Harper government provoking an election?

[gc1765]

Unless they are buying a new house. That's right. Take an average price for a new house of $300,000 and somebody will save $3k on the GST when the further 1% cut is implemented. That will probably help in purchasing a house.

If they are buying a new house, they can apply for a GST New Housing Rebate. If that's not enough, why not just increase this rebate?

The vast majority of economists in one Globe and Mail article. Nope, no evidence at all.

It's not just that one globe and mail article:

Link

Link

In fact, I can't seem to find many economists who think it is a good idea. Can you?

For income trusts there was a fundamental change that necessitated the Government changing its policy. Two huge companies, BCE and Telus, signalled their intent to change to trust status. This situation did not exist at the time the original promise was change.

There is really no change at all. Common sense would dictate that if a company has a choice between paying taxes or not paying taxes, they are going to choose not paying taxes. Don't you think that's just common sense?

If you can't the only reason I can see is because you oppose Harper no matter what he does.

Good try, but I have already stated that I support Harper on his income trust flip-flop. I have been consistent in my position that it is better to do what is right than keeping a promise. You have been consistent in your position that you support Harper no matter what.

[Michael Bluth]

If they are buying a new house, they can apply for a GST New Housing Rebate. If that's not enough, why not just increase this rebate?

Instead of cutting the GST from 6% to 4.5% it could be cut from 5% to 3.5%. Sill not a bad idea.

It's not just that one globe and mail article:

Link

Link

In fact, I can't seem to find many economists who think it is a good idea. Can you?

Why? The burden of proof is on you to prove this is bad for Canada. If all you can do is reach back for two year old articles then why would you do it.

There is really no change at all. Common sense would dictate that if a company has a choice between paying taxes or not paying taxes, they are going to choose not paying taxes. Don't you think that's just common sense?

Alas it isn't that simplistic. The money is still flowing out of the company, either in tax or in the form of payouts to the trust. Depending on the nature and dependability of the revenue stream trusts may or may not be in the best interest of a company.

Good try, but I have already stated that I support Harper on his income trust flip-flop. I have been consistent in my position that it is better to do what is right than keeping a promise. You have been consistent in your position that you support Harper no matter what.

You haven't proven it is right to not cut the GST. You made a half-assed effort by posting an article that was nearly two years old. You showed no understanding of the economics related to income trust. Until you prove otherwise I'll take it your understanding of the tax code is equally as superficial.

[capricorn]

And my point was that increasing the GST rebate would be a better way to cut tax for that group.

---

You changed the argument when you started trying to argue that low-income people do not invest much, however that doesn't mean that Canadians in general don't invest.

And my point was that the GST cut would be preferable over increasing the GST rebate. But hey, I won't argue if both measures are taken. And who knows, this may happen and time will tell.

gc, you are the one who raised the issue of investing back in the economy in post #59 at 9:40pm yesterday. You said:

"That wouldn't help the economy. Instead of buying big ticket items, that money would be invested back into the economy. Most people don't keep their money under their mattress, the invest it."

Here you are again implying I am changing the channel. I did not introduce a new element to the discussion in support of my position. The vast majority of low income earners, (I specified those with an income less than $20K) are not in a position to invest money.

I never stated that Canadians in general don't invest so why are you bringing this into the equation? In the context of our discussion, the propensity of the average Canadian to invest is unrelated to the limited opportunity of the lowest income earners to invest.

[Michael Bluth]

And my point was that the GST cut would be preferable over increasingI never stated that Canadians in general don't invest so why are you bringing this into the equation? In the context of our discussion, the propensity of the average Canadian to invest is unrelated to the limited opportunity of the lowest income earners to invest.

You are correct ma'am.

Changing the channel because their argument is weak.

[gc1765]

Instead of cutting the GST from 6% to 4.5% it could be cut from 5% to 3.5%. Sill not a bad idea.

Not sure what you're talking about here? Are you talking about how there is 3.5% GST on new homes, but if it is cut to 5% it would be 2.5%? Why not keep the GST at 6% but cut the GST on new homes to 2.5%, or even lower??

The burden of proof is on you to prove this is bad for Canada. If all you can do is reach back for two year old articles then why would you do it.

