Canadian Personal Finance Blog

Alternate Property Tax Model

So after whining about my Property Taxes, I think I have come up with a simple(r) model for Property Tax valuations which could make lives simpler (simpler for me).

Simply put, your Property Tax is set when you buy your house. When the price is set, that is what your property taxes will be based on, until the house is sold again.

Sounds easy doesn’t it? The municipalities could tweak it so that they could add an inflationary increase each year, so that their incomes could slowly increase, and maybe a caveat on the valuation at sale (i.e. the City can have an independent body valuate the house at sale time and then base property taxes on that value), in case folks try to sell houses for $1 or the like.

Advantages?

• Property tax increases would be limited year over year to only an inflationary increase, better than current system where Property Tax valuations can wildly vacillate (mostly up)
• If someone stays in their house for a long period of time, they will not end up having to sell their house because their neighbourhood suddenly went “up scale” and their Property Taxes have sky rocketed (as in Vancouver), good for Fixed Income seniors.
• May cause a boom in contracting work for upgrading houses, since it’s value will not increase unless it is sold (i.e. why move to a bigger house, when it ends up being cheaper to add a room to my current home)
• Less yearly paper work with new valuations and warning home owners of the pending change.

Disadvantages?

• Municipalities incomes may not be as large as they need them to be and it may force them to cut services (to run a balanced budget)
• Tom-foolery and shenanigans are still possible given there can be manipulations of these systems, like we have seen with rent controlled properties and such.
• Might throw cold water on the housing market, with folks maybe staying in an older house, instead of buying a brand spanking new one, because it costs more (and the older house has been inhabited in for a while)

Opinions? Should I write this one up and present it to the Ottawa City Council as a progressive and exciting way to move forward in the 21st century? Maybe if I add a Green element to it, it might be an easier sell (it will help the environment, because it will slow housing developments)?

Stats Canada put out it’s yearly population estimates with the data showing sex and age correlations, and all I can say is I am starting to feel a lot older.

The Median age of a Canadian as of July 1,2009 was 39.5 years (up about 0.2 years from last year and 3.1 years from 1999). This seems to suggest that the statement that the Canadian Population is aging (as a group) is a correct statement. Why are we getting older as a population?

Fertility rates persistently below the generation replacement level, and an increasing life expectancy are the main factors explaining the ageing process of the Canadian population.

Interesting since in my household we have 4 kids, so we have effectively a doubling fertility rate. The guess is that the Median Age by the 2030s may reach 44.0 years old (by then I’ll be in my 60s), and thus we all get that much older.

Working Age Population?

Yes the working age population is getting older (the median is at least) and this comprises the group of folks between 15 and 64 years old (I’d love to retire before 64, but my guess is I’ll be retiring much later than that). The median age in this group is 40.5 years old, which explains why more and more working folks are worried about: Pensions, Medical benefits and retirement savings plans.

Working Age Median

The Big Table

This table I really like because it shows what I kept hearing, that women live longer than men, and from age 50 onward there are more women of that age group than there are men.

What is also interesting to me is that there are over 1,000,000 Canadians 80 years and older and 5,000 of them 100+ years old, wow. All I need to do now is that I have enough money to live that long, and then figure out how to live that long. My firm belief is that death is the leading cause of mortality, but I am willing to listen to counter-arguments.

Where do you fit in this table?

Were you alive in October 1970? I was, and I lived through the October Crisis, and actually remember it, and since it is October, let’s remember this important time in Canadian and Quebec history. Given that Mr. Cross was Trade Commissioner this has a little bit to do with Finances, however, no this isn’t really topical, but still an important piece of Canadian history.

I remember this because I remember a school chum’s Dad was a Member of the Legislature and when I went to a birthday party at their house, there was a machine gun on his front lawn and some large soldiers there as well.

This has been one of the most interesting years in my life and in the financial world, and I will not lament it’s end, but it is certainly not the worst year of my life (but it isn’t one of the top 10 either). 

