Winnipeg Free Press

Winnipeg Free Press (Newspaper) - May 21, 1989, Winnipeg, Manitoba 14 Winnipeg free May Banks set in by Brenda Dalgish Canadian press i Ike the tooth finance minister Michael Wilson tucked a Nice Surprise for Banks and other financial institutions into his proposal for the new goods and services tax due to begin in the Stock Market liked the sur prise so much that Bank share prices but just How Nice Wilson has been to the financial services Indus try wont be known until the govern ment completes a fresh round of haggling with the finance ministry officials had been debating with the Trust investment dealers and insurance companies since the government announced in mid1987 that it intended to include financial ser vices along with All the other goods and services it planned to the philosophy was that a goods and services tax should be spread across As Broad a base As the broader the the lower the tax rate and the fairer the in some argued that higher income individuals use Finan Cial services More than lower in come people and that taxing Finan Cial services was especially important to make sure that the new tax system was not stacked in favor of the but something changed in the two weeks before the sales tax proposal was finally released along with the budget on april the government abandoned plans to tax financial inter mediation things such As the Money Banks make on the spread Between the interest they collect on Loans and the interest they pay on depos but it didst let the Industry off the Hook final Consumers it is imposing the nine percent sales tax on fee services such As safety Deposit Trust administration and data and As a Compromise for not taxing financial the institutions will be treated As final Consumers and wont be allowed to collect rebates on the Federal sales tax they says my Don Blen chairman of the House of commons finance the Canadian Bankers association estimates its members will pay about billion annually in sales tax on everything from buying note paper to construction materials for new office but unlike other business tax pay they will not be Able to get a rebate on that Blenkarn instead of collecting billion in sales tax Revenue that the finance ministry had originally estimated it would get from the financial institutions if All transactions were one government tax expert Esti mates the new system will provide about half that we worked at this for months but there were some technical problems that we the offi Cial it was very hard to Fig ure out what to one of the major difficulties was figuring out which dollars to assign to what he we called it the Jellybean prob you could see what was in the Jar but you identify an individual but another tax expert who also worked on devising a system that would work said the government could have implemented a broader tax on financial services if it had wanted my own feeling is a lot of political pressure must have been brought on so in the end they said we wont tax the margin he Jelinek wants to hear from you financial institution sales tax too Complex for Ottawa to handle Canadian press nobody likes the idea of More and the idea of taxing Mort gages and some other financial transactions is even less Appeal depending on who you talk the Federal governments Deci Sion to pull Back from its plans to tax the full complement of Finan Cial services is either an ideological failure or a practical solution to an exceptionally difficult the government said when it introduced its plans in 1987 to implement a National sales tax on All goods and services that it was important to include every thing from food to medical care to Stock trades in the tax but when the goods and services tax proposal was finally unveiled april the government had caved in and exempted things such As Basic Legal Aid educational prescription medical and dental child residential rents and some areas of financial some argue that since it seems self evident the Rich spend More Money on financial services than the any attempt to shift the tax Burden away from financial services would cause additional in equity to a tax system that is already a deviation from the progressive income tax Richard a University of to Ronto says the Bottom 20 per cent of the population does not use financial services As much As the top 20 per but everyone else uses Finan Cial services pretty much i would Bird others argue that financial ser vices be taxed at All be cause they Are outside the consumer sector of the someone who buys a guaranteed investment certificate or pays in Terest to borrow Money to buy a car is not making the same kind of consumer expenditure As someone who buys groceries or pays for they i believe that a sales tax should be essentially a consumption and financial transactions Are not necessarily consuming anything said Merv chairman of can Ada economic theory suggests that not taxing certain segments of the Economy encourages a shift to the no taxed if you Levy a tax on everything but financial you might encourage people to borrow More make More Bird but ultimately the decision not to tax some financial services came Down to practical most observers no other country has devised a successful tax for financial ser said my Don chair Man of the House of commons finance a lot of countries have tried but no one has really come up with a system that said it turns out that it is a very difficult thing to the Canad an government looked very seriously at but in the end they just were not up to handling the if Canada had arbitrarily taxed its financial services sector it would have put an unfair Burden on Cana Dian companies who Are competing with foreign Large customers could easily have transferred their business outside the country