# GST cut



## vonGarvin (2 Jul 2006)

Well, I went to the store yesterday and bought some stuff.  Came to about twenty bucks.  I checked my receipt to ensure that the GST were indeed down to 6%.  It was.  I saved 20 cents.  Not enough to invest in an RSP, perhaps (a_majoor may correct me on this.  I don't know if he remembers me, but once, many many moons ago he overheard me say that I won 200 bucks on Proline.  He pulled out his briefcase and asked if I were going to invest it.  I told him that I had already invested it: Mr. Molson's company, and some long-forgotten blonde benefitted from my indulgences!).  But, hey, 20 cents on one purchase.  I'd rather save 20 cents than lose 20 cents.  Perhaps I should track my GST savings and put aside for a rainy day.  

Has anyone else been tracking?


Mods: I hope I've put this in the correct forum


von Garvin out.


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## paracowboy (2 Jul 2006)

von Garvin said:
			
		

> Mods: I hope I've put this in the correct forum


yeah, I think so.

Kinda scary, isn't it? A government that actually does what it promised to do?


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## vonGarvin (2 Jul 2006)

paracowboy said:
			
		

> Kinda scary, isn't it? A government that actually does what it promised to do?


"Mad" Mike Harris did just that, and was rewarded with a majority.  I believe that he left politics due to personal issues.  No matter your political stripe, you would have to admit that this government has been a refreshing change.


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## Hot Lips (2 Jul 2006)

Haven't noticed yet vG...but will on my next purchase.

Like the old saying goes, "a penny saved is a penny earned"

My understanding is that there will be approximately a $400 savings per year per family of four...I believe I heard that on a radio broadcast...here's an article

http://cnews.canoe.ca/CNEWS/Canada/2006/04/05/1521630-cp.html

HL

I like PM Harper and I am impressed that he is a man of his word.


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## Franko (2 Jul 2006)

Well this morning at Timms....2 large coffees were $2.78, down from $2.80.

I'm happy.     ;D

Regards


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## HItorMiss (2 Jul 2006)

You know it's starnge my entire voting life has been based on watching the Liberals lie to me.

I'm not really sure what to do when the government does what it says it's going to... I think I feel nervous like maybe the world is ending?

*Looks about for the 4 horsemen and Gabriel blowing his horn*


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## George Wallace (2 Jul 2006)

So.....now I have to bring a pocket full of pennies to Tims, or collect a pocket full of pennies........smells like a "Price Hike" is in the wind.


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## vonGarvin (2 Jul 2006)

In spite of the original bashing of the 1% cut by the media during the campaign, cbc radio had a very interesting story on it the other day.  Some person bought a house and the closing date was in July.  They were saving 7K from the purchase price (GST is included in house prices).  Considering that they had already been approved for the mortgage with that extra 7 K in it, that money is theirs.


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## Hot Lips (2 Jul 2006)

Recce By Death said:
			
		

> Well this morning at Timms....*2 large coffees were $2.78, down from $2.80.*I'm happy.     ;D
> 
> Regards


Awesome Recce by Death...my annual income just went up significantly then   

HL


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## Derka Derka Jihad (2 Jul 2006)

The cut is just political smoke and mirrors...it's really going to benefit businesses, not the average consumer.  :-\


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## aesop081 (2 Jul 2006)

Derka Derka Jihad said:
			
		

> The cut is just political smoke and mirrors...it's really going to benefit businesses, not the average consumer.  :-\



Nice name  :

I smell a troll , but time will tell !!

The GST cut works for me..i saved $15 already


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## paracowboy (2 Jul 2006)

Derka Derka Jihad said:
			
		

> The cut is just political smoke and mirrors...it's really going to benefit businesses, not the average consumer.  :-\


uuuhhh, benefitting the businesses* does * benefit the consumer. That's how laissez faire economies work.


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## jarko (3 Jul 2006)

Yeah, GST cut huh. -- *Check this out.*


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## aesop081 (3 Jul 2006)

jarko said:
			
		

> Yeah, GST cut huh. -- *Check this out.*



You're never going to make everyone happy.  So far this weekend i saved around 25 bucks. I'm happy.  I'm looking at buy a house....guess what!!


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## The Bread Guy (3 Jul 2006)

Hate to seem the troller, but...

I talked to a deli owner I frequent, and he said that effective 1 Jul, he's been asked by Ottawa to start sending in a 1% "inventory" tax.  

Anyone else (esp. those running their own businesses) hear of this?


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## aesop081 (3 Jul 2006)

:

here we go......

he was "asked" ?

do you realize how that sounds ?  The government doesnt "ask" you to send in a tax....


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## Sheerin (3 Jul 2006)

While cutting the GST by a whole 1%, the government decided to raise the tax on alcohol to compensate for the loss of income.  They've also raised the personal income tax for the lowest tax bracket to 15.5%.  

The GST tax cut is really only going to be noticed for people who make big ticket purchases, like a woman who saved 7 grand when buying a 700k house.  I know this "tax cut" isn't really going to affect me for the time being, except maybe my GST rebate cheque will be smaller. 

With that said my morning ritual of a xl regular and a toasted sesame bagel with light cream cheese only costs 3.31 now as opposed to 3.34 on friday.  Woo a savings of 3 cents a day (so 15 cents a week and 60 cents a month and $9.20 a year...)


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## aesop081 (3 Jul 2006)

Sheerin said:
			
		

> While cutting the GST by a whole 1%, the government decided to raise the tax on alcohol to compensate for the loss of income.  They've also raised the personal income tax for the lowest tax bracket to 15.5%.
> 
> The GST tax cut is really only going to be noticed for people who make big ticket purchases, like a woman who saved 7 grand when buying a 700k house.  I know this "tax cut" isn't really going to affect me for the time being, except maybe my GST rebate cheque will be smaller.
> 
> With that said my morning ritual of a xl regular and a toasted sesame bagel with light cream cheese only costs 3.31 now as opposed to 3.34 on friday.  Woo a savings of 3 cents a day (so 15 cents a week and 60 cents a month and $9.20 a year...)



you could always give me what you save every morning........i mean if you dont like it, i'll take it off your hands.


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## Hot Lips (3 Jul 2006)

Ditto to that aesop081

HL


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## Sheerin (3 Jul 2006)

My point is that this tax cut will really only benefit people who make big ticket purchases. 

If the government really wanted to give us a tax break they'd either A) get rid of the GST completely, B) give the GST rebate cheques to more people and increase the rebate C) take the GST off of most necessary purchases.  
Theres nothing worse than buying 700 dollars worth of text books and then having to pay 7% on it.  Its great that Miss so and so is able to save 7 grand on her new 700K house, but what about all those students who have to shell out a larger proportion of their income on tax for books and other necessities?


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## The Bread Guy (3 Jul 2006)

Re:  "asking", all I know from one retailer is that Revenue Canada (allegedly) sent out a letter in March, saying that as of 1 Jul, a 1% "inventory" tax that I haven't seen anything about in the media (not that I trust them entirely).  Struck me as odd having a pro-biz gov't (allegedly) levy a new tax on businesses, so I was just wondering if others in the same boat had seen same letter, and, if they had, if this is pulling in more revenue to deal (at least partly) with the 1% GST drop.

Hope this clarifies....


