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TORONTO — Signs announcing price increases and letters to employees slashing benefits have grown rampant in Ontario, revealing two very different approaches businesses have gravitated toward in the wake of province’s minimum wage hike.

Some Tim Hortons franchises have faced significant backlash after cutting paid breaks and forcing workers to cover some of their dental and health benefits to compensate for the minimum wage jump from $11.60 and hour to $14 an hour last week, while chains such as Pizza Nova say they will be upping prices instead.

But how some companies settle on the route to take might have come down to a factor as simple as timing, said Sylvain Charlebois, the dean of Dalhousie University’s faculty of management.

He said there is little to no evidence that Restaurant Brands International Inc., the parent company of Tim Hortons, and franchise owners worked on a strategy before Ontario’s new minimum wage rate came into effect Jan. 1. “It is not a surprise. Everyone knew it was coming,” Charlebois said.

Price increases take time to calculate and roll out, he said, so large companies with many locations or franchises that didn’t plan ahead might have been in a scramble to adjust to the hike and target their workers instead.

“Food services are heavily affected because most of their workers are paid minimum wage and they can’t rely on robotics and automation, but things like changing benefits or asking employees to pay for uniforms are things you can change very quickly,” Charlebois said.

Raising prices can also be problematic because there’s only so far you can increase them without driving away customers. A study published in the Journal of Labour Research has shown food service companies can only sustain a three per cent increase over a few years, which Charlebois said often pales in comparison to the amount needed to offset higher labour costs.

Despite that research, Ontario Labour Minister Kevin Flynn seemed to be nudging businesses to at least consider price increases.

He said Monday that companies struggling to cope with the minimum wage legislation have many ways to handle cost constraints and “to pretend that maybe pricing isn’t a part of that, I think it would be unfair.”

“I think any business having to make decisions would take a look at, is my pricing fair?” Flynn said. “Is this something where I can make a profit, but make sure that the people that I’m paying, the people that I’m employing, aren’t living in poverty?”

Those aren’t questions all business owners can mull over. Franchisees, for example, often aren’t allowed to raise prices.

The Great White North Franchisee Association, a group created last year to give voice to the concerns of some Tim Hortons franchises, has said that without help from their parent company in raising prices among other cost offsetting requests, franchisees have been forced to take steps to protect their business.

In a statement Monday, Tim Hortons head office said franchisees could offset costs by analyzing their top-line sales, operational efficiencies, and savings on equipment and costs such as waste management.

The statement came days after head office called franchisees who took aim at employee benefits, calling them “reckless” and “completely unacceptable,” and said staff “should never be used to further an agenda or be treated as just an ‘expense.'”

Pizza Nova CEO Domenic Primucci said restaurant franchises at his chain will pass along the cost of Ontario’s new minimum wage rate to customers rather than transfer the brunt of the hike to employees, though he wouldn’t say when or by how much.

While he said the legislation has been “contentious” and has started to have an impact on everyone from owners of small mom-and-pop shops to large corporations, “it doesn’t affect one more than the other.”

“There is not much we can do about it other than accept it and move forward.”

Tara Deschamps, The Canadian Press

Nearly 1 million people with low or fixed incomes will be eligible for new program

Low-income Canadians will be able to file their tax returns by phone this year.

Under a new automated service called “File My Return” announced by National Revenue Minister Diane Lebouthillier today, about 950,000 Canadians with low or fixed incomes that don’t change from year-to-year can file their returns by answering a series of questions over the telephone.

That represents between two and five per cent of all tax filers.

People eligible for the new service will receive personalized invitation letters beginning mid-February. They will be able to access all the deductions, benefits and credits they are entitled to without having to do any of the paper work or calculations, according to the Canada Revenue Agency (CRA).

A CRA official said the changes are to make the system easier and to encourage more people to file.

A former program called Telefile that allowed people to file basic returns by phone was cancelled in 2013 by the former Conservative government to encourage more people to file online. At the time, the change was expected to affect about 300,000 people across the country and require fewer tax information packages to be mailed out.

Former phone service cancelled

John Power, a spokesman for the minister, said the Telefile service had required users to complete their income tax and benefit return before calling, which meant they had to do their own calculations beforehand.

Users had to know which deductions and non-refundable tax credit amounts they could claim, then users were prompted to enter their completed tax return information line by line on the telephone call.

The new File my Return service uses information in the CRA’s records, and information provided on the call to complete and file the person’s income tax and benefit return, automatically figuring out the deductions, benefits and credits they are eligible for.

Paper packages mailed

Lebouthillier also announced that taxpayers who filed using paper tax forms in past years will now receive a tax package directly by mail this year instead of having to pick one up at a Canada Post, Service Canada, or Caisse populaire Desjardins outlet.

A limited number of the 2017 tax return guide and forms book will still be available at those locations.
About two million Canadians filed their tax returns on paper last year, compared to four million in 2012.

“We know that Canadians lead busy lives and doing taxes can sometimes be a challenge” the minister said in a release.

“This is especially the case for people with reduced mobility, people who live far from service locations and people without internet access. The CRA is working to make it easier and simpler to find, complete and file a return.”

The paper packages were discontinued in 2013, but Power said many Canadians were dissatisfied with this change.

