GST
As has been rumoured for awhile, the Conservatives came out today with their big ticket item - a reduction of the GST to 5%.
The recent Liberal spending spree when they gave out 5 billion dollars a day is going to make it very difficult for them to attack the loss of 4.5 billion in revenue the first 1% drop will bring. As a result, Martin will paint it as income tax cuts versus consumption tax cuts. Given that people are Christmas shopping, rather than doing their taxes, I suspect this will work in Harper's favour.
For what it's worth, I think this is a bad policy. You keep the administrative costs and cut revenue. But this gives Harper something he can point to as constructive policy. And it's going to be very difficult to argue against (although both sides will trot out hundreds of economists to defend their position).
The recent Liberal spending spree when they gave out 5 billion dollars a day is going to make it very difficult for them to attack the loss of 4.5 billion in revenue the first 1% drop will bring. As a result, Martin will paint it as income tax cuts versus consumption tax cuts. Given that people are Christmas shopping, rather than doing their taxes, I suspect this will work in Harper's favour.
For what it's worth, I think this is a bad policy. You keep the administrative costs and cut revenue. But this gives Harper something he can point to as constructive policy. And it's going to be very difficult to argue against (although both sides will trot out hundreds of economists to defend their position).
posted by calgarygrit at
11:37 a.m.
67 Comments:
The dance of the seven veils continues. Harps just brought out his GST cut and by all accounts it's going to be a winner with joe average who may not speak economese.
If the Conservatives can sustain this chinese torture of releasing their platform drip by drip then they will start to dictate the terms of the election on a daily basis - something which puts the other parties on the back foot.
Harps and the Conservatives are starting to look like they have a very cunning plan - which is more than you can say about the Liberals at this point.
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Anonymous, at 11:50 a.m.
Harper will cut income taxes too.
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Anonymous, at 11:56 a.m.
Sure, the neo-con(vict)s(/neo-fascists) are coming up with tax cuts for the averag-joe-country-bumpkin and the Liberals have years of scandal but the right doesn't have the style or stars of the Liberals.
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Anonymous, at 12:10 p.m.
I hope the Liberals bring out Brison for this one!
"The hon. member was quite right in pointing out that while he is opposed to the GST and would like to reduce the GST, so were the Liberals of similar persuasion before 1993. Let me suggest that a potential replacement for those revenues may be gained from a hypocrisy tax. If we were to have a hypocrisy tax that would be levied on politicians who break red book promises, perhaps that would be one way to help replace revenue from the GST.
I would appreciate his erudite views on my proposal for a hypocrisy tax which would serve two functions. First it would force Liberals to keep their promises for a change. Second, it would raise those revenues to reduce the GST, as the hon. member feels is important."
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Don, at 12:18 p.m.
I would think that most Liberals would be in favour of reducing sales tax. After all, sales tax is regressive. Sales tax hurts the poor more as a % of income.
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Michael Fox, at 12:26 p.m.
This is bad, bad economic policy. We should have low personal income taxes and higher consumption taxes. This encourages better productivity. And Harper is going to have make up that lost revenue with tax increases in other areas...
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Anonymous, at 12:36 p.m.
As the comments here seem to indicate, opinion on this policy is going to be pretty evenly split by those who understand (or think they understand) economics. Its un-likely to change the votes of those people.
What it is going to do is appeal to lower and middle income families who pay a passing attention to politics because they're more focused on their household budget.
Result: gain in votes for the Cons.
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Matthew, at 12:57 p.m.
Well, there is economic policy and social policy. The economy is only useful if it improves our lives. A strong economy that leaves behind a quarter of the population is not a good economy.
So, high productivity is important because it gives us money to do things for people, but we must also make sure that all people benefit from that high productivity.
In our liberal democratic society, people benefit from productivity when they have the resources to create options and make choices in their own lives.
Finally, the debate is organized along social, conservative, and liberal dimensions. The socialist way is to give people money; the conservative way is to stop taking money from people; and the liberal way is to devise a rational, fair, and efficient process to manage finances.
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Anonymous, at 12:59 p.m.
er, my point was that while a lower GST may not be good macro-economic policy, and no one is claiming it is, it may be good social economic policy.
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Anonymous, at 1:01 p.m.
Good economic policy? ....I have no friggan idea.
Annoucing a 2% decrease in a consumer tax, during the Xmas shopping season? The holiest of holy times for consumers? Brillant.
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Anonymous, at 1:52 p.m.