This year has seen:

• My retirement savings drop by 20% in value thanks to the stock market implosion, caused by the shenanigans and tom foolery over low rate mortgages in the states, and the financial apocalypse.
• My career at Nortel finish at 20 years (I am still looking for gainful employment), but maybe that is a good thing at the end of it all. With this I have taken complete control of my retirement savings, as well.
• My oldest go off to University and now I am learning how the business of higher education works (and it’s ins and outs). 
• An election that seems to have resolved nothing and we are more likely than not off to the polls again in 2009, which always makes for fun writing.
• The birth of the TFSA, but I am not sure how I am going to use it yet.
• Gas prices going up and down have caused havoc with any kind of budgeting attempts by my family, but the cheaper prices now, has managed to balance mid-year large outlays for fuel.
• Interest rates remain at historic lows and inflation has calmed down with the drop of fuel prices as well, where will this lead? I have no idea, but I hope interest rates stay down for a while longer, then they can sky rocket (remember interest rates low good for borrowers, bad for bond holders).
• I await a “bail out” by the government for me, but I guess for the common man, the “bail out” is called buying lottery tickets. Maybe I should change my name to Ford?
• I have written well over 250 posts this year, which is the most active writing year I have ever had.

I thank you kind reader for your patronage this year and hope you keep coming back to see my view of the Personal Finance world in the coming year.

Bye Bye 2008

Man that was a tiring year

$30 Billion is Quite a Debt

Stephen Harper told the CBC that the coming fiscal year the Canadian Government could run up to a $30 Billion debt thanks to the Financial Apocalypse? Wow, that is quite the turn around from running surpluses for years, and if it is a one time thing that does stimulate the economy and gets people (like me) back to work, I guess it isn’t too bad, however my concern is that this isn’t going to be a one time thing. When deficit financing started in the 70’s it was not planned to be the “Standard Business Practice”, but it did end up being that way and we are still paying for it now.

The statement by Harper is also a contradiction of his own finance ministers statements of a week or two ago where it was claimed Canada would only run a $5 Billion deficit, makes me wonder what is the real number (and we won’t know that until December 31 2009 or later) and how much “stimulation” the Tories plan on putting into the economy (and what happens to this whole mess if the Three Headed Coalition Monster rears it’s head as well). Should be a very interesting fiscal year coming ahead, that is for sure.

The specter of Deflation or Hyper-Inflation is what has me concerned as well, because we are now in uncharted waters that is a certainty.

Advent Financial Calendar Box Day 20

Advent is slowly coming to a close and the Christmas Festival begins on Sunday and our Financial Calendar has very few boxes left for us to open.  In today’s box we find House Plan, complete with blue prints, cost estimates, the works. This plan has a few ways you can look at it as part of your financial journey:

1. If you succeed in your financial journey, you may one day be able to afford building your Dream House where you and your family can live and prosper.
2. For me this signifies the importance of a complete Plan for your Financial Journey. If you do not have a Financial Plan which is honest, and complete you cannot succeed and worse still, you cannot tell if you have succeeded as well (which is more important). 

Every week I write at least one article on the importance of Financial Planning, but many times I don’t mention why it is so very important.

There is a line from a Tom Clancy novel that rings in my ears, “… if you don’t write it down, how do you know it happened…”, but better still if you don’t write down what your goals and plans are, how do you know if you are succeeding? That is the positive view you should take of any financial plan, it gives you the positive feedback that you are succeeding, or the Shepherdly tap on the shoulder to get back on track, if you are not.

Make that Financial Plan for next year today, before Advent is over.

Snowmagaedon?

After visiting Toronto (to pick up my daughter from school), I had to chuckle at Environment Canada’s interpretation of the coming snowstorms for Southern Ontario.  The weather forecasts on Wednesday night quoted Environment Canada saying the storms would be Snowmagaedon (my spelling), which is a little over the top, given I don’t think the Rapture will be occurring during this event (if it is, my apologies), but it is even funnier to think that Environment Canada feels it is important to get people’s attention so they use these kind of sensationalized colloquialisms.

The storm does look quite serious, and I would suggest not traveling during it, but I am hoping that the Rapture does not come during it (because then we’d miss Christmas). Hunker down my fellow Ontarians, here comes another snowstorm!