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## aesop081 (3 Jul 2006)

Sheerin said:
			
		

> My point is that this tax cut will really only benefit people who make big ticket purchases.
> 
> If the government really wanted to give us a tax break they'd either A) get rid of the GST completely, B) give the GST rebate cheques to more people and increase the rebate C) take the GST off of most necessary purchases.
> Theres nothing worse than buying 700 dollars worth of text books and then having to pay 7% on it.  Its great that Miss so and so is able to save 7 grand on her new 700K house, but what about all those students who have to shell out a larger proportion of their income on tax for books and other necessities?



 :crybaby:

poor freakin students........There's a group i have little sympathy for. Specialy those who live with mom and dad rent-free.  before the CF strted paying for everything i got my education and i shelled out money for books just like any other student.  i was married and raising 2 yound kids.  I didnt get any help like loans and grants....give me a freakin break !!

a 1% GST cut doesnt seem like a big deal to you but every little bit i dont have to shell out on my hydro bill, my cable bill, my phone bill sure helps.  Like you example of the money you save on coffe every year now...well that an extra 10 bucks that gets put in my kid's RESP....seems like small change but it wont hurt.

If you dont like it, go to Russia.



			
				milnewstbay said:
			
		

> Re:  "asking", all I know from one retailer is that Revenue Canada (allegedly) sent out a letter in March, saying that as of 1 Jul, a 1% "inventory" tax that I haven't seen anything about in the media (not that I trust them entirely).  Struck me as odd having a pro-biz gov't (allegedly) levy a new tax on businesses, so I was just wondering if others in the same boat had seen same letter, and, if they had, if this is pulling in more revenue to deal (at least partly) with the 1% GST drop.
> 
> Hope this clarifies....



The governemnt doesnt go and ask for a tax from buisnesses directly.....the democratic process has to take its course first.  Have you seen this letter ?


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## The Bread Guy (3 Jul 2006)

aesop081:  The governemnt doesnt go and ask for a tax from buisnesses directly.....the democratic process has to take its course first.  Have you seen this letter ?

Nope - retailer talked about a 1% "inventory tax".  CRA has been clear & transparent on a new 1% inventory tax on smokes beyond a certain level of inventory:
http://www.cra-arc.gc.ca/E/pub/em/edn10/edn10-e.html
and I asked about that.  Retailer said no, it was on everything.  Could just be a rant, so that's why I was curious to hear if anyone else had heard of such a beast.


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## aesop081 (3 Jul 2006)

Well until i see it, it is just another BS conspiracy thing. More people having to complain about everything.  I expect that the lineup at the Russian imigration office will grow larger..... ;D


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## GAP (3 Jul 2006)

The CCRA notice is pretty clear....liable only on inventories over 150 cartons...not applicable to those under and on vending machines.. ???


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## The Bread Guy (3 Jul 2006)

Barring new info, then, foil hat invited to Russia is it....


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## Sheerin (3 Jul 2006)

> poor freakin students........There's a group i have little sympathy for. Specialy those who live with mom and dad rent-free.  before the CF strted paying for everything i got my education and i shelled out money for books just like any other student.  i was married and raising 2 yound kids.  I didnt get any help like loans and grants....give me a freakin break !!



You do realise that the vast majority of university students go to schools that are outside of their home towns right?  
I suspect you really have no idea what hardships students face, but I don't blame you for that.  You're entitled to your opinion as am I.  Congratulations on surviving without help.  There are many students who attempt this and fail miserably, mostly becuase tuition has increased dramatically over the past few years.  of course that doesn't really mean anything, does it?

And yes, I admit its nice to have the extra money from the 1% cut, but in all honesty the government could be doing so much more to help those who really need it.  That 1% is almost a slap in the face to those who can't afford jack.


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## HItorMiss (3 Jul 2006)

OK Sheerin so let me get this straight your saving $9.20 a year "just" on coffee? and your complaining?

As Aesop pointed out, do that 1% decrease in all your bills to which your paying GST and you'll see that it may just be $9.20 on coffee that you see this instant but when the rest of your bills start coming in lower then before how much do you think you will be saving?

Add to that the drop of another 1% in a years time (providing the Conservatives stick to the plan) so everyone will then be saving 2%. I'm not seeing a down side here at all?

Then again, hey what do I know I just count to 29 and change Mag's.


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## Kat Stevens (3 Jul 2006)

So, as I understand this, and please forgive a dumb ol' Alberta redneck highschool dropout,  I'm paying 1% less tax on every single item I purchase, than I did 6 months ago.  Again, I'm unedjikated, but it sounds okay to me.


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## HItorMiss (3 Jul 2006)

Yup Kat you have it right.

And even Sheerins "poor" hard done by students are now saving 1% on tuition and books and cost of living. You know there was a time when my wife was a student and in her words every little bit helped. Guess now days it's not how much you can do do help save and make it work, it's more about Hey Government Gimme Gimme Gimme, And when the do give it's not enough for everybody so it can't therefore be a good thing.


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## aesop081 (3 Jul 2006)

Sheerin said:
			
		

> You do realise that the vast majority of university students go to schools that are outside of their home towns right?



Yeah , i realize that



> I suspect you really have no idea what hardships students face, but I don't blame you for that.  You're entitled to your opinion as am I.  Congratulations on surviving without help.  There are many students who attempt this and fail miserably, mostly becuase tuition has increased dramatically over the past few years.  of course that doesn't really mean anything, does it?



I've dated enough university girls to know exactly whats its like.  Last year i was dating a girl out of medical school so i am acutely aware of the"hardships" they face.  Dont sit there and type away trying to lecture me.  I did it myself with much larger challenges than paying for books while making sure i have enough money to party every weekend.



> And yes, I admit its nice to have the extra money from the 1% cut, but in all honesty the government could be doing so much more to help those who really need it.  That 1% is almost a slap in the face to those who can't afford jack.



Even someone who can't afford much should be happy to pay less for whatever he/she does have to buy.  I worked hard toget to the point where i can buy just about anything i want, the cut is definately not a kick in the nuts


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## Kat Stevens (3 Jul 2006)

"That 1% is almost a slap in the face to those who can't afford jack.  "


They can now afford exactly 1% more jack than they did under the Libs, right?  A slap in the face would be tp up the GST by 3%.... less tax good, more tax bad.... really, these complex economic concepts leave me battered and fried.


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## GAP (3 Jul 2006)

It's not enough, and will NEVER be enough, but you have to start somewhere.


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## Redeye (3 Jul 2006)

Kat Stevens said:
			
		

> They can now afford exactly 1% more jack than they did under the Libs, right?  A slap in the face would be tp up the GST by 3%.... less tax good, more tax bad.... really, these complex economic concepts leave me battered and fried.



Well, sort of.  In terms of "complex economic concepts", the GST cut doesn't make sense for a number of reasons.  First, it's not going to passed on to consumers on a lot of things - think of all the services and so on that are rounded off to even numbers, they're going to stay the same price so you get a 1% increase in prices of a few things.  Secondly, if you want to cut taxes to improve the economic conditions of the masses, ie the middle class and so on, a cut in a consumption tax is not the best way to do it.

Then you factor in that the Conservatives actually raised both income tax rates on the lowest bracket and the personal exemption.  That means that now you're paying more income tax, and I suspect that the amount of extra income tax I'm paying is going to be more than the money I save on the GST.  I make a pretty good income, but when you break down what you purchase and whether or not it's GST-taxable, you'll see it's a pathetic amount of savings.

