brunswickers earn between $1 and $20,000 while only 38 per cent of Albertans fall into that category. If you’re wondering where you can find the other ten per cent, those taxpayers and a few of their friends are more substantially employed earning $50,000 plus (12 versus 23 per cent).
There are some who would argue that a province’s resource wealth should be excluded. I’d respectfully point out however, that this is not the same as having a hard working, successful individual supporting a slacker younger sibling. In resources, you either have them or you don’t. I wasn’t born a Rockefeller. But you might be interested to know that of his generation, John D. Rockefeller was known for his philanthropy, sending hundreds of millions of dollars to worthy causes.
Roger Haineault is with Help 4 Taxes. He can be reached with specific questions or suggestions by calling 506-693-1212 or by e-mailing him at roger@help4taxes.ca. His column appears Mondays. |
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