Interesting. First you said that nothing has changed in the last two years with respect to the GST, and that economists were blasting the idea of cutting the GST two years ago as they are now, and now you are criticizing me for providing a two year old article? Hmm. Anyways, I have provided links to dozens of economists saying that income tax cuts would be better. If that is not proof enough for you, then you are blinded by partisanship. If economists were blasting a Liberal plan, you would listen to them wouldn't you? Come on, be honest...

The money is still flowing out of the company, either in tax or in the form of payouts to the trust. Depending on the nature and dependability of the revenue stream trusts may or may not be in the best interest of a company.

Not every company will necessarily convert to an income trust, however it's pretty obvious that many would. An economist like Harper should understand that quite well. It really is common sense.

[gc1765]

gc, you are the one who raised the issue of investing back in the economy in post #59 at 9:40pm yesterday. You said:

"That wouldn't help the economy. Instead of buying big ticket items, that money would be invested back into the economy. Most people don't keep their money under their mattress, the invest it."

Here you are again implying I am changing the channel. I did not introduce a new element to the discussion in support of my position. The vast majority of low income earners, (I specified those with an income less than $20K) are not in a position to invest money.

I never stated that Canadians in general don't invest so why are you bringing this into the equation? In the context of our discussion, the propensity of the average Canadian to invest is unrelated to the limited opportunity of the lowest income earners to invest.

I think you are misunderstanding me here. I said that Canadians in general (not necessarily low income Canadians) save/invest money, and that is good for the economy. Your counter argument was that low income people don't invest money (which is wrong anyways), but that is irrelevant. It doesn't matter whether low income people invest or not, because it's obvious that Canadians in general do, and that is good for the economy. That is the point I was trying to make. I'm sorry if I wasn't clear the first time, but that is what I meant.

[Michael Bluth]

Are you talking about how there is 3.5% GST on new homes, but if it is cut to 5% it would be 2.5%? Why not keep the GST at 6% but cut the GST on new homes to 2.5%, or even lower??

So you would prefer cutting the special GST rate on new homes to 2.5% and keeping the GST at 6% over cutting the special GST rate on new homes to 2.5% and cutting the GST to 5%? Don't see how that is preferable.

[daniel]

...It doesn't matter whether low income people invest or not, because it's obvious that Canadians in general do, and that is good for the economy. ...

Actually, low income people, out of necessity, spend a greater % of their income than higher income people. In economics 100, we learned that more savings equates to less savings meaning more personal savings takes $ out of circulation and isn't good for the economy. So in effect, low income people have a better personal contribution to the economy than higher income people - that is by % not by $ value.

[gc1765]

So you would prefer cutting the special GST rate on new homes to 2.5% and keeping the GST at 6% over cutting the special GST rate on new homes to 2.5% and cutting the GST to 5%? Don't see how that is preferable.

Yes. How much does a 1% reduction in GST cost in lost revenues? How much does a 1% reduction on new homes only cost in lost revenues? If you can answer that you will see why one is preferable to the other.

[gc1765]

Actually, low income people, out of necessity, spend a greater % of their income than higher income people. In economics 100, we learned that more savings equates to less savings meaning more personal savings takes $ out of circulation and isn't good for the economy. So in effect, low income people have a better personal contribution to the economy than higher income people - that is by % not by $ value.

Huh?

Savings does not take money out of the economy, it puts money back into the economy...that is unless you keep your money under your mattress.

[capricorn]

Actually, low income people, out of necessity, spend a greater % of their income than higher income people. In economics 100, we learned that more savings equates to less savings meaning more personal savings takes $ out of circulation and isn't good for the economy. So in effect, low income people have a better personal contribution to the economy than higher income people - that is by % not by $ value.

That's an interesting observation daniel. So along those lines, when lower income earners spend all their disposable income on consumables, their per capita contribution to the economy is the highest.

Taking that logic one step further, the GST reduction would increase their disposal income somewhat and that money would also go back into the economy. Would you agree this would be a logical outcome?

[Michael Bluth]

Yes. How much does a 1% reduction in GST cost in lost revenues? How much does a 1% reduction on new homes only cost in lost revenues? If you can answer that you will see why one is preferable to the other.

The GST cut is $5 Billion in revenue. Let's say the new homes cut is $100 Million dollars.

I'd prefer the tax cut package that keeps $5.1 Billion dollars in taxpayer pockets. That is better than any one individual tax cut.