It's a pretty typical political play, they work on the vilified tax (which incidentally is lot more fair than the tax it replaced!), but quietly screw you on income tax.


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## Gunner (3 Jul 2006)

1% GST cut was good politics but bad government policy.


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## a_majoor (3 Jul 2006)

Gunner said:
			
		

> 1% GST cut was good politics but bad government policy.



Cutting the GST was a relatively simple administrative action which Prime Minister Harper could carry out effectively even in a minority government position. Cutting income taxes could be promised, but would be much more difficult to pull off under the current parliament. (Of course even Prime Minister Harper could not have expected the opposition to be so totally incompetent, forgetting to show up for the third reading of the budget etc.). Now the Conservative Government has another notch in it's belt, the electorate sees they do what they say, and as been pointed out, 1% is far better than 0%.

The ultimate solution would have to be a "single tax" (i.e. a flat rate which treats every dollar equally [no special exemptions for interest or capital gains, for example]), but this would probably take an epic battle even in a majority government given the way the tax code has been perverted over the years to grant exemptions to special interests, such as allowing one off shore tax shelter which could be exploited by a shipping company to evade $700 million in Cdn taxes.........(looking up the owner of said company at the time this was done is illuminating as well).

From an economic perspective, tax cuts in general are good, and closing loopholes and exemptions are even better, since they reduce distoritons and perverse incentives in the marketplace. If the Conservatives can rack up a string of mandates, that is the general trend I will predict; cutting out loopholes and exemptions in the tax code and gradually moving towards a "single tax".


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## GAP (3 Jul 2006)

Now THAT would be nice...  ;D


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## Gunner (3 Jul 2006)

> Cutting the GST was a relatively simple administrative action which Prime Minister Harper could carry out effectively even in a minority government position. Cutting income taxes could be promised, but would be much more difficult to pull off under the current parliament. (Of course even Prime Minister Harper could not have expected the opposition to be so totally incompetent, forgetting to show up for the third reading of the budget etc.). Now the Conservative Government has another notch in it's belt, the electorate sees they do what they say, and as been pointed out, 1% is far better than 0%.



A consumption tax is much more efficient means of generating government revenue, much more so than the large bureaucracy that has become Revenue Canada (or CCRA or whatever they are calling themselves these days).  Consumption taxes focus on taxing what you buy vice what you make, or taxes for simply having a job (ie payroll taxes).  Flat tax critics would point out there is no disincentive to earn as much as you can, whereas with personal income tax, there is.  Hence, the cutting of the GST, a consumption tax was bad government policy.  It was, as you rightly point out, good politics.  The Conservatives can now show that they have kept a promise and wrap themselves in the "looking out for the little guy".  Unfortunately, this move was generally revenue neutral as they reversed the cuts by the Liberals from November. 
  


> The ultimate solution would have to be a "single tax" (i.e. a flat rate which treats every dollar equally [no special exemptions for interest or capital gains, for example]), but this would probably take an epic battle even in a majority government given the way the tax code has been perverted over the years to grant exemptions to special interests, such as allowing one off shore tax shelter which could be exploited by a shipping company to evade $700 million in Cdn taxes.........(looking up the owner of said company at the time this was done is illuminating as well).



I would be comfortable with a flat tax, with a high personal exemption which is similar to what Alberta has.



> From an economic perspective, tax cuts in general are good, and closing loopholes and exemptions are even better, since they reduce distoritons and perverse incentives in the marketplace. If the Conservatives can rack up a string of mandates, that is the general trend I will predict; cutting out loopholes and exemptions in the tax code and gradually moving towards a "single tax".


  

In general yes, however, cutting taxes during a economic boom period places additional stimulus into the economy.  I would have much preferred a legislated 40 year plan to pay off the national debt (or at least significantly reduce it) or, in the short term, move the EI system out of general revenues into a self supporting plan (ie CPP).  Unfortunately the Federal Government is taking in too much and have been spending like drunken sailors (apologies to the drunken sailors out there).  My advice, solidify our current financial picture with a long term view at maintaining financial stability featuring targeted tax cuts at the middle income earners.


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## paracowboy (3 Jul 2006)

I dunno. I have a certain amount of faith in a man that is an economist by trade, with a vested interest in the situation, to do the right thing when it comes to monetary matters.

More to the point for me, he kept his word. That counts for a lot. And it's certainly far more than his two immediate predecessors ever did.


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## Gunner (3 Jul 2006)

> I have a certain amount of faith in a man that is an economist by trade, with a vested interest in the situation, to do the right thing when it comes to monetary matters.



When you are posted to Goose Bay as part of the new Rapid Reaction Battalions, are you going to say that the MND was a former BGen  by trade, with a vested interest in the situation, to do the right thing when it comes to military matters...  As an economist, he may say something similar to me, but as the leader of a political party, he is carrying out their platform (right or wrong).



> More to the point for me, he kept his word. That counts for a lot. And it's certainly far more than his two immediate predecessors ever did.



Totally agree.  The Liberals are famous for doing the opposite of what they campaign on (Trudeau using wage and price controls after campaigning against the Conservatives platfrom in the 70s and Cretien campaign to cut the GST....).  Politicians (of all political stripes) are masters of doublespeak and we need to keep them accountable.


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## vonGarvin (4 Jul 2006)

Sheerin said:
			
		

> My point is that this tax cut will really only benefit people who make big ticket purchases.
> 
> If the government really wanted to give us a tax break they'd either A) get rid of the GST completely, B) give the GST rebate cheques to more people and increase the rebate C) take the GST off of most necessary purchases.
> Theres nothing worse than buying 700 dollars worth of text books and then having to pay 7% on it.  Its great that Miss so and so is able to save 7 grand on her new 700K house, but what about all those students who have to shell out a larger proportion of their income on tax for books and other necessities?


What about those students?  Miss so and so just happens to spend, in taxes, about the same as the student who paid tax for books (which, by the way, aren't they deductibles at the end of the day?)
So, in summation, I take your post to imply that we should tax the rich more and leave the lower income groups alone.  Punishment for financial success?  I don't buy it.

By the way, the 7% on 700 is 49 bucks.  6% on 700 is 42 bucks.  A savings of 5 bucks.  If you feel that this is a pittance, well, good for you.  Send your five bucks to me and we'll call it even


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## Shec (4 Jul 2006)

Not that I am cynical but how long, you figure, before some provinces start hiking their PST by 1% ?


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## GAP (4 Jul 2006)

As long as the Conservatives don't have to take the political heat for it, go for it.....but there will be a price at the polls !!!


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## George Wallace (4 Jul 2006)

Shec said:
			
		

> Not that I am cynical but how long, you figure, before some provinces start hiking their PST by 1% ?



That would probably be 'political suicide' in the next Provincial Election.

Especially if it were a Liberal Government.


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## techie (4 Jul 2006)

Shec said:
			
		

> Not that I am cynical but how long, you figure, before some provinces start hiking their PST by 1% ?



Ill admit, i don't know about how Government finances work, but i don't see how the cut in GST would affect the Provinces. Again as far as i know, the GST is a federal tax, where PST is provincial. If the Cut in GST dosnt affect the Province, there would be no reason to raise the PST.


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## Sheerin (4 Jul 2006)

Well the government is doing a pretty good job on taxing the poor, raising their tax rate while at the same time lowering the GST.

