One of the big stories in Canada today was Conservative Leader Stephen Harper’s pledge to reduce our GST from 7% to 5% if his party wins the election. The reduction would be 1% immediately, and another percent sometime within five years. Apparently, savings would be fairly good:
Canadians would have $4.5 billion put back in their pockets with the first reduction, said Harper. An average family of four earning $60,000 a year would pay about $400 less in taxes. The GST reduction would be a “tax cut you see every time you shop. No politician will be able to take it away without you noticing.”
Sounds good, but think about it for a second. Who does GST really affect? People who buy a lot of stuff beyond the basics (GST is not charged on basic groceries, most medical services, etc). Those are typically people who are already rich. So essentially, GST reduction helps those with lots of money. Personal income tax cuts in the lower income brackets, as the Liberals have suggested, help those with less money.
That being said, I agree with NDP Leader Jack Layton:
“Deep tax cuts right now are not what Canadians are looking for.”
Do I really care if GST is around after the election? I have lived most of my life with GST, and I have come to accept that it’s going to be there. Instead of giving that 7% back to me (or even part of it) I’d rather see the government do something meaningful with it. Of course that’s where it gets tricky, because what I think is useful may not be what someone else thinks is useful. For example, I wish we’d stop spending so much money on Africa, though there are lots of Canadian who would disagree with me.
The announcement today by Harper has “dirty” written all over it as far as I am concerned. Recall in 1993 the Liberals promised to abolish the GST and that didn’t happen. I don’t feel the Conservative promise is any more solid. How about announcing something more meaningful? A promise to cut GST is something I’d expect the day before the election to try and win the swing voters, not something you propose right away.
Read: CBC News