To give everyone a good idea how this is going to play the Red Star is carrying the following from CP:
"The GST tables have been turned on the Liberals. They won power 12 years ago promising to eliminate it and have suddenly been transformed into champions of the unpopular consumption tax...
"I don't believe that is the path to follow," he said of the Tory plan.
"Canadians have been down this road before. They've heard this story."
They heard it in 1993 — when Martin himself co-authored the Liberal red book that promised to scrap the tax. The Liberals backed away from the promise once they took office, and now find themselves swapping roles with the Tories....
"Martin said the Conservative GST plan could be affordable, depending on what else his opponents propose".
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Anonymous, at 2:06 p.m.
I don't see why the Liberal hypocricy on this issue should receive any more attention than the Conservative hypocricy.
Both parties have flip-flopped.
As someone who was previously entirely pro-consumption taxes, why is Mr. Harper now in favour cutting them instead of income taxes?
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Anonymous, at 2:13 p.m.
Cutting the GST is a smart political move and not a good economic one.
Consumption taxes are better than investment (capital) and income taxes ewspecially in a country that has such a poor savings rate. I think that Harper understands this as an economist.
However I think he is an economist who understand the realities of politics. The only reason GST is not 9 or 11% or (even 19% as it is in some parts of Europe) is that it isn't hidden. Cuts to income tax are visible for about a week and then we forget that the rates have dropped - a cut to the GSt will be seen every time I buy something.
Dumb economics but smart, very smart, politics.
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Anonymous, at 2:37 p.m.
Canadians have been down this road before. They've heard this story."
Martin said the Conservative GST plan could be affordable...
Does Martin reaaly want to scriptwrite CPC TV commercials?
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Anonymous, at 3:05 p.m.
Lowering GST may not have been a good move a few years ago when fighting the debt was such a priority. However, as GST returns to the Government coffers have been increasing while we have been reducing debt then a small reduction in GST (and let's face it we're not talking a huge reduction) is completely justified. Consumption taxes do not necessarily promote savings (savings are at an all-time low since the introduction of the GST). As for the argument concerning choice (income tax cuts give greater choice) both income tax and GST reductions amount to the same thing - more money left in the pocket. Where everyone is correct is that it is a very visible policy - something that, at least for the short term, taxpayers will see every time they check a receipt. Now, what about a flat tax...
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Anonymous, at 3:15 p.m.
"Intellectual High Road": my term for a campaign based on issues and not hyperbole.
Martin, by flip-flopping at least maintains his intellectual integrity (argue what you will about making the promise to scrap it in the first place).
Doesn't Harper give up his integrity by pushing a policy that his inner economist is sure to know is a bad idea?
That's what I meant by the high road.
And love him or hate him, you have to give Layton credit. "Tax cuts? Hell no!"
So yeh, Harper has come out swinging in a very clever (even political) way. He at least seems ot be learning. Does Martin have it in him to keep up? I don't think he's doing a good job as yet. But the campaign is young.
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Anonymous, at 3:27 p.m.
Since the poor may well be exempt from income tax and thus not benefit directly from an income tax cut, and since the poor spend a higher proportion of their income than other demographics, it stands to reason that anti-poverty groups and the NDP will come out in support of this initiative.
Cutting the GST will benefit primarily low-income Canadians - it's hard to see how either the Dippers or the Libs can attack it credibly.
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Babbling Brooks, at 3:33 p.m.
gunter: good parting line.
flat can be progressive with a large refundable tax credit and pure buck is a buck is a buck tax policy. then income vs. corporate vs. consumption with savings credits is merely about the best way to mimimimize tax evasion.
great policy, but bad politics.
in the meantime it's all about incremental flattening and tax fairness.
speaking of the investment vs. consumption life cycle... gst reduction is especially attractive to young single income families with no income splitting whose consumption is largely important investment in the country's future.
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Anonymous, at 3:34 p.m.
Gunter:
Income tax is, at least, progressive. Cuts to that can target individual tax brackets according to social policy.
GST cuts (so goes the argument) will tend to provide more savings to the wealthy who consume more (and save less).
More spending = less investment. Did I get that right?
Does anyone have a link to something that addresses VATs vs. income taxes? I'd certainly like to understand this better.
And Goodale has just been on saying that the rich will benefit. After screwing up the income trusts thing, it's hard to give him any cred.
And CBC streeters look like they're split. Those supporting GST cuts are saying "lower taxzes? Yeh, count me in!"
