What Happened to Lower Taxes? Another Flaherty Fairy Tale?

[Progressive Tory]

From the Vancouver Sun under the headline: "Taxes cost Canadians more than homes do

Ottawa collected 3.3 per cent more in income taxes than in 2006"

http://www.vancouversun.com/travel/activit...5145/story.html

"Despite the tax-cut boasts of governments, Canadian families paid six per cent more on average in personal income taxes last year, which remained the single largest expense for families, even ahead of keeping a roof over their heads."

My husband's salary was about the same but our rebate was almost $ 600.00 less. We certainly didn't save $ 600.00 in GST.

What happened?

[DrGreenthumb]

From the Vancouver Sun under the headline: "Taxes cost Canadians more than homes do

Ottawa collected 3.3 per cent more in income taxes than in 2006"

http://www.vancouversun.com/travel/activit...5145/story.html

"Despite the tax-cut boasts of governments, Canadian families paid six per cent more on average in personal income taxes last year, which remained the single largest expense for families, even ahead of keeping a roof over their heads."

My husband's salary was about the same but our rebate was almost $ 600.00 less. We certainly didn't save $ 600.00 in GST.

What happened?

The GST cut was meant to benefit the rich when they buy a new yacht or Cadillac, it was never meant to benefit the average family. 3 cents on a cup of coffee??? whoopdee do!

[Argus]

From the Vancouver Sun under the headline: "Taxes cost Canadians more than homes do

Ottawa collected 3.3 per cent more in income taxes than in 2006"

http://www.vancouversun.com/travel/activit...5145/story.html

"Despite the tax-cut boasts of governments, Canadian families paid six per cent more on average in personal income taxes last year, which remained the single largest expense for families, even ahead of keeping a roof over their heads."

My husband's salary was about the same but our rebate was almost $ 600.00 less. We certainly didn't save $ 600.00 in GST.

What happened?

From the story it appears that they are talking about ALL personal taxes, not just the share that goes to Ottawa. The headline is thus misleading. The taxes you pay to the province and city are included in this total. I don't know about your city, but mine generally raises taxes more than 5% per year, regardless of cost of living. Ontario has also raised taxes enormously over the past four years. I suspect BC has too.

[Argus]

The GST cut was meant to benefit the rich when they buy a new yacht or Cadillac, it was never meant to benefit the average family. 3 cents on a cup of coffee??? whoopdee do!

If I spend $50,000 per year, the GST cut saves me $1000

[Smallc]

If I spend $50,000 per year, the GST cut saves me $1000

Only if everything you buy is taxable (which it shouldn't be). $500 is more within the reasonable range.

[DrGreenthumb]

Only if everything you buy is taxable (which it shouldn't be). $500 is more within the reasonable range.

Only the richest Canadians have 50 grand to spend on GST taxable items per year, most don't even earn that much. Income tax cuts would have been much more fair and effective.

People who have 50 grand to spend on GST taxable items do not need a tax cut, they already have plenty of money.

Edited December 29, 2008 by DrGreenthumb

[Smallc]

I agree. Income tax cuts would have increased productivity while strengthening the buying position of individuals. A GST cut does none of the first (in fact, productivity has gone the other way recently)and very little of the second.

[Argus]

I agree. Income tax cuts would have increased productivity while strengthening the buying position of individuals. A GST cut does none of the first (in fact, productivity has gone the other way recently)and very little of the second.

I never favoured GST cuts myself. In fact, I would have preferred to see payroll taxes cut, for that would stimulate job growth. But to say the GST cuts didn't cause any benefit except to the rich is silly.

[Smallc]

But to say the GST cuts didn't cause any benefit except to the rich is silly.

I didn't say that. It provides more benefit to the rich, but it also provides some benefit to the very poor. I'm not saying it didn't do anything, but I remember hearing economists say that it isn't good for productivity because it doesn't encourage it. It seems they may have been right about that, but I really don't know for sure.

[ToadBrother]

I never favoured GST cuts myself. In fact, I would have preferred to see payroll taxes cut, for that would stimulate job growth. But to say the GST cuts didn't cause any benefit except to the rich is silly.

