Sunday, March 26, 2006

More ammo against the Con "tax plan"

I’ve already blogged at length on the inequities of the Conservative plan to replace the pre-election Liberal income tax cuts with a one (and, if you reelect them, two) per cent cut in the Goods and Services Tax, so I won’t rehash the case at length again.

Except there’s now more corroboration to show how the Cons are out to lunch on this one. A recent CBC Reality Check lays out the case nicely, reporting on a study comparing the plan the Liberals proposed to the one the Conservatives, supported by a minority of voters who probably didn’t look past the electronics store photo-op anyway, plan to impose.

Who will be the biggest beneficiaries of the one per cent GST cut? If you’re thinking it’s you, Joe and Jane Canuck that stop at Timmy’s for a double double on the way to dropping Jenny at ringette practice, think again, unless you own the Canadian Imperial Bank of Commerce. Because according to the study, some of the main beneficiaries will be (all over five years):

Banks and Financial Institutions: $2.6 billion
Doctors, dentists, and other health professionals: $650 million
Landlords: $970 million

It should also be noted that hospitals, universities and colleges will also benefit to the tune of $1.3 billion, and I’m cool with that. I don’t think the banks need the help though. Think they’ll lower service fees with the savings? Yeah, neither do I. There are ways of helping hospitals, universities and colleges without throwing gobs cash at the uber rich that the Cons might want to look into.

Here’s another fun statistic from the study. By lowering the lowest marginal interest rate by one per cent and increasing the basic personal exemption, actions the Conservatives will undo (or not do again, depending on how you want to look at it) the previous Liberal government saved most taxpayers $320 a year.

Now, the report says, to save $320/year via the Conservative GST cut, you’d have to spend $32,000 A YEAR on goods and services, and that doesn’t include rent or mortgage payments, groceries, prescriptions, tuition, child care, loan payments and investments, all of which you don’t pay GST on.

So, please, Mr. Harper and Mr. Flaherty, please tell me again how this GST cut is a better deal for the average Canadians you claim to represent?

I can’t wait for the first question period.

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Anonymous said...

please tell me again how this GST cut is a better deal for the average Canadians you claim to represent?
The answer to this question is Economics 101.

less tax on goods and services = more spending by consumers = more jobs = more income tax revenue = eliminating deficit

A BCer in Toronto said...

Conservative Economics 101, yes indeed, chapter one in the book Regeanomics for Dummies, How to Let the Love Trickle Down.

George W. Bush had someone read at least the first chapter to him, and it has worked so well he has raised the debt by some $3 billion in his presidency. Bravo, we need some of that here.

It's economics 101 that consumption taxes are more inherently fair and progressive than income tax. That's why nearly every economist worth their salt came out against the Con plan. Here's what one said about cutting the GST instead of income tax:

"Stupid, stupid, stupid, stupid."
-- Jim Davies, UWO

But sure, take $320 out of my pocket so I save a few pennies on a bottle of pop. Instead give a few billion to the corporations, who will issue a fat bonus to their executives, who will buy a nice plasma tv to celebrate, creating jobs in Japan.

On the bright side, the GST cut will save the exec a few bucks on his new tv. Score.

A BCer in Toronto said...

I forgot to add the deficit has already been eliminated, some years ago, by the previous Liberal government. Unless you know something about Jim Flaherety's upcoming budget I don't.

leftiesRlosers said...

once the deficit is under control, perhaps we could start paying the debt?

A BCer in Toronto said...

What deficit?

leftiesrlosers said...

deficit and debt aren't the same thing. The deficit is (roughly) defined as the gov't spending more than the revenue it takes in during the fiscal year. The public debt is the amount owed on loans foreign.

A BCer in Toronto said...

I know the difference between deficit and debt. I also know that the Liberals have returned seven or so (don't reall exactly) straight balanced budgets (no deficit, but instead a surplus). The Liberals have also been making regular payments on the debt.

So, my point being, we're not in deficit. The debt accumulated over the years remains, but there is no deficit to bring under control.

leftiesrlosers said...

"So, my point being, we're not in deficit. The debt accumulated over the years remains, but there is no deficit to bring under control."
Agreed.....But the fact still remains that consumption taxes retard the economy. Gov't could also cut social and arts programs, thereby farther reducing debt. Not holding my breath for this to happen as the poverty industry is far too ingrained for any gov't to make the necessary cuts.