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Anonymous, at 3:35 p.m.
scrapping the GST as a bad economic policy isn't true.
most of us on the hard, far right want a consumption based tax system, but want to run it using the income tax infrastructure. we also want a flat tax with a relatively high individual exemption.
GST duplicates costs and has no exemption, so on a 2fer basis its bad just from a conservative viewpoint! if you are going to argue against this policy in terms of its macro effects, you should really know what the people you oppose propose or see as an end goal.
when us righties talk about flat (or flat ish) consumption based taxes, we want a high exemption, minimal rates, simple system that takes (possibly employment only) income subtracts savings and investments and then applies the rate. it looks very similar to an income tax but has very different macroeconomic effects and incentives.
we wouldn't move to a retail consumption tax as it's rather easy to avoid, creates high evasion incentives when it's bringing significant revenue, and has high collection overheads.
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Anonymous, at 3:41 p.m.
boreal99,
if economic players were all the same and treated identically it woud be far easier to make your case.
especially if we ignore the biggest ecoonomic investment lifecycle of all the raising of the next generation of workers.
you really don't know what harper's inner economist is saying. i suspect his inner parent is speaking too.
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Anonymous, at 3:44 p.m.
annextraitor:
Very well put. I think you are channelling harper's inner economist.
Income less refundable credits for hard investments (things) and soft investments (people).
Direct consumption taxes become less important as taxes flatten and the code simplifies.
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Anonymous, at 4:20 p.m.
"Cuts to that can target individual tax brackets according to social policy"
Exactly. And social policy is as screwed up as corporate policy.
In the name of the poor, we always seem to end of up with policy that benefits the comfortable. Its human nature. What can't be understood is always manipulated in favour of those who do.
what annextraitor is talking about is still far away. but it is positive macroeconomics and it puts progressivity into a political realm where it can be seen to be done rather than played with.
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Anonymous, at 4:44 p.m.
All indications are that income taxes will also will proposed. I understand the arguements on both sides of the consumption/income debate...and please be aware that both sides has its advantages and disadvantages...by doing a little of both I think there will be something here for everyone...what is the most encouraging is that Liberals are crying out for tax relief....little did they know that they have been conservatives for the past 12 years...
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NorthBayTrapper, at 4:54 p.m.
I laughed when I heard Harper's comments about the GST. Has he forgotten that Mulroney, former leader of his own party, is the one responsible for introducing the GST in the first place? Harper is such an idiot.
As for promises of tax cuts, there's no way he can do it without hurting Canadians. We learned that already with Cons. They cut taxes by cutting healthcare.
Forget what Harper "says" he will do. The fact is, he better tell us "how" or else nobody will ever trust him. And thank goodness for that!
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Anonymous, at 5:20 p.m.
Since when does a family with an income of 60K spend 2/3 of their income on GST-taxable items? Harper’s $400 savings imply that 40K are spent. I’m not an economist, but somehow, that doesn’t seem right since things like food and rent are not GST-taxable. “Used” homes aren’t GST-taxable and new homes less than 350K have some GST rebated. So where is this 40K being spent? That would buy a lot of shoes!
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Anonymous, at 5:20 p.m.
Check your math, Regan. $400 is 2% of $20,000, not $40,000.
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Anonymous, at 5:32 p.m.
regan, it's because you are taking the jason cherniak willful misrepresentation line.
a 1% cut would give you something around $200 benefit, but Harper is proposing a (2 step) 2% cut. Under the full proposal, you'd save about $400, given 20k in taxable spending, which seems about right.
calgarygrit dicusses substance, rather than just spinning, ao lets try to do the same in the comments. You can always go to cherniak's place for spin and pure shillism.
while I have a side, I'll deal with things straight up as I see them, not just spin and shill.
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Anonymous, at 5:42 p.m.
Cherniak got 29 comments on his GST thread. You have 34. I think the Tories feel insecure about this one.
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James Bowie, at 5:47 p.m.
some of the spin here about Harper
flipping from Mulroney's position is hilarious:
1986: Harper left PCs.
1987: Harper at Reform's founding convention
1991: Mulroney brings in GST
1993: Harper becomes Reform MP
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Anonymous, at 5:55 p.m.
Anonymous,
Mulroney had to introduce the GST to combat dangerously high budget deficits (from both the Trudeau and Mulroney eras).
We have been in a strong surplus situation for a while now, so why would one assume we need the same level of GST? Cutting the GST by 2% reflects the new economic reality that we don't need higher consumption taxes to fight large budget deficits.