Why exactly does the government feel the need to punish groups that are hoovering just above the poverty line and in the case of most students, well below the line.  I am by no means an advocating a free ride for anyone, i just would like it if the government didn't make it so difficult for people who are actually trying to make themselves better.  How exactly would harm society by reducing the financial load on university and college students?


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## paffomaybe (4 Jul 2006)

techie said:
			
		

> Ill admit, i don't know about how Government finances work, but i don't see how the cut in GST would affect the Provinces. Again as far as i know, the GST is a federal tax, where PST is provincial. If the Cut in GST dosnt affect the Province, there would be no reason to raise the PST.



I believe it's called "surplus tax capacity."  A population is used to being taxed on consumption over a period of time, so a drop in the GST leaves room for the provinces to raise their PST in order to lessen their dependence on federal funding like equalization, and pay for their own programs and responsibilities under the constitution.

The Conservatives aren't only being politically smart by enacting a simple tax cut and keeping their promise.  They're being ideologically consistent as well - they believe in small govt, and small govts should naturally collect less tax for their share of governing responsibility, and that provinces should pay for their own responsibilities instead of relying on federal funds like equalization.  By enacting the 1% cut in the GST, they succeed in doing the following:

- Immediately reducing the amount of tax collected by the feds, in effect forcing the govt to be smaller ("making do with less").
- Implicitly winking to the provinces that if they wish to do so, they can raise their PST by 1% (with no political repercussions to themselves, natch.)
- And in doing so, sending out the message that they intend to wean provinces off federal pogey (equalization is the likely victim to be hacked by the Cons.)
- And also sending out the message that stuff like health and education is ultimately a provincial responsibility, the days of feeding off the fat federal trough are coming to an end, so you'd best seriously consider ways to fund it yourselves, kids.  
- Consequently, the big PR blitz in military spending seems to also be sending out a message:  a Conservative govt will take it's own constitutional responsibilities, like defence, very seriously.


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## dapaterson (4 Jul 2006)

von Garvin said:
			
		

> By the way, the 7% on 700 is 49 bucks.  6% on 700 is 42 bucks.  A savings of 5 bucks.  If you feel that this is a pittance, well, good for you.  Send your five bucks to me and we'll call it even



Apparently, vonGarvin wasn't a math student...  

Sheerin: University students are already heavily subsidised.  Perhaps a better method would be to remove all direct and indirect subsidies to universities, have them charge the full cost of education to their students, then governments could use the offset expenditure to reduce income taxes for new grads, helping them pay down their debt.  You stay in Canada, you get a nice tax write-off.  You take your degree to the US or Britain or somewhere else, and our banks make a healthy profit.


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## vonGarvin (4 Jul 2006)

dapaterson said:
			
		

> Apparently, vonGarvin wasn't a math student...



OK.  49-42 is five bucks PLUS two more bucks for the invisible governemnt 

Hey, I'm working on 2 hours of sleep here: give me a break


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## Shec (4 Jul 2006)

Thanks for responding before I could Paffomaybe.  With the provinces already up in arms about PM's proposed revamping of the equalization program Premiers could make a grab for that surplus tax capacity; plausibly accusing Ottawa of  forcing them to raise PST by shifting the burden to own-source revenues to fund provincial responsibilities.


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## techie (4 Jul 2006)

So, even though Harper dropped the GST, and raised the Income tax(which as far as i read, we will be paying more in the long run) the provinces can go ahead and raises the PST and in turn, making us pay more. 

7% Gst goes to 6% (already happened)
base Fed income tax goes from 15.5% to 16 %(already happened)

8% PST goes to 9%(could happen)

Looks we are paying more now(right?) and after the PST is raised(which might happen?)we will be paying even more. Wow, they did some good manipulating of the public.


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## GAP (4 Jul 2006)

Yeah, but the point that Flattery and Harper have been making these past months is that The Federal Government get the *ell out of provincial jurisdiction and said funding, they have enough on their own plate to worry about (Libs like the control factor), and let the provinces run and FUND their own social programs. Hmmm....makes sense to me


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## vonGarvin (4 Jul 2006)

techie said:
			
		

> base Fed income tax goes from 15.5% to 16 %(already happened)


Well, last fiscal year, it was at 16%.  Libs lowered it to 15% (I believe).  Cons wanted to delete the liberal cut but deferred to go halfway: 15.5%.  I think these are the numbers.
Anyway, 0.5% on the base amount (15K give or take?) is 75 bucks.  If you spend more than 7500 a year on GST taxable "stuff", you'll come out spending less this fiscal year.


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## FastEddy (4 Jul 2006)

techie said:
			
		

> So, even though Harper dropped the GST, and raised the Income tax(which as far as i read, we will be paying more in the long run) the provinces can go ahead and raises the PST and in turn, making us pay more.
> 
> 7% Gst goes to 6% (already happened)
> base Fed income tax goes from 15.5% to 16 %(already happened)
> ...




Your absolutely right !, but every cloud has a silver lining (so they say), to be meaningfull get rid of it all together. But lets face it, its a Cash Cow, so if they did that, I'm sure the Defense Budget would not have been so generous.

Cheers.


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## techie (4 Jul 2006)

yes, my bad, the year before last it was 16%, then they lowered it to 15, then harper raised it to 15.5%


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## paffomaybe (4 Jul 2006)

Shec said:
			
		

> Thanks for responding before I could Paffomaybe.  With the provinces already up in arms about PM's proposed revamping of the equalization program Premiers could make a grab for that surplus tax capacity; plausibly accusing Ottawa of forcing them to raise PST by shifting the burden to own-source revenues to fund provincial responsibilities.



Cool.  

Personally, I think that it's a stretch politically to make the general voting public aware of the nuances of surplus tax capacity, and convert that into votes, especially if you're an unpopular incumbent like the provincial Liberals.  Thus, I don't think Guinty McDalton will be raising the Ontario PST any time soon - which I think they should.  Things are falling apart in this province - power shortages, failing education, failing health, rising urban crime, etc. - and there doesn't look to be any relief on the horizon.  The biggest fear I have is that, the federal Conservatives being undoubtedly western-biased, and with their focus on Quebec for that electoral majority, Ontario will be screwed with an even bigger fiscal imbalance.


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## vonGarvin (4 Jul 2006)

techie said:
			
		

> yes, my bad, the year before last it was 16%, then they lowered it to 15, then harper raised it to 15.5%


It was lowered to 15% prior the announcement of the election, Revenue Canada amended their forms (which were then shipped out) prior to it receiving approval.  The Conservatives allowed it to stay at 15% for the FY 05-06.  It now stands at 15.5%.


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## techie (4 Jul 2006)

von Garvin said:
			
		

> It was lowered to 15% prior the announcement of the election, Revenue Canada amended their forms (which were then shipped out) prior to it receiving approval.  The Conservatives allowed it to stay at 15% for the FY 05-06.  It now stands at 15.5%.



yeah, thats what i meant....


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## Shec (4 Jul 2006)

paffomaybe said:
			
		

> Cool.
> 
> Personally, I think that it's a stretch politically to make the general voting public aware of the nuances of surplus tax capacity, and convert that into votes, especially if you're an unpopular incumbent like the provincial Liberals.  Thus, I don't think Guinty McDalton will be raising the Ontario PST any time soon - which I think they should.  Things are falling apart in this province - power shortages, failing education, failing health, rising urban crime, etc. - and there doesn't look to be any relief on the horizon.  The biggest fear I have is that, being undoubtedly western-biased, and with their focus on Quebec for that electoral majority, Ontario will be screwed with an even bigger fiscal imbalance.



