Fixing Fixed Incomes

This column of mine appeared in the February 9th print edition of The Kitchener Post but did not, for some reason, appear on their website. I've taken the liberty of posting it here:

Fixing Incomes One Way of Addressing Costs

In raising concerns about government spending, some people call on others to be mindful of those "living on a fixed income".

This group of people is at once mysterious and everpresent. Whenever the cry is raised, the implication is that these are the little people who don't get a voice against the tax-and-spend elites that are apparently ruining our country.

Who were these people living on a fixed income, and why are their incomes fixed? Why did they get trapped into deals that failed to take inflation into account?

Never mind the problems of dealing with increased taxes, Canada's inflation rate has raised the price of goods by 17.37% over the last ten years. Why rail against government spending when it is just a fraction of the rising day-to-day costs of living.

But then I did some research. Looking up "fixed income" turned up many investment websites, all talking about how a large amount of money is held in a bond and people take income off the interest from that bond. The principle of the bond doesn't increase, so neither do the interest payments.

So, technically, to get off a fixed income, you could take your equity out of your bond and invest it in something that produces a higher yield. Of course, doing this adds more risk.

Many privately pension plans that have survived attacks by corporations are fixed incomes. Public sector pensions tend to have cost-of-living allowances. Canada Pension Plan and Old Age Security also offer increases each year, although these don't always meet Canada's inflation rate.

Indeed, it can be argued that most of us are living on fixed incomes. When was the last time we salaried employees have had a raise? The only people that don't fit this description are self-employed freelancers who work without medical benefits, paid vacation and consistent hours. They wish they lived on a fixed income.

There are a lot of problems here which we should address, and some cities have. One of the big problems is the municipal property tax system, which has been foisted onto our towns and cities by the province, giving our municipal governments few alternatives in raising the funds required to balance their budgets.

Property taxes are, in my opinion, among the worst taxes governments can impose. They charge a fixed amount, making little allowance for the year-to-year income of the property owner. It doesn't matter if the homeowner is unemployed or retired or running a Fortune 500 company; a tax calculated on a percentage of the property's value still must be paid.

Cities like Toronto do offer retirees property tax relief. Low income seniors, or people unable to pay their taxes due to sickness or poverty can apply to have their property taxes reduced or cancelled.

That's the least our cities can do. I would rather that cities receive their revenues from taxes that are levied based on the individuals' ability to pay, such as sales taxes or income taxes.

In any event, these issues should not be used as a club to beat back cities' attempts to offer services that make lives better for citizens, including funding libraries, and keeping our streets clean.

It's a tricky balance, trying to pay for services to help improve people's lives using funds raised from those same people who struggle to make ends meet.

We should do more to help all of us who live on fixed incomes. This means changing the way we're taxed, but also increased government services for those who need them.

James Bow is a writer and a father of two in Kitchener, Ontario. You can follow him online at or on Twitter at @jamesbow.

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