This policy may be enough to convert me to a fence-sitting voter to supporting the Tories.
Matt
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Anonymous, at 6:15 p.m.
we don't feel insecure about this one. you'll note that there are a lot of wrongheaded liberal comments about how it's bad policy. I corrected misunderstandings about what the policy is, and how gst can be seen to be inline with that policy.
the liberals are running scared on this one, since it's great politics.
watch this space for more.
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Anonymous, at 6:43 p.m.
Harper has never been in favour of the GST (as he stated in his press conference when someone brought up the Mulroney bit as done here).
Martin, on the other hand CO WROTE the Red Book calling for scrapping the GST.
Nope. The Hypocracy and two facedness lies solely with Martin on this one. That's what makes it so great!
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Anonymous, at 6:46 p.m.
Brilliant move, Mr Harper!
I am actually impressed. The CPC knows how to campaign (touch wood). And this from a was-Liberal supporter (so far).
I am sure you will ALSO cut income taxes? A 1-2 punch if I ever saw it.
Just keep hammering these points.
BTW I have never believed the conservatives when they say the media is biased, but today's City TV was definitely biased against cutting GST, I felt.
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mezba, at 7:02 p.m.
When Martin said "I Love Canada more than Harper" did he pull the soother out of his mouth first?
Next up ---> "I hate the USA more than Duceppe"...should play well in QC and on the CBC
http://www.canada.com/vancouversun/story.html?id=bd4ac027-46b8-4c89-9cd7-34642343cfc3&k=94299
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Anonymous, at 7:02 p.m.
My earlier comments regarding the benefits of the GST reduction need to be augmented by the both the merits and optics of such a program as relates to low-income citizens.
A low-income citizen has to devote more of their income to consumables (read: items that are taxed by GST) than does a middle or high income person. As a consequence they save less. Targeting income tax cuts to this area is perilous at best as it necessitates raising the lowest income bracket sufficiently high enough to offset taxes at the point of sale (despite GST rebates). The beauraucratic cost alone of this type of program is a reason not to adopt it. For those that pay no-tax then a reduction in GST is real tax relief. As well, this is universal tax relief that benefits all citizens and doesn't require 250 more pages added to the tax code - it is simple. Low-income earners do not always have access to accountants - for this they don't need one.
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Anonymous, at 7:18 p.m.
I think there needs to be some sort of statute of limitations on flip-floping. Ie. What Harper or Martin said FIFTEEN YEARS ago, likely isn't relevant.
I think most people will agree Mulroney did the right thing by bringing in the GST way back when - the real question is whether we can afford to axe it now.
The 400$ amount Harper mentioned reflects 2% savings. If PMPM can backload his tax cuts, I think it's fair enough for Harper to quote a figure for a 5 year plan.
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calgarygrit, at 7:35 p.m.
"I laughed when I heard Harper's comments about the GST. Has he forgotten that Mulroney, former leader of his own party, is the one responsible for introducing the GST in the first place? Harper is such an idiot."
The GST was introduced in 1991. Harper left the PCs in protest well before that. Therefore, it wasn't "his party" that introduced it.
On the other hand, who cares?
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Michael Fox, at 7:40 p.m.
Anytime you can get the opposing party to say "We've heard that story before" in reference to their OWN STATEMENTS you know you're doing well.
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Anonymous, at 7:47 p.m.
CG is the sanest Grit around, but even he gets the "policy" part wrong.
Cutting GST has its social policy merits.
None of us are rich like Martin so we don't have access to CSL's tax shelters for our income.
But we can dodge consumption taxes with a black market. Get your driveway plowed? Renovations to the Bathroom?
Liberals have done nothing but encouraged the black market with their "appropriation of black market techniques" you might say.
As Harper makes government more honest and transparent, he makes the citenzry more honest and transparent.
We all win.
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Tarkwell Robotico, at 7:48 p.m.
anonymous (re grits saying that they lied about that policy, so why believe cpc?) excellent point.
i'm loving this reaction. how it will play locally? dunno but let's hope it gives cpc a chance of a pickup or 2 in 416.
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Anonymous, at 8:30 p.m.
The GST is a flat tax. All incomes are charged equally. It works like Alberta's flat tax and should be scrapped because it's unfair for the middle and lower classes.
Income taxes are much more effective because the higher amount of money you make the higher rate you pay.
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Anonymous, at 10:57 p.m.
The question is, Anonymous, what "effect" are you talking about when you say "effective"?