Could be but nuances don't count in campaign politics as much as perceptions do.  If the perception created is that some provinces have to tax you more to maintain a minimum level of already strained services because the Fed is off-loading John Q. Citizen might buy it.    Its just the line I would expect to hear from Premier I'm Named After An Australian Drinking Song.

Under the revamped equalization plan as I understand it, natural resource revenues will be deducted from equalization payments which ticks off Newfoundland & Saskatchewan but, unless poutine is a natural resource, works well for Quebec.


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## paffomaybe (4 Jul 2006)

Shec said:
			
		

> Could be but nuances don't count in campaign politics as much as perceptions do and if the perception created is that some provinces have to tax you more to maintain a minimum level of already strained services because the senior government is off-loading John Q. Citizen might buy it.



Hey, if they do buy it, it'll be the first partisan vomit I'd swallow from McDalton, only 'cause it's actually true!  Too bad his credibility is already gone because of all the other vomit.  Or, maybe not.


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## begbie (4 Jul 2006)

paracowboy said:
			
		

> I dunno. I have a certain amount of faith in a man that is an economist by trade, with a vested interest in the situation, to do the right thing when it comes to monetary matters.



As someone schooled in Economics myself, it is important to note that there are many different schools of economic thought.  Everything ranging from "free market & no government intervention" types to those who support price controls, regulations, and government intervention with a whole host of schools in between.  So just because he's an economist, it doesn't mean he's right since economics is nowhere near an exact science (despite it's best attempts) and there is by no means consensus on economic theory and it's application.

Generally speaking, there are two kinds of taxes that the average citizen pays (sales and personal).  So from a policy point of view, this is where the debate occurs and to me and it's all about trade-offs.  And it should be about which one will be more effective.  Economic growth can be achieved by cutting both taxes but it does it through different means.  Cutting the GST encourages consumption which grows an economy and cutting personal income taxes encouarages savings which increases investment and thus improves productivity which also grows an economy.

So it depends on your objective.  Most economists line up behind a personal income tax cut for my over-simplified statement above.  

But in the end, I agree that a tax cut is a tax cut and you take where you can get it.


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## dapaterson (4 Jul 2006)

The GST is good politics more than good policy.  Where a difference of a few dollars on your direct deposit pay will get noticed once or twice (since payroll does vary over the year as CPP and EI maximums are reached), a reduction in GST is apparent every time you stop at a cash register - it's a much more visceral proof of tax cuts.

Keep in mind that the budget was not intended to be a masterpiece of marcoeconomics; rather, it is a public relations ploy intended to create a positive impression of the government of the day, since minority governments generally last 17 months or less.  (For the record, my bet is on less)


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## GAP (4 Jul 2006)

dapaterson said:
			
		

> Keep in mind that the budget was not intended to be a masterpiece of marcoeconomics; rather, it is a public relations ploy intended to create a positive impression of the government of the day



And that is a good thing. The Liberals have created a constant public relations ploy intended to create a positive impression of the government of the day  ever since I can remember, but more blatantly in the last 13 years. It's only fair the Conservatives do so also, but it seems that people like the idea of a government keeping their promises. Not many, but kept


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## Brad Sallows (4 Jul 2006)

>While cutting the GST by a whole 1%, the government decided to raise the tax on alcohol to compensate for the loss of income.  They've also raised the personal income tax for the lowest tax bracket to 15.5%. 

The previous (Liberal) government promised to reduce the lowest federal personal income tax rate from 16% to 15%.  The new (Conservative) government reduced the lowest federal personal income tax rate from 16% to 15.5%.  The income tax rate was not raised; the Conservatives simply didn't follow through on a Liberal promise.  By a quirk of how things are done, CCRA starts to implement this sort of change as soon as the government of the day announces it and assumes the legislation will be passed.  The Liberals didn't get a chance to pass the legislation to enable their campaign promise, but income tax payers got the benefit of doubt for one year.  That is all that happened.  If the NDP had promised a 2% cut, no-one would be complaining that taxes were raised by 1.5% because the NDP did not form government.  The government has an election advantage by virtue of controlling the policy levers, but we shouldn't allow that to mischaracterize the nature of campaign promises.

The GST cut is small.  Soon enough another small cut of 1% in the rate (1/6th of the remaining GST) should be implemented.  If it's done five more times (5 is a small number, too) there won't be any GST at all.


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## snowy (4 Jul 2006)

yeah, and i saved a total of (roll the drums please.... ;D) 2 cents, but all is good boys, in the long run, think positive, this might be a good move, coming from the liberals ;D


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## I_am_John_Galt (5 Jul 2006)

begbie said:
			
		

> Generally speaking, there are two kinds of taxes that the average citizen pays (sales and personal).  So from a policy point of view, this is where the debate occurs and to me and it's all about trade-offs.  And it should be about which one will be more effective.  Economic growth can be achieved by cutting both taxes but it does it through different means.  Cutting the GST encourages consumption which grows an economy and cutting personal income taxes encourages savings which increases investment and thus improves productivity which also grows an economy.
> 
> So it depends on your objective.  Most economists line up behind a personal income tax cut for my over-simplified statement above.



I think you've over-simplified to the point where we've missed the argument: both consumption and income taxes affect economic growth in similar ways (via spending and investment) but the GST (as a consumption tax) is more efficient (costs much less to administer and collect) and fairer (in the sense that the rich pay more and poor less) than income taxes.

The economic (monetarist/rightist/laissez-faire-ist) argument is that while pretty much all taxes are bad, consumption taxes are preferable to income taxes: that is, there is a more _provable_ argument that a reduction in income taxes will have a more positive economic effect than a similar reduction in a consumption tax (which only makes sense: get rid of the less-efficient tax and you will get more bang for you tax-buck-collected).  However, as you alluded to, a reduction in a direct sales tax may create some additional psychological benefit vis-a-vis spending habits ...

Nonetheless, as you said, less taxes of any kind are a good thing.


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## begbie (5 Jul 2006)

I_am_John_Galt said:
			
		

> I think you've over-simplified to the point where we've missed the argument: both consumption and income taxes affect economic growth in similar ways (via spending and investment) but the GST (as a consumption tax) is more efficient (costs much less to administer and collect) and fairer (in the sense that the rich pay more and poor less) than income taxes.
> 
> The economic (monetarist/rightist/laissez-faire-ist) argument is that while pretty much all taxes are bad, consumption taxes are preferable to income taxes: that is, there is a more _provable_ argument that a reduction in income taxes will have a more positive economic effect than a similar reduction in a consumption tax (which only makes sense: get rid of the less-efficient tax and you will get more bang for you tax-buck-collected).  However, as you alluded to, a reduction in a direct sales tax may create some additional psychological benefit vis-a-vis spending habits ...
> 
> Nonetheless, as you said, less taxes of any kind are a good thing.



