Canadians living Near the Border Escape their High Taxes by Shopping in the United States

Posted by PITHOCRATES - May 26th, 2012

Week in Review

High prices in Vancouver getting you down?  No problem.  Just hop into the car and head to the U.S. border.  Everyone else is (see Cross-border shopping: price trumps moral suasion in the fight for consumers by Craig McInnes posted 5/22/2012 on The Vancouver Sun).

I always feel a little guilty when I shop in the U.S. I would much rather support local merchants. I get the whole notion that local merchants employ my neighbours and that the money they earn stays in the community and creates more jobs.

But as the report from the Bank of Montreal pointed out last week, the price gap between Canada and the U.S. is too great to be ignored. The report predicts that gap, combined with new rules about how much Canadians can bring back duty free, is going to increase the already powerful pull of cross-border bargain hunting.

We learn early on that a penny saved is worth two pennies earned, thanks to the effect of income and consumption taxes. So mining lower prices is both a thrill and sound financial management.

The gap between sample retail prices in the U.S. and Canada documented in the Bank of Montreal study is compelling. Running shoes were 37-per-cent more on this side of the border. A Canon camera was five-per-cent more, a Gap Kids T-shirt cost $5 more here…

And it’s not just price. The bigger market in the U.S. offers more choice as well…

But is this short-sightedness on my part? Am I undermining my community, my country and ultimately myself in my drive to save money by passing over the merchants in my neighbourhood and town?

No.  It’s not short-sightedness.  It’s you getting the most value out of your money.  For why should you pay higher prices to subsidize uncompetitive businesses?  However, if you want all of those government benefits you pay for with those high income and consumption taxes then, yes, you should pay the higher prices.  Which pay for all of those government benefits.  Including that national health care everyone in America is so envious about.

It makes it tough on a government to put high taxes on gasoline and other goods & services in cities close to the U.S. border.  For those living in the interior of Canada can’t escape this social democracy as easy as those living near the border can.  And this is the greatest threat of any social utopia.  Better stuff across the border.  Because if people can escape the high taxes of their utopia so they can better afford to live it will only put pressure on the government to raise taxes further.  To make up for that lost tax revenue on those purchases across the border.

Of course to have this problem can only mean one thing.  Canadians are taxed too much.  Those consumption taxes really inflate prices in the supply chain.  Adding a tax whenever someone adds value.  It adds up.  And given the opportunity people will avoid it.  A lesson as old as time.  People are smart shoppers.  They spend their money wisely.  And they will go where they will get more value.  And typically that will be where there is more capitalism.  And less socialism.  Even if you live in a country that has just a little socialism.  For in the social democracies of the West there are varying degrees of socialism in these countries.  But one thing is always certain.  This kind of cross-border shopping traffic is always towards the country with less socialism.

This even holds true for health care.  For people who want the best in health care will travel from a country that has more socialism to a country that has less socialism.  Even in Canada.  Where they pay high income and consumption taxes in part to pay for that free national health care.  Of course Obamacare will put a stop to that.  For when Obamacare is just like the Canadian system there will be no reason for Canadians to cross the border.  For the amount of socialism in our health care systems will be the same as in the Canadian system.  And the American system will no longer be better than the Canadian system.

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Passenger Rail losing Money in Vancouver like they do Pretty Much Everywhere

Posted by PITHOCRATES - April 8th, 2012

Week in Review

Governments love trains.  Not because they’re good economic models.  They’re not.  Unless you’re hauling heavy freight.  No.  They love them because they are so costly.  And require lots of workers from union construction workers to union maintenance people to union operators.  And that’s a lot of votes.  Which is why governments love trains.  And hate gasoline and the freedom it gives their people (see TransLink revenue took a hit despite higher ridership, cross-border gas trips by Andrea Woo posted 4/5/2012 on The Vancouver Sun).

Ridership grew on Metro Vancouver’s public transit system last year, but wavering revenues from TransLink’s gas tax and lower-than-expected use of the Golden Ears Bridge contributed to the transportation authority’s deficit, according to its annual report…

TransLink attributes the shortfall to a 5.9-per-cent decrease in fuel sales volume last year, brought on by high gas prices. Drivers also likely fuelled up in neighbouring regions, such as the Fraser Valley Regional District and Whatcom County, according to the report…

The gas tax, which is applied to gasoline and diesel fuel sales in Metro Vancouver, rose two cents to 17 cents per litre on April 1.

Meanwhile, ridership grew 8.6 per cent in 2011, with a total of about 233 million paid trips during the year. That figure is 18.5 million more than the target goal for the year, according to the report…

“Although [the bridge] experienced growth in traffic volumes over 2010, it was not to the level assumed in the budget,” the report stated. “Another contributing factor to the lower revenues were the toll discounts provided in April and May for off-peak and weekend travel.”

