GST cut

[begbie]

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.

 

[vonGarvin]

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.

 

[Bruce Monkhouse]

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]

 

[dapaterson]

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]

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. 

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?

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.

 

[Brad Sallows]

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 Sallows]

>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.

 

[begbie]

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.

 

[Fishbone Jones]

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.

 

[Brad Sallows]

>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.

 

[GAP]

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.

 

[dapaterson]

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).

 

[Brad Sallows]

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.