Based on everything I understand about macroeconomics, I agree that a cut in personal income taxes is the preferred route to go.  But the choice of an income tax cut also needs to consider the temporal aspects of a policy change.  Currently, it could be argued that the economy is firing on all cylinders right now despite a series of interest rate hikes.  Those interest rate hikes were designed to slow the economy down in order to manage inflationary risks.  However, it could also be argued that a cut in consumption taxes will encourage more consumption and possibly drive up inflation.  So here, it is possible that we have fiscal policy counteracting monetary policy goals.  This is another reason why I would have preferred an income tax cut (takes longer for the change to effect the economy and probably at a time when the business cycle is on a down swing).

In the end, I am encouraged that forum members are discussing this on the merits of this policy change and not simply based on their voting preferences.  I haven't seen this on too many sites (blogs) and I'm pleased to see it.


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## George Wallace (5 Jul 2006)

Sheerin said:
			
		

> Well the government is doing a pretty good job on taxing the poor, raising their tax rate while at the same time lowering the GST.
> 
> Why exactly does the government feel the need to punish groups that are hoovering just above the poverty line and in the case of most students, well below the line.  I am by no means an advocating a free ride for anyone, i just would like it if the government didn't make it so difficult for people who are actually trying to make themselves better.  How exactly would harm society by reducing the financial load on university and college students?



This is really ridiculous.  Everyone pays GST.  Any cuts to the GST will affect everyone in the country, not just the 'Rich'.  

As for the "Poor" being penalized.  That is BS too.  They still pay less taxes, sometimes none at all; or even get compensation, rebates, refunds, Credits, etc.  The higher the income one makes the more Taxes they will pay, progressively getting higher as their incomes increase.  Some of the 'Rich' are paying 50% or higher Taxes.  The 'Poor' are not getting Taxed at those rates.

With the cut of 1% on the GST, everyone benefits.  You save 1% GST on a $1.00 spent, just as someone saves 1% on $1,000,000.00 spent.  1 Cent compared to $10,000.00 is a big difference, but in the end it is still the same 1%, and someone had to work hard to earn that $1 million in the first place, as well as pay a lot more in Taxes to do so.  

This "The Poor are being penalized" is a load of crap.  They have every opportunity to work and earn more, pay more in Taxes, and receive more in the way of 1% GST savings in doing so, just like everyone else.  Get off that Socialist bandwagon and get a job.


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## GAP (5 Jul 2006)

George Wallace said:
			
		

> This is really ridiculous.  Everyone pays GST.  Any cuts to the GST will affect everyone in the country, not just the 'Rich'.
> 
> This "The Poor are being penalized" is a load of crap.  They have every opportunity to work and earn more, pay more in Taxes, and receive more in the way of 1% GST savings in doing so, just like everyone else.  Get off that Socialist bandwagon and get a job.



Very well put... +1


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## a_majoor (5 Jul 2006)

paffomaybe said:
			
		

> Personally, I think that it's a stretch politically to make the general voting public aware of the nuances of surplus tax capacity, and convert that into votes, especially if you're an unpopular incumbent like the provincial Liberals.  Thus, I don't think Guinty McDalton will be raising the Ontario PST any time soon - which I think they should.  Things are falling apart in this province - power shortages, failing education, failing health, rising urban crime, etc. - and there doesn't look to be any relief on the horizon.  The biggest fear I have is that, the federal Conservatives being undoubtedly western-biased, and with their focus on Quebec for that electoral majority, Ontario will be screwed with an even bigger fiscal imbalance.



The biggest problem isn't that they don't get enough revenue, its that spending is out of control. Spending is being sent to "sexy" portfolios like education, healthcare and nebulous things like "productivity", rather than the basic grunt work like Infrastructure. Even the "sexy" portfolios are poorly managed, the amount of money being spent on health care in Ontario is sufficient to run a third world nation, but the vast majority of the money is eaten by "administrative" costs, so the hapless taxpayer doesn't receive very much "health care" at all. Similarly for education, and many of the industrial planning initiatives like ethanol plants are simply corporate welfare (since it takes more energy to make ethanol than you ever get out of it, you can see this is really sending tax dollars up in flames).

The Provincial governments could cut very deeply and reduce taxes. This would inconveinience the people at the trough, but the resulting economic boom would more than absorb these people back into the productive economy. The same could be said at the Federal level as well.....


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## Nemo888 (5 Jul 2006)

a_majoor said:
			
		

> The biggest problem isn't that they don't get enough revenue, its that spending is out of control. Spending is being sent to "sexy" portfolios like education, healthcare and nebulous things like "productivity", rather than the basic grunt work like Infrastructure. Even the "sexy" portfolios are poorly managed, the amount of money being spent on health care in Ontario is sufficient to run a third world nation, but the vast majority of the money is eaten by "administrative" costs,



Where on earth do you come up with this crap?


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## a_majoor (5 Jul 2006)

Nemo888 said:
			
		

> Where on earth do you come up with this crap?



Observation. Try looking out of the window every so often and you will be surprised at what you can see.


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## 2 Cdo (5 Jul 2006)

Nemo888 said:
			
		

> Where on earth do you come up with this crap?



Another proud liberal supporter I think! : As others have pointed out, Canadians are grossly over-taxed due to successive governments waste of tax dollars without proper safeguards in place! (Think gun registry, adscam etc., etc.) To simply advocate throwing more money at a problem is typical NDP, Liberal crap!

 Give your head a shake!


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## I_am_John_Galt (5 Jul 2006)

paffomaybe said:
			
		

> the nuances of surplus tax capacity,



Please enlighten me!!!  What the _what_ is this?!?!  The amount you can raise taxes before the population revolts?   :-\


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## paffomaybe (8 Jul 2006)

a_majoor said:
			
		

> The biggest problem isn't that they don't get enough revenue, its that spending is out of control. Spending is being sent to "sexy" portfolios like education, healthcare and nebulous things like "productivity", rather than the basic grunt work like Infrastructure. Even the "sexy" portfolios are poorly managed, the amount of money being spent on health care in Ontario is sufficient to run a third world nation, but the vast majority of the money is eaten by "administrative" costs, so the hapless taxpayer doesn't receive very much "health care" at all. Similarly for education, and many of the industrial planning initiatives like ethanol plants are simply corporate welfare (since it takes more energy to make ethanol than you ever get out of it, you can see this is really sending tax dollars up in flames).



No no, I agree with what you're saying - and a lot of is is certainly because of applying outdated ideology to running a modern province.  I recently became aware of how badly this province is run - especially in the health portfolio.  Anecdote:  A friend who runs a doctor's office says that after processing forms for patients, she's completely shocked that people with refugee status get *everything* paid for - far more benefits than an actual citizen, including optical (ie.  they get their fricken glasses paid for.)  After processing a number of these patients, she made the common-sense conclusion that a lot of these refugees are simply soaking the system for the benefits.  That's messed up - there are bona fide users of the system waiting for hours to deal with a bona fide health problem, and then there are these leeches who get the bells and whistles paid for.  (My Q:  how on earth can a federally-determined status (refugee) be hamstringing provincial spending (health?)  It may or may not be included in the confusing deal we call equalization, but no normal Canadian can ever possibly understand how that megaloth will ever work.  I guess that's why the federal conservatives are champing at the bit to just hack at it.)



> The Provincial governments could cut very deeply and reduce taxes. This would inconveinience the people at the trough, but the resulting economic boom would more than absorb these people back into the productive economy. The same could be said at the Federal level as well.....



