September 5, 2017

I enjoy reading Don Pettis’ articles on the CBC news website but find that sometimes he has a penchant for the understatement.

Canadian consumer debt is so entrenched in our social consciousness there may never be any escape from the black hole of debt.

Yesterday, I was at a breakfast meeting listening to a tax avoidance scheme that is based on the acquisition of debt, which is used for financing unencumbered assets in order to avoid paying some taxes.  The pitfalls of such a notion should be so obvious, to any uneducated onlooker, as to be utterly absurd.  But high taxes and high debt loads are completely and insidiously acceptable ways of life for Canadians.

We seem to innately understand, and for a very strange reason, accept that we will always be in debt and that we will always be exposed to high taxes.  Among the populace it is quite acceptable to avoid the later, even by engaging in activities that may be immoral, questionable or even illegal – but “don’t touch my debt – I love it!”

We, Canadians, pay almost half of our earnings in some form of taxation – not just income tax – which is most avoidable for high income earners who have the necessary facilities, legal teams and accountants, to assist them.  Taxes drain our ability to fund our desired lifestyles long before we are exposed to the usury of the banks.

Before we even consider the effect of compounding interest we find that banking fees alone cost average Canadians billions of dollars each year.  In essence we no longer have a national currency to speak of – it has been almost completely usurped by debit and credit cards.  When we use plastic we pay bank fees on every single purchase we make – effectively devaluing the national currency.

Sadly, Canadian debt loads aren’t growing on the back of new spending, on the acquisition of new goods and services.  Canadian household debt loads are increasing mostly on the back of compounding interest and a matrix of fees.

Do you ‘like’ being in debt?   if you are reading this you most likely are in debt.  Getting out of debt isn’t all that hard but staying out debt requires income sufficient to fund a reasonable 21st century lifestyle.   Taxation, of the poor and middle classes, is every bit as responsible as the availability of debt for destroying our way of life and creating tension and anxiety amongst the population.

Oh, yeah, it’s payday, after your salary is deposited, don’t forget to use your overdraft to transfer some ethereal number to your line of credit to allow you to make a payment on your credit card so that you can buy the kids pizza tonight.