With the fast paced living that the majority of us are exposed to, we don’t get much time to think beyond what we have to do to get through each day. When the hydro bill comes in, or we reach the checkout at the grocery store we might say Wow! That’s pretty expensive. When we get our tax returns done and maybe have to send in a check with it, we grumble about it for an hour or two. This is about the extent of time that is spent on this financial issue.
There is an old cliché that if you look after the pennies, the dollars will look after themselves. This sort of delivers the message that if you really know where every penny is being spent then you are going to make the dollars. It means being really analytical with every penny you put out. This takes time which the average family just doesn’t have.
The question being asked today is are you putting out more of your money on your yearly tax bill, or are you spending more on your living expenses. You may ask what does it matter? You can’t do anything about your taxes, and you have to live and it costs money.
Let’s deal with the first question:
A study last showed that the average Canadian was actually spending more on their tax obligations compared to what they were putting out for the clothing, food, and shelter all together. The end figures of this study indicated that in the year 2013 that about 41.8% of the average income a Canadian family made went towards their total tax bill, which 36.1% went to their necessities of clothing, food and shelter.
If you are wondering how long it has taken for us to get to this place, go back to 1961 and from there to now the tax bill in its totality has risen by 1,832%. Now, so has the other necessities. Shelter has increased by 1,375%, clothing has increased by 620% and food by 546%. While these are all fairly high you can see the tax rise is the winner here for increase.
Remember that this refers to all tax not just income. It includes payroll, health, sales, property, fuel, vehicle, import, alcohol and tobacco taxes.
This is quite a list of taxes that we pay, and ironically we don’t think of them in a list form like this.
What about the second question, that you can’t do anything about the taxes or the cost of living anyway so why give them any thought?
The answer is yes you can.
For your taxes you can take a look at each of them if you wanted to see how you could reduce your costs. The primary one for most people is their income tax. By having a good quality accountant you can be assured that you are capitalizing on every potential tax break, and implementing means of lowering your taxes that may be available to you.
For the other taxes you can take a look at them and determine if there is any action you can take. For example, you can cut your gas tax by walking more and using the car less. For property taxes pay closer attention to what these are if you are buying a home. Basically the key is take a look at each of them and how they relate to you, and what you can do to scale them down.
