City projects $20-million deficit and asks citizens: 'Would you rather have increased taxes, or reduction in services?'
Summary
The article on The Province that I have read is written by Clare Ogilvie explaining the situation of how Vancouver is doing financially. Currently, there is a budget gap of twenty million dollars and Vancouver has to balance its’ budget. Therefore, they are deciding to increase residential taxes by around two percent which will cover eleven million dollars but the idea is not very popular to the citizens. In addition, the other proposal to make up the money is to reduce some public services. Some services are out of the cut, such as public safety, affordable housing, the environment and arts of culture which make Vancouver a world-class city. Citizens and businesses are allowed to put in opinions about their choice-to raise taxes or reduce services. The final decision will be held on December 14.
Connection
The connection from the article and the text is mainly about Merchandising Businesses being affected. In general, the amount of Cost of Goods Sold is influenced and decreased due to the increase of taxes citizens have to pay. This may affect the consumers’ desire to buy more products because their budget is limited. Therefore, a low amount of Cost of Goods Sold for a business would lead to less profit which may, as a result, become a net loss if the amount we made is not enough to cover the expenses. To conclude, the number of Cost of Goods Sold and the Gross Profit in a business would decrease.
Reflection
The article reminds business owners and accountants that if the taxes really occurred than many businesses, not only merchandising would lose money. Although the economy is slowly turning better, it is still not as great as it used to be so if the tax was added, the businesses would get even worse. In addition, the citizens are receiving the same amount of income but if we were to add on taxes than their income would continue to diminish. When they have fewer income people are less willing to spend and purchase new merchandises. For instance, if we were planning on buying two new t-shirts, we might only be able to afford one. This causes the Cost of Goods Sold inventory and profit to decrease because items are not being bought as much as before. When the company is losing customers, they can lower the prices of their products or create promotions (such as buy 1 get 1 free). As a result, the demand might even be more than before.
This is a very interesting article.I wouldn't had known it if you haven't posted on the blog. I agree your idea too. Taxes kept increasing.As a consumer, I wouldn't buy more stuff than before, especially we have to pay 12 percent of HST everytime we purchase stuff. Because the consumer is buying less, so it will cause the number of Cost of Goods Sold and the Gross Profit in a business would decrease.
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