to avoid paying the leaving the entire Burden to fall on Small Consumers who Arent so free to said Al Cooper of the Canadian Bankers f you found the 1988 tax re turn quite a Challenge to com you Are in Good this past filing Revenue minister Otto Jelinek did his own tax return for the first time in several and like All other Canad ran up against the results of tax i guess i scored fair to said Jelinek in an i had the accountants Check what i had done and they made corrections in a couple of Jelinek said his involvement in his family sporting goods business plus his investments probably meant his tax was More complicated than the average but at least his experience has Given him a personal As Well As ministerial interest in what he has decided will be one of Revenue can Adas major projects for the coming year trying to simplify every aspect of the tax if i have one it will be to try to make the guides and processes Jelinek we want to simplify the Lan we want to provide tables to show what calculations must take we want to expand the use of color coding and examples so people can see at a glance what they have to Section we Are planning Pilot projects As we go along to make sure we Are going in the right and Jelinek wants to hear directly from you if you have any comments or suggestions that would help with the simplification write to him you dont even need a stamp Otto minister of National House of Otta Ontario k1a i have set up a special Section in my office to work on said so six people Are dealing with this and i am prepared to commit More if Neces we will look at every letter we and use every suggestion that has the 48yearold minister admitted he was a bit apprehensive about the new tax return when he took Over the Revenue Canada portfolio last Jan canadians were just getting their first look at the new which combined some of the Previ Ous system of deductions with the More widespread use of tax credits produced by tax yet the filing season went quite with Little difference from previous Jelinek most of the mistakes this time were in he being new to the i found it incredible to see How Many mistakes there we now have a More sophisticated computer sys tem which catches and corrects the errors More Jelinek said he cant Promise canadians a simple tax Only a simpler we have a Complex tax he the first step is recognizing the weve done that and now we Are doing something about Jelinek said there has been Little change in the level of unreported the so called underground he said his department will continue to focus its audit efforts in areas Likely to produce the greatest recovery of typically Large Cor Mike Grenby portions rather than Ordinary Indi Jelinek said he also will resurrect the declaration of taxpayer which was introduced four years ago by Perrin then Revenue this document reaffirmed every taxpayers right to right to right to Louii Tesy and consideration and pre sumption of another of my priorities will be to bring the declaration of taxpayer rights to the forefront Jelinek we cannot and must not move away from those Princi we have to be constantly Vigi Lant in our but we Are not going Back to the Days when taxpayer ers were we will never enjoy paying but if Jelinek is successful in reach ing his objectives of reminding Rev Enue Canada personnel to be humane As Well As and of making the tax return and accompanying material easier to under stand and he will have earned our nontaxable Jelinek Pilot project Bank machine wins Over mans word Edmonton up the word of a machine prevailed Over a City mans word in a court of Queens Bench Bob alone Issis bid to be reimbursed for seven withdrawals of made from his Toronto Dominion Green machine account was Dis missed by Justice in addition to losing his to the Green the dismissal Means alone Issi has to come up with about another to pay the Banks costs in the a 26yearold lawyer who was a student at the time of the was appealing an ear Lier Small claims court Case he lost after he was unable to prove the banking machine was the Bank had argued a Friend of alone Issis must have made the retirement annuities and Grifs annuities and Grifs Are available from certain life insurance Trust companies and Banks licensed in availability is subject to Federal legislation and individual corporate policies among those offering such the following table illustrates the monthly income that of registered funds will provide at certain Trif Deposit rates Are also certain minimums May apply and All rates Are subject to change without age of life annuity guaranteed 10year life annuity guaranteed 15year certain a age first year income Only 61 62 63 64 65 66 67 68 69 70 or formula 55069 current a ref 1 year 2 year 3 year Deposit rates 1 year year to 90 11 based on Purchase at age note All monthly income shown commences one month after Purchase As rates Are affected by interest rate the rates Are subject to change at any rates represent the highest Vel Dana plans Attha Timo source Rice financial group free current resp Deposit Trust Aetna Canada Trust can West Central guaranty citizens guaranty cooperators confederation Coronet counsel first City first City household line Inland investors group metropolitan group Montreal Mutual National North West Pacific Western West peace Hills Western Peoples Hills Royal Saskatchewan Standard Vanguard Wellington Bank of of Canadian Western Western Royal Bank of Bank of Scotia Toronto other Assiniboine credit credit Caisse pop a pop de Natl certain minimums May apply to both rasps rates Are subject to without rates for rasps Are annual interest and May include special bonuses term minimum resp deposits and interest on deposits Are paid these rates 19 compiled by Rice financial group rates quoted As of May ;