I dunno, I think that simply cutting taxes in a system so corrupt (the fat is so integrated with the meat) is a recipe for people to falling through the cracks and therefore political instability... Harris tried to do that, and ended up with a revolt on his hands.  I think the idea of cutting taxes and "making do with less" definitely works more on a federal level than a provincial level because most federal portfolios don't influence the day to day running of mainstream society - downloading has made running a province more complex, the energy portfolio alone is causing serious problems, especially with the cap on rates.  So while a GST cut might work, cutting the PST could directly result in stuff like brownouts, which would scare away investment and forestall any economic boom.  

[quote author=I_am_John_Galt]
Please enlighten me!!!  What the what is this?!?!  The amount you can raise taxes before the population revolts?  [/quote]

Shoot, now I'm coming off sounding like a hoity-toity know it all... sorry dude.  (Well, I spose if I actually want to become a PAFFO, that's not necessarily a bad thing...  )

Based on what I know, the federal government, as the grand tax collector of this great nation of ours, makes tax policy decisions in conjunction with political effect and areas of constitutional responsibility.  This federal government has made it simple:  we feds are responsible for this, so we'll tax for this.  We're taxing too much, so we're cutting those taxes.  What they're saying to the provinces is this:  you're responsible for all of this, so tax your population appropriately so they're taken care of.  So by cutting the GST, the feds are saying to Ontario:  if you have problems, raise the PST.  (And, if that causes political problems, well hay-ell, that's your problem, innit?   )

It's just that based on stuff that I've observed over a period of time, it's not that simple for a province.  Ontario in particular has been so badly run that moves like cutting taxes or raising spending on a provincial level results in badness all around.  On one hand, there's definitely a political effect (the revolt.)  On the other hand, the province is in charge of far more day-to-day responsibility today than, say, 10 years ago.  The way I see it, since the NDP had the reins, ideology - both left and right - has virtually crippled the running of this province for years, and now we're left with a soft, pink, badly run mess where these decisions no longer have a logical effect.  Raising taxes will piss people off, but it doesn't necessarily fix the problems.  Cutting taxes should piss less people off, but because the province is so badly run, spending needs to be cut, and if you're not smart like Harris, you'll piss more people off.  The result is political instability, which ensures little to nothing gets done - we now have a province with high taxes, high spending in areas that should have less, cut spending in services in areas that should have more, subsidized stuff where there should be none (e.g. energy.)  And don't get me started on municipal funding and operation...

I'd love to get a provincial government with political will (that sure isn't Guinty McDalton's crowd), they could 1) raise the PST to cover the suck portfolios including energy and health 2) with that cash, announce that the health care premium will be done away with, which will bolster the govt politically, 2) with that cash, come up with an energy deregulation and production plan (like Eves should have) so that the treasury is no longer drained by this suck portfolio (not to mention showing the world that Ontario is no longer a soviet energy basket case) while ordinary people won't be facing triple the energy bill.  Then get to work cutting the fat out of the meat, especially in health care - and coming up with a productivity plan that actually *means* something (it's only nebulous if you pay lip service to the term, and spend money on that lip service.)  And come up with a taxing system that allows municipalities to tax, like they do in New York, for example.  Oh, and move towards privatizing health care so the leeches will wither at the trough.  Oh, and monorails for all!


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## GAP (8 Jul 2006)

Good Politics is the art of the possible....and that's what we are getting. 

You are right, you can't change things overnight and expect to get reelected. Ain't gonna happen!!

First you get the categories straight....fed to fed, prov to prov, municipal to municipal, etc. 

Second...adjust accordingly up or down for the area

Third live happily ever after.... :


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## begbie (12 Jul 2006)

So, did anyone else's take home pay drop after July 1st?  Mine did and it dropped more than what I've been saving with the GST cut.

Thanks for nothing 'Steve'.


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## George Wallace (12 Jul 2006)

Perhaps your Province upped its' Health Premiums?  Why don't you ask what may have increased at you Fin Office/OR?


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## begbie (12 Jul 2006)

It's with my civi job... I compared today's pay stub with the last one I received before July 1st and it's clear.  My income tax deductions have increased.

With all the noise of the GST cut there is still the matter of the oft-forgotten personal income tax hike that was meant to pay for the GST cut.  The gov't increased the lowest tax rate you pay from 15% to 15.5%.

I expect responsible employers like mine will take more tax off people's paycheques starting now so that their employees don't end up owing a couple of extra hundred bucks they weren't planning on owing at the end of the year.  

I'm sure others will notice this too.


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## George Wallace (12 Jul 2006)

Buy more Large Double Doubles.  They have dropped in price.  You can make up your savings at Tim's.   ;D


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## begbie (12 Jul 2006)

George Wallace said:
			
		

> Buy more Large Double Doubles.  They have dropped in price.  You can make up your savings at Tim's.   ;D



That's what I'll have to do I guess.  What can you do?!  There are only two things certain in life; death and taxes!

It might hurt the gov't a little if people feel they ended up being duped and are in fact no better off for this much trumpeted supposed tax cut.


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## vonGarvin (12 Jul 2006)

begbie said:
			
		

> It might hurt the gov't a little if people feel they ended up being duped and are in fact no better off for this much trumpeted supposed tax cut.


Actually, the gov't has been quite clear on this.  The 16% to 15% "cut" offered by the previous government never received official approval: the house dissolved prior to its implementation.  Nevertheless, Revenue Canada (or whatever it's called now) changed their forms to reflect this change for the base level.  The incumbent government stated soon after the election that this "cut" would remain for FY 05/06.  They first said that the proposed cut to 15% would not be implemented.  Later, they decided to make the cut from 16% to 15.5%.  I don't know if they "spun" it as a cut, but they have been (remarkably) clear on this.  
So, an "increase" of 0.5% of the first 15K (or so) of income means 75 bucks more a year on that amount.  Combine that with the reduction of 1% means that to recover said 75 bucks (which is the max amount of increase per wage earner: those making less than 15K per annum will naturally pay less) , you must spend 7500 bucks on GST taxable items.  Sounds like a lot, but in reality, it isn't difficult to spend that much in 6 months, let alone 12.  In the end, you will pay less tax IF you spend money.


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## Bruce Monkhouse (12 Jul 2006)

Quote from Von garvin,
_you must spend 7500 bucks on GST taxable items.  Sounds like a lot, but in reality, it isn't difficult to spend that much in 6 months, let alone 12._

Yup, I'm over that just at Costco already this year with my executive membership.[2% back at the end of the year]


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## dapaterson (12 Jul 2006)

One other reason taxes withheld tend to rise during the year: once you've hit the maximum EI and CPP deductions for the year, the amount withheld for income tax increases.  People tend to hit those limits mid-year.


----------



## begbie (12 Jul 2006)

von Garvin said:
			
		

> Actually, the gov't has been quite clear on this.  The 16% to 15% "cut" offered by the previous government never received official approval: the house dissolved prior to its implementation.



Well, the truth as always lies somewhere in between.  The Gov't is being disingenuous in stating that it was never legislated but the last tax cut from 16-15% was passed by parliament through a "ways & means" motion.  So it's (remarkably) clear explanation isn't all that clear and could be considered spin.

"The business of “Ways and Means” is the process by which the government sets out its economic policy through the presentation of a Budget and obtains parliamentary approval to raise the necessary revenues through taxation. The most important revenue-raising statutes (i.e., those which replenish the Consolidated Revenue Fund) are the Income Tax Act, the Excise Tax Act, the Excise Act and the Customs Tariff. 