The benefits to lower income groups is marginal. Of course, GST has always been a bit of a scam, the rebate cheques long designed to buy off lower income people by giving them the what looks like a subsidy.

At any rate, a 2% cut in the GST doesn't deliver the economic impact that cutting payroll taxes does. I'm rather more approving of what Gordon Campbell has done here in BC, holding firm on our PST, but delivering some small but at least measurable income tax cuts. Harper's GST cuts were nothing more than a variant on Chretien's HST scam; "Look, I'm doing something about that hated GST..."

[Alta4ever]

The benefits to lower income groups is marginal. Of course, GST has always been a bit of a scam, the rebate cheques long designed to buy off lower income people by giving them the what looks like a subsidy.

At any rate, a 2% cut in the GST doesn't deliver the economic impact that cutting payroll taxes does. I'm rather more approving of what Gordon Campbell has done here in BC, holding firm on our PST, but delivering some small but at least measurable income tax cuts. Harper's GST cuts were nothing more than a variant on Chretien's HST scam; "Look, I'm doing something about that hated GST..."

When that segment of the population really pays very little or no income taxes how would income tax cuts benefit them?

[ToadBrother]

When that segment of the population really pays very little or no income taxes how would income tax cuts benefit them?

Low income folks get a helluva lot of tax credits as it is. The Child Tax Benefit is essentially a nice tax-free gift to low income families.

[Progressive Tory]

The cut to the GST did absolutely nothing. I need to repeat that. ABSOLUTELY NOTHING to help the average Canadian. I don't know a single person who chose to buy something because they would save 2% It was a gimick and it's now backfiring on a government that spends like Sarah Palin on crack. When you reduce your income you must reduce your spending. It's that's simple.

[Jerry J. Fortin]

The GST cut took billions out of the federal revenue stream and saved a lot of money for folks who bought big ticket items. More importantly the Tories get to say they are the party that cuts taxes. Perception is everything.

[Progressive Tory]

The GST cut took billions out of the federal revenue stream and saved a lot of money for folks who bought big ticket items. More importantly the Tories get to say they are the party that cuts taxes. Perception is everything.

Yes. I think someone else said that if you could afford to buy big ticket items, you probably don't need a tax break. However, car sales are down drastically, and big ticket items are now small ticket items.

I see on the Conservative website they are now accusing Mr. Ignatieff of wanting to raise the GST. I don't know whether he said it or not, but who cares? It should be a non-issue. Raise the GST and lower the income tax. That's more prudent, because we can't buy anything if you take all our money.

[capricorn]

I would feel a lot better if those big ticket items were mostly produced in Canada.

It would be nice to create more "employers" who could then employ more workers. But it seems that recently, governments are aiming tax policies to cultivate votes. It's nice to get a personal tax break which increases consumer spending and saving for retirement. But on its own, tax breaks don't create the type of jobs Canadians would aspire to.

Our unemployment rate is increasing. We have a lot of workers. What we need desperately are jobs that only employers can provide.

[Progressive Tory]

I would feel a lot better if those big ticket items were mostly produced in Canada.

It would be nice to create more "employers" who could then employ more workers. But it seems that recently, governments are aiming tax policies to cultivate votes. It's nice to get a personal tax break which increases consumer spending and saving for retirement. But on its own, tax breaks don't create the type of jobs Canadians would aspire to.

Our unemployment rate is increasing. We have a lot of workers. What we need desperately are jobs that only employers can provide.

You hit the nail on the head Capricorn. Corporations should only get tax breaks if they hire Canadians and do not send work overseas. We need Canadian jobs to pay Canadian income taxes and buy goods that generate GST revenue.

[Jerry J. Fortin]

I would have preferred that our government take a huge equity stake instead of handing out loans to the auto industry, but I am not the guy making that call. At least the government could have invested enough money to "buyout" the Canadian plants, or at least some of them, and then replace the management staff and retool the lines for production of Canadian vehicles, fuel efficiency being the priority. Keep the jobs and toss the company!

