Prime Minister Stephen Harper wants Canadians to tell our respective MPs that we support the Tory plan to cut the GST rather than the income-tax cuts introduced by the previous government. Speaking in St. John’s yesterday (as reported in The National Post), Mr. Harper said:
To ensure that it [a 1% cut to the GST] becomes a reality, Canadians like yourselves must write, call or e-mail MPs to let them know that it isn’t just our priority, but it’s your priority as well. To be frank, to hinder the implementation of these long-overdue tax-relief measures would be unconscionable.
I, for one, would do no such thing. In fact, I plan to write to my MP (who is a Liberal) that I strongly prefer to keep the cuts to my income taxes. To see why, let’s run some numbers.
The income tax cuts work out to roughly $350 per taxpayer. If you are a two-income household earning $35K each, the income tax cuts are clearly better as they put $700 in your pocket. Even if you were a single individual making $35K per year, to get an equal benefit with the cut in the GST you would have to spend more than your entire annual pre-tax income, which is not a sustainable situation.
Now consider the spending habits of Canadians. Assuming that the entire spending food, shelter and personal taxes are not subjected to the GST and the rest of the spending is, a cut in the sales tax would save the lowest income quintile household $91, the second quintile $167, the third quintile $239, the fourth quintile $337 and the highest quintile $538 respectively.
The cut to the GST is better only for two groups of Canadians: those who have no or very low income and those who are really wealthy. So, how exactly does giving a break to really wealthy Canadians buy Porches and yachts square with the Tory claim that they stand up for “working” families?
Bookmark: del.icio.us Digg StumbleUpon
8 responses so far ↓
1 e-i-e-i-o // Apr 13, 2006 at 9:49 pm
I’m a supporter of the conservatives but I’ve never liked the idea of reducing the GST. It might save me, oh maybe $150 a year, but it will end up costing the gov’t billions of dollars that could be used to balance the books.
2 David // Apr 14, 2006 at 10:01 am
So….., I’ve picked up the gauntlet, and used the content of this blog to write my MP (Tory) to vote to reduce income taxes rather than the GST. I wonder if I’ll get a response?
3 awardtour // Apr 14, 2006 at 12:57 pm
I also emailed my MP and used part of the text from this post.
You can find your MP’s contact info by postal code here: http://www.parl.gc.ca/information/about/people/house/PostalCode.asp
4 Homer // Apr 15, 2006 at 6:46 pm
I like your blog but your logic is simply out to lunch on the tax topic. As any REAL capital knows, ANY tax cut is a good tax cut. There is no such thing as a BAD tax cut. In reality, an income tax cut is a NOT going to happen in a minority government. Writing a letter to a Fiberal MP is a waste of your time. A GST tax cut is the only tax cut that truly benefits all Canadians at all income levels. Wake up!
5 Canadian Capitalist // Apr 15, 2006 at 7:24 pm
Homer: Thanks for your comments. I do agree that I would take any tax cut rather than none at all. The income tax cut is already in the books (introduced as part of the fiscal update) and Mr. Harper wants to scrap those cuts and introduce a 1% cut to the GST. While a GST cut benefits all Canadians, in dollars and cents, the income tax cuts are better for most Canadians.
Now, if we could have both the tax cuts, I’d quit complaining
6 Canadian Capitalist // Apr 17, 2006 at 10:55 am
In an op-ed piece in The National Post today, John Williamson says that Ottawa can afford both the income and GST tax cuts.
“The PM cannot seriously expect Canadians will contact lawmakers to demand a tax increase.”
Link
7 Average Joe // Apr 18, 2006 at 7:26 pm
I agree with CC. The personal income tax cut is better than the GST cut. Of course, I would love both!
But, in order for me to enjoy the GST cut, I have to spend money. And I prefer to be a saver.
I read an article in the Globe a little while back and they said that the government could not afford both tax cuts. So who knows. We will have to wait and see.
8 Average Joe // Apr 19, 2006 at 12:59 pm
Check out http://www.theglobandmail.com website today. They have a poll asking whether people would prefer the GST cut or the income tax cut.
As of this writing, 13277 for income tax cut and 4555 for GST cut.
Leave a Comment