Still more than $10 Billion in surplus to work with.

[gc1765]

The GST cut is $5 Billion in revenue. Let's say the new homes cut is $100 Million dollars.

I'd prefer the tax cut package that keeps $5.1 Billion dollars in taxpayer pockets.

Agreed. So let's cut $100 million dollars for the GST new home rebate and cut $5 billion from personal income tax.

[Michael Bluth]

Agreed. So let's cut $100 million dollars for the GST new home rebate and cut $5 billion from personal income tax.

There will be cuts to income tax rates as well.

[capricorn]

I think you are misunderstanding me here. I said that Canadians in general (not necessarily low income Canadians) save/invest money, and that is good for the economy. Your counter argument was that low income people don't invest money (which is wrong anyways), but that is irrelevant. It doesn't matter whether low income people invest or not, because it's obvious that Canadians in general do, and that is good for the economy. That is the point I was trying to make. I'm sorry if I wasn't clear the first time, but that is what I meant.

Hey, misunderstandings happen all the time. C'est la vie.

What is understood is that I support a GST cut and you do not.

[jdobbin]

What is understood is that I support a GST cut and you do not.

Have you been able to determine now much more you would save of a GST cut versus and income tax cut?

[capricorn]

Have you been able to determine now much more you would save of a GST cut versus and income tax cut?

I won't bother because I expect both will be forthcoming.

[jdobbin]

I won't bother because I expect both will be forthcoming.

I don't doubt that the next budget will have a GST cut.

All I know is that I benefit more from an income tax cut than a GST cut in general. Too many businesses and organizations didn't pass on the savings of the last GST cut.

[capricorn]

Too many businesses and organizations didn't pass on the savings of the last GST cut.

Yup, a lot did for sure and shame on them.

[daniel]

..Savings does not take money out of the economy, it puts money back into the economy...that is unless you keep your money under your mattress.

That was over twenty years ago when my economics professor gave the lesson on propensity to save vs income and how "more savings equals less savings" (his exact words in quotes). I can't remember the exact details but unless the bank actually takes your savings account money and uses it for loans, mortgages and investments, it's not in the economy and economic activity slows down.

...Taking that logic one step further, the GST reduction would increase their disposal income somewhat and that money would also go back into the economy. Would you agree this would be a logical outcome?

We'd like to think that, but the biggest expenditure of low income people are food and housing. Michael Wilson exempted groceries from GST because the poverty advocates screamed that the GST was unfair to the poor. As for housing, the poor usually rent which is contractual and would be highly unusual for a landlord to reduce the rent because his own expenses were lowered. (They can try to take the landlord to court over it but whose got the money for that over a few bucks?)

And furthermore, the poor currently claims a GST refund on the tax return so what appears to be a 1% savings for them in expenditure also translates to a 1% reduction in GST refund, so that has no effect.

[jdobbin]

Yup, a lot did for sure and shame on them.

Sad to say my profession did the same thing. The GST cost was contained within the fee. I expect that the next GST cut will probably not be passed on either. This benefits me, yes, but I know with many others doing the same thing that it is a bit of a saw-off. I didn't see any big savings from the GST cut after going over my numbers.

Considering the cost of the GST cut, I would have probably done better with an income tax cut.

[daniel]

...Considering the cost of the GST cut, I would have probably done better with an income tax cut.

Regardless, all that money will make their way back to the municipalities to fund what Harper and the Provinces refuse to do.

[jdobbin]

Regardless, all that money will make their way back to the municipalities to fund what Harper and the Provinces refuse to do.

This doesn't help my personal finances for the most part.

[capricorn]

And furthermore, the poor currently claims a GST refund on the tax return so what appears to be a 1% savings for them in expenditure also translates to a 1% reduction in GST refund, so that has no effect.

Are you saying you expect the GST rebate (you say refund) presently paid to low income earners will be reduced in order to reflect the lower GST?

[ScottSA]

I can't remember the exact details but unless the bank actually takes your savings account money and uses it for loans, mortgages and investments, it's not in the economy and economic activity slows down.

The exact details are that except for a small reserve to maintain bank liquidity, the banks does exactly that with your money. That's why savers get interest...it doesn't come out of nowhere; it comes from the interest spread between lending it out and saving it. Except equities, which go directly to the economy through a corporate entity.