“It was considered an inconvenience, particularly for those with mobility challenges or residing far from retail outlets. This also led to the challenge of getting the right product in the right place at the right time in the right language,” he said.

The changes to make the system more convenient and user-friendly come as the CRA faces widespread criticism over service delivery.

In November, Auditor General Michael Ferguson reported on problems with the CRA call centres, where people either could not get through or were receiving incorrect information.

CBC News has also reported on several cases where Canadians, including single mothers, were forced to battle the tax agency.

Canada’s ombudsman for taxpayers Sherra Profit also told CBC that service issues at the Canada Revenue Agency are systemic. Her office received almost 1,500 complaints about the CRA last year.

Energy-eating, rule-avoiding, big private but small public benefit — is bitcoin the libertarian ideal?

In many ways, bitcoin is a microcosm of a pure free market.

Whether you think that’s a good thing or not depends on your own political values. Either way, the bitcoin phenomenon acts as a case study of what some celebrate as the benefits of markets without controls.

The longer the digital currency survives, the less free its market is likely to become. The fact is even the most neo-liberal governments really don’t like truly free markets.

As the new year dawned, South Korea — a major nexus of the bitcoin trading frenzy — announced it plans to crack down and end anonymous trading, adding another zig in zig-zagging prices.

The European Union and Britain have announced measures of their own to put controls on virtual currencies, including forcing online traders to know who is doing the trading and whether the money is from a traceable, legitimate source. Russia has said something similar.

Beijing has banned trading outright, which, as the South China Morning Post reported last month, may have saved bitcoin markets from even wilder gyrations than we have already seen.

“If things were still the way they were at the beginning of [2017], over 80 per cent of the world’s bitcoin trading and [initial coin offering] financing would take place in China — what would things look like today?” said Pan Gongsheng, head of China’s State Administration of Foreign Exchange.

“It’s really quite scary.”

Scary is not how some free market advocates would describe it.

After all, bitcoin was founded on libertarian principles — the dislike of government involvement in our daily lives, the so-called “nanny state.”

Keeping the NSA out

The libertarian view, with a strong following in the tech community, is not single-minded, but it has often come down in favour of things like encrypted messaging, with the goal of stopping groups like the U.S. National Security Agency from reading your email.

In its harshest rendering, those strong free market principles oppose taxation as a form of theft and see the ideal world through a lens of social Darwinism where people should “eat what they kill” and devil take the hindmost.

Digital currencies are a celebration of those principles.

By design, bitcoin keeps your wealth strictly between you and the global blockchain that keeps an encrypted record of every valid currency unit.

A country’s revenue agency has no way of knowing how much bitcoin a person earns or spends. For countries with capital controls, money denominated in bitcoin flies through the electronic ether without reporting where it started or where it ends.

From a pure free market analysis, bitcoin may be the ideal currency. Rather than basing decisions on government tax laws and other rules that might seem like arbitrary red tape, a person using bitcoin could choose to consider only what’s most profitable.

But, of course, not everyone agrees that those kind of pure free markets are an unmitigated blessing.

Free market crime

In the case of the EU and the U.K., authorities view anonymity as an opening for crime like money laundering and terrorism, the same kind of justification governments have used for demanding keys to encrypted documents.

As I reported last year, one academic study showed Google searches that combined bitcoin and libertarian terms were negligible while searches combining bitcoin and terms for criminal activity were widespread.

According to Canadian tax law, people who earn money in bitcoin are required to report the value of that income. As bitcoins rise in value, Canadians are supposed to report those increases as capital gains in their taxes when they sell.

But if those currency units are anonymous, they are hard for the Canada Revenue Agency to track, meaning dishonest bitcoin owners and traders will be tempted to avoid taxes. Honest bitcoin traders and the rest of us will have to pay more for the roads and streetlights that keep our economy functioning.

Another feature of truly free markets is their volatility. Even the world’s freest securities markets are regulated. Among other provisions, most have what are called circuit breakers to limit sudden perilous changes in prices, allowing cooler heads to prevail before a damaging crash.

Even though currencies are for the most part freely traded, central banks have used various techniques to bring stability to those markets. Their interventions, intended to keep money stable enough to be a useful tool for domestic and international trade — but also used to stimulate the economy by keeping money cheap — have been a target of scorn from digital currency advocates who dismiss dollars, euros and yen as “fiat currency.”

Trading irregularities

But, of course, without regulation, new issues of digital currencies have been subject to hacks and frauds and trading irregularities. Trading in bitcoin has been so wild it’s virtually impossible to use for its intended purpose: buying and selling goods and services.

Instead, traded and mined as a speculation, mostly by men, bitcoins have become a way of making money from nothing, profiting their owners without providing social benefit. As CBC Radio’s The Current reported yesterday, the currency, which requires massive amounts of computing power to mine, is sucking up the energy of a country the size of Ireland — some of that energy from coal — and in the manner of truly free markets, the social costs are ignored in favour of private benefit.

Even in the long term, it is hard to see how governments can ever come to terms with a free market currency like bitcoin that robs them of so much power.

But for those who believe free markets really are the solution to creating a sound and stable economy, there is a first test bitcoin and its ilk must pass to show libertarians are right. To prove their superiority over government-sponsored money, the unregulated digital currency markets must end their wild swings and bitcoin must reach a stable equilibrium price.