A principle fundamental to the Ways and Means process is the requirement that taxation originate in the House of Commons. The Constitution Act, 1867, provides that “Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons”, [304]  a requirement echoed in the Standing Orders of the House. [305]."

The above is cited from http://www.parl.gc.ca/marleaumontpetit/DocumentViewer.aspx?DocId=1001&Sec=ch18&Seq=5&Lang=E

Based on my quote above, the financial procedure of a 'ways & means' motion is enshrined in various pieces of financial legislation and in the standing orders of the house of commons.  So whether or not you consider it legislated or not is largely due to semantics and likely depends on whether you drink Tory blue kool-aid or Liberal red kool-aid.  

However, further on in the website quoted above, the relevance of a 'ways & means' motion is that parliament has approved the gov't's current budgetary policy.  In effect, the previous tax cut was enacted and the public got that tax break.  



			
				von Garvin said:
			
		

> So, an "increase" of 0.5% of the first 15K (or so) of income means 75 bucks more a year on that amount.



I'm not sure that it's on the first 15K.  Isn't it on the first 35K? Then from $35,001 to $70,000 it's 22%, from $70,001 to $113,804 it's 26%, then for over $113,804 it's 29%.   Can someone verify this?



			
				dapaterson said:
			
		

> One other reason taxes withheld tend to rise during the year: once you've hit the maximum EI and CPP deductions for the year, the amount withheld for income tax increases.  People tend to hit those limits mid-year.



I'm not there yet.  For me, that usually occurs sometime in late September or October.  Although I thought your tax burden remains unchanged because my take home pay typically goes up when I max out on my CPP and my EI.


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## Brad Sallows (12 Jul 2006)

Begbie.

Are you wilfully blind to the overwhelmingly preponderant likelihood that the Liberal-orchestrated cut was basically a campaign promise, or do you harbour some evidence to support a belief that it was part of a grand plan to rachet down federal income tax levels, that just happened to hit its implementation date shortly before a federal general election?

Assuming you will admit to the former, why would you expect the Conservatives to deliver a Liberal campaign promise?


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## Brad Sallows (12 Jul 2006)

>I'm not sure that it's on the first 15K.

The threshold for last year was at $35,595, but from that one must remove deductions, of which the minimum was the basic personal amount ($8,648) leaving the taxable income in the first range not greater than $26,947.  The Liberals also had raised the BPE more than the Conservative would have (by $300 or so if memory serves).  0.5% of $26,947 is $134 and change.  So, one way to look at it is whether you'll spend $13,400 on GST-eligible purchases in a year.  That depends on your driving habits, your dining habits, your entertainment habits, etc. I figure I'm easily on track to save that amount this year, at least half of which will obtain from "necessary" purchases (fuel, maintenance, utilities).  Another way to look at it: if you buy a new home on which GST must be paid, you'll cover 15-20 years worth of the difference.


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## begbie (13 Jul 2006)

Brad Sallows said:
			
		

> Begbie.
> 
> Are you wilfully blind to the overwhelmingly preponderant likelihood that the Liberal-orchestrated cut was basically a campaign promise, or do you harbour some evidence to support a belief that it was part of a grand plan to rachet down federal income tax levels, that just happened to hit its implementation date shortly before a federal general election?
> 
> Assuming you will admit to the former, why would you expect the Conservatives to deliver a Liberal campaign promise?



Brad,

My criticism stems not from the fact the Conservatives would not deliver a Liberal campaign promise but from the fact they delivered a tax cut that will have only a modest impact, if any, on the average citizen.  All this from a party that are supposed to be the champions of the middle class, tax cuts, and smaller government.  Perhaps you were willfully blind to the fact that you enjoyed that personal income tax cut last spring.  I know I did, I enjoyed getting a modest return in lieu of not owing any more money to Revenue Canada.

Lets not forget that the conservatives voted in favour of that tax cut in the last government.  Essentially what they did was they traded one tax cut for another just so that they could do something different.  It's almost dollar for dollar in terms of reduced revenue for the government.  So in the end, it's no different in those terms so now the critique needs to be on whether it was the right choice to make.  

We've all heard that 'another promise made, another promise kept' line many times before and any reasonable person, like it or not, has to agree that has largely happened.  They've proved that they can do it but I think it's time to move on.  It's time to take the blinders off and start critiquing the merits of every policy and legislative proposal the current government makes instead of the rhetorical red vs. blue debate that normally occurs.


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## Fishbone Jones (13 Jul 2006)

Give them a break. They're a minority Govenment that has done more to restore our faith in our system than that bunch of theives did in more than 10 years. They've given back instead of take. They're being honest and upfront. They've made amends where some have thought they erred. All in all, if your whine about the GST cut is all you've got, you should give your head a shake. Want them to make a real difference? Give them a majority next election. Action Man and his cabinet are starting to make politicians respectable again.


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## Brad Sallows (17 Jul 2006)

>My criticism stems not from the fact the Conservatives would not deliver a Liberal campaign promise but from the fact they delivered a tax cut that will have only a modest impact, if any, on the average citizen.

They reduced the amount of GST I pay, as a fraction of the total amount, by 14%.  If they stick to plan, they will reduce the amount of GST I pay by 16% next year.  Does it sound less modest expressed that way?  Over the past few years there have been several modest impacts: elimination of federal income surtax and reduction of federal rates; elimination of provincial income surtax and provincial rates (in BC); reduction of GST; reduction of PST (it's still higher than it was a few years back).  All these modest impacts have added up; voila, a more-than-modest net impact.  I expect there have been some quiet movements in the other direction, but know of none in particular.

>All this from a party that are supposed to be the champions of the middle class, tax cuts, and smaller government.

They are.  Is there some measureable threshold for that - you're not a champion unless you cut 2% at a time, or 2% every year - or can you be satisfied with the direction of the vector?  Will they cease to be champions of those matters when the middle class is large and prosperous, taxes are low, and government is small?

>It's time to take the blinders off and start critiquing the merits of every policy and legislative proposal the current government makes instead of the rhetorical red vs. blue debate that normally occurs.

That's my preference.  But then a one-sided fight will be started again by people whose only real intention is to swap governments - a propaganda war.  It'd just be stupid to ignore it and yield the battle unfought, so I won't.  I'll impart my share of counter-spin.


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## GAP (17 Jul 2006)

The conservatives did not make the attitude towards government and government promises and cuts/non-cuts that is out there, nor did they create the unrealistic expectations. They gave the initial cuts they could, probably could have made more, but in a political world, you gotta save some to re-impress the electorate all over again next year and next election. It's a reality we live with, can live with. Would I like the cuts to 20%? sure, but not gonna happen.


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## dapaterson (17 Jul 2006)

Brad:  The reduction will be a cumulative 28% (that is, 2/7) over two years.

Not too shabby from where I sit (since I'll likely be buying a new home next year).


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## Brad Sallows (18 Jul 2006)

Yes.  I just expressed it as 1/7th of the total (14%) this year, and 1/6th of the remaining total (16%) next year.  I checked my numbers; I'm assuredly going to do better by the GST cut this year than by another 0.5% cut on the lowest federal income tax rate this year, and I estimate I'll do it on the basis of "necessities" (utilities, transportation, etc) alone.


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