The TransLink Golden Ears Bridge Task Force is working on a number of initiatives to increase revenue and “enhance customer convenience,” according to the report. They include a public awareness and education program, market research and real-time web monitoring of traffic conditions on the bridge.

Most passenger trains lose money.  Because they are poor economic models.  Due to the costly infrastructure they require.  Other than the Bullet Train in Japan and the TGV in France no passenger train can pay for itself.  And that’s only a total of two lines that can.  So all passenger rail requires government subsidies to survive.  And it’s no different in Vancouver.

In Vancouver they have a 17 cents gas tax per liter of gas.  Which is about $0.64 per gallon.  Which is pretty high.  If you fill up a 17 gallon gas tank that’s about $11 in taxes.  So if you’re wondering why gas is so expensive here’s your answer.  Of course if you’re going to penalize people for using gasoline people are going to use less gasoline.  Which can be a problem if you’re funding your passenger rail with gasoline taxes.

To reduce congestion on the Golden Ears Bridge they’ve offered discounts to cross during off-peak hours.  Because gas taxes are so high people take advantage of the lower toll and travel off-peak hours.  Which can be a problem if you’re funding your passenger rail with a tax on bridge tolls.  But they’re trying to “enhance customer convenience.”  And based on what they just said that can only mean finding a way to make people pay more.  By either removing the discount toll and increasing congestion during peak hours.  Or increasing the toll.  Whichever they choose the result won’t enhance anyone but the taxing authority.

Perhaps they should cut the gas tax and the toll tax.  Which will encourage more gasoline purchases.  Increasing tax revenue even at the lower gas tax rate.  And making the streets so congested that people will avoid it by leaving their cars at home in favor of using passenger rail.  This increase in economic activity will translate into more sales and other taxes for the taxing authority. 

Counterintuitive, yes, for government officials.  But they should give it a try.  Better yet, in the future, they should just say ‘no’ to passenger rail and save themselves this headache in the first place.  And stick with busses.  Which are a far more successful economic model.

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Vancouver building Charging Stations for Electric Cars that aren’t there to use Them

Posted by PITHOCRATES - February 25th, 2012

Week in Review

Vancouver is going all in on electric cars.  Even when no one is buying them (see City to build 67 more electric car-charging stations by 2013-Vancouver by Tara Carman posted 2/23/2012 on the Vancouver Sun).

The City of Vancouver is taking an “if you build it, they will come” approach to electric vehicles, announcing an $800,000 pilot project to expand the number of charging stations in the city…

Less than one per cent of Canadians have purchased an electric vehicle, according to Brian Murphy, a senior man-ager at J.D. Power and Associates. One of the reasons is likely the price of the vehicles, which typically run more than $40,000, plus the $2,000 it costs to purchase and install a charging station in private homes…

Another discouraging factor about electric vehicles is “range anxiety” about having to take trips that are 200 kilometres or more, Murphy said. A full charge will take the Nissan Leaf, for example, about 160 kilometres, depending on the terrain and weather conditions.

The article includes a photo of a man in what appears to be a gas station for electric cars.  Happily plugged in.  And charging up his battery.  Luckily for him it appears to be a nice day.  It’s daylight.  And he’s not wearing a coat.  So he should have no problem standing there for 5 hours or so until his battery charges.

This is the dark side of range anxiety.  If you don’t make it back home on your charge you are stranded.  Because batteries don’t charge as fast as you can fill a tank with gasoline.

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Woman Dies from Drug Overdose at Occupy Wall Street in Vancouver

Posted by PITHOCRATES - November 12th, 2011

Week in Review

Sadly, a 23-year woman died from an apparent drug overdose at an Occupy movement in Vancouver (see Death at Occupy Vancouver shouldn’t force end to encampment, protesters say by Sean Sullivan, Katie DeRosa, Jason Markusoff and Sean Myers posted 11/6/2011 on canada.com).

The woman, identified online as 23-year-old Ashlie Gough of Victoria, was found unresponsive in her tent Saturday afternoon from a rumoured drug overdose. Police said the death is not considered suspicious.

After news of the woman’s death broke, Mayor Gregor Robertson said he had asked city manager Penny Ballem to find a way to force the protesters from the makeshift tent city, calling it unsafe…

“This is the second critical incident in the last two days,” Robertson said over catcalls from occupiers, in reference to a man who overdosed on heroin on Thursday…

Protester Niko Guerra said the woman and her friends were peaceful and played music most nights.

“They enjoyed having somewhere to stay, as opposed to living on the street,” he said.

Sad.  Only 23 years old.

I guess we can stop calling these the Left’s Tea Party.  Because the Tea Party rallies weren’t just a place to score and get high.  They had a serious and consistent message.  Not just playing music all night and getting high.  Which appears to be the case with many of these protesters.  Not everyone I’m sure.  But enough to make these look more like a tailgate party before a concert than a political movement.

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