[Progressive Tory]

I would have preferred that our government take a huge equity stake instead of handing out loans to the auto industry, but I am not the guy making that call. At least the government could have invested enough money to "buyout" the Canadian plants, or at least some of them, and then replace the management staff and retool the lines for production of Canadian vehicles, fuel efficiency being the priority. Keep the jobs and toss the company!

Here, here.

[madmax]

If I spend $50,000 per year, the GST cut saves me $1000

You spend $50,000 EVERY YEAR? I highly doubt that, however you are a Federal Employee your wages are quite high, perhaps you can spend $50,000 every year.

I save .02cents on my coffee. I pay the federal government .05Cents.

The GST was brought in by Conservatives. All 7% and all at onetime. It is a tax to help government pay your wages. Knocking it down to 5% is just a joke, and is spinning the public. If it was so important to cut, then remove the Goods and Services tax completely.

I never voted for it.

[capricorn]

Knocking it down to 5% is just a joke, and is spinning the public. If it was so important to cut, then remove the Goods and Services tax completely.

I've heard the suggestion that the GST should be eliminated for one year and then reinstated. There is speculation that this would lead to increased consumer spending and all that money dumped in the economy would lead to good things. The problem is that once you give a goodie to voters, they'll hate you when it's taken away. There goes that idea, up in flames.

[madmax]

I would feel a lot better if those big ticket items were mostly produced in Canada.

The intent of eliminating the FST and moving the tax onto the consumer was to lower production costs, and create a large tax base from individuals for the government coffers.

This move was successful in both operations. However, lowering taxes is not successful as a retention program for industry that wants to manufacture in foreign countries and bring in the same consumer goods into Canada.

It creates a warehouse economy. Which is what the intent of the Free Trade Agreements and Globalization has been about since the early 70s when the talk of creating these agreements where being shaped in great detail.

The Job losses created by technological change were long ago implemented as organizations that used to have 1000 employees could do the same work with under 250 and have higher productivity and profit margins.

However, the job losses here are the relocation of these operations. A tax break actually helps the process as it frees up more capital.

Ironically the place benefit is China economically as there economy grows because we didn't want value added jobs. At the same time, CHina is facing a downsizing from their old backwards industries, as the new efficient companie come in with lean production methods, high technology and a skilled workforce.

I expect the US to use protectionist measures and their is enough capital and Political Capital to reinvest in the US and support tarrifs on foreign goods. It was a great tactic used by Ronald Reagan when the Japanese were overexpanding in the US market.

[madmax]

I've heard the suggestion that the GST should be eliminated for one year and then reinstated. There is speculation that this would lead to increased consumer spending and all that money dumped in the economy would lead to good things. The problem is that once you give a goodie to voters, they'll hate you when it's taken away. There goes that idea, up in flames.

That's very interesting. Where can this information be found. Was it a formal source, a business source, news source etc.

If not eliminate the GST entirely, they could do it on various goods or services?

You are right about putting the GST back after a year. People didn't like it in the first place when the Conservatives brought it in. And now, I doubt a Conservative or Liberal would dare raise it.

We existed without the GST on services prior to free trade, but as government knew the intent was to eliminate manufacturing and move into a "service sector economy" they cleverly put taxes on services.

[capricorn]

That's very interesting. Where can this information be found. Was it a formal source, a business source, news source etc.

If not eliminate the GST entirely, they could do it on various goods or services?

So, bringing it back to Canada: Mr. Harper's government has been bashed for cutting the GST, and also for apparent indifference to helping the auto industry. But wouldn't it be something if, rather than simply hand money to General Motors and the forest industry and construction firms, the Tories chose instead to put the “stimulus” in the hands of the consumer: No GST for six months, maybe a year.

Could the New Democrats, after all of Jack Layton's puffed-up talk about “kitchen tables, not boardroom tables,” possibly vote against this? What about the Liberals?

http://www.theglobeandmail.com/servlet/sto...umnsBlogs/home/

Why not cut the GST from all the expenses of buying a home or a car? Not only would consumers dip into their savings for these major purchases, many would obtain credit which would help financial institutions boost their business. Surely, this would create jobs in various industrial sectors, including the auto sector.