The wealthy people, Paul Martin-types, use off-shore tax shelters to shield their income from your ridiculously high top tax brackets. Its not effective at all. And these tax-dodging rich people that you loathe run the Liberal party! Unbelieveable.
Who's kidding anyone, anymore. Off-shore tax shelters. Private health care.
What's the hidden agenda?
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Anonymous, at 11:08 p.m.
"Rent and food are both GST exempt...."
Here's a quarter - now go buy a clue. The inputs to both of those activities are not tax exempt, so -for instance- the lumber, the carpet, the windows and the paint in a rental structure have all borne GST. Similarly, all the inputs in the grocery supply chain have been taxed. These taxes are just passed along (depending on relative supply and demand elasticity) to consumers. Given that the elasticity of demand for essentials is flat, most of those taxes are ultimately paid by consumers of food (ie, everybody) and those who rent (somewhat less than everybody).
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deaner, at 11:39 p.m.
Once again harper proves he is a hypocrite. Out one side of his mouth he blast the liberals for their fiscal plans, deeming this as buying votes with people’s money. Haper then he turns around and does the same thing with the GST cut policy.
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fresh, at 1:56 a.m.
"Finally, the debate is organized along social, conservative, and liberal dimensions. The socialist way is to give people money; the conservative way is to stop taking money from people; and the liberal way is to devise a rational, fair, and efficient process to manage finances."
Anonymous, shouldn't it read like this.
--and the liberal way is to steal the money.
Horny Toad
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Anonymous, at 2:11 a.m.
"As for promises of tax cuts, there's no way he can do it without hurting Canadians. We learned that already with Cons. They cut taxes by cutting healthcare".
Umm, it was the Lieberals who gutted the health system to balance the budget , or have you forgotten the Liberanos have been in power for the past 12 years.
Horny toad
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Anonymous, at 2:22 a.m.
From CTV News tonight, Mulroney said that Harper hit a home run with his GST announcement..
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Anonymous, at 3:12 a.m.
And Shiela Copps is digging it, along with Warren Kinsella.. is the sky falling?
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Anonymous, at 3:17 a.m.
annextraitor said...
regan, it's because you are taking the jason cherniak willful misrepresentation line.
Hey annextraitor, no spin here… I’m just commenting on what I saw and heard Harper say in his announcement. Since CBC Politics archives its broadcast, you can check it out for yourself (at 1.25min into the archived PM show). Unless the CBC is involved in some Grewal-esque splicing of video, it is clear that Harper was using the $400 amount to refer to the immediate benefit of the 1% reduction. That estimate seems high to me.
Personally, I agree with the masses that say it is politically savvy but not the best decision for the country, economically speaking.
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Anonymous, at 3:49 a.m.
Harper has the Libs defending the despised GST, and now Kim Cambell is on board against Harper.
Could the day have gotten any better for the CPC?
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Anonymous, at 4:40 a.m.
Living here in Alberta, I have really learned to hate the GST. It the only consumption tax we see on our purchases, so I can only vent my displeasure at this tax in one direction. You lucky people that have to pay PST in the rest of the country have a choice in which direction your disgust can flow
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Anonymous, at 6:34 a.m.
Fools! It's obvious that the GST cut promise was the suggestion of a Grit mole in the Harper camp. The idea is to help the Tories rise in the polls in order to polarize the country. Result: NDP collapse and Grit victory.
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Anonymous, at 8:20 a.m.
Deaner are you actually suggesting that if the GST drops by 2% we will see a 2% drop in the price of food and rent? That's ridiculous. Large corporations will just pocket the increased revenue.
That was the DUMBEST reply on this thread yet, and that's saying something.
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Anonymous, at 11:17 a.m.
Richard
Despite what I sense is a bit of sarcasm in your post, you may essentially be correct. The Liberals cannot win this election unless there is a danger of the CPC forming a majority government throughout the campaign. The soft Liberal vote needs to be persuaded to come back to the LPC.
Stephan Harper has gotten his campaign off to a strong start. But this contest is not about winning the first lap, and he is very likely playing into the Liberals overall strategy. Strong CPC poll results will drive soft BQ and NDP voters back to Liberals during the final push. This group of voters is the key to Liberal success. They fear a CPC government more than most core LPC supporters for a variety of reasons e.g SSM.
During this campaign I suspect history will repeat itself.
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Anonymous, at 11:39 a.m.
CalgaryGrit,
Do a post on the Team Quebec hockey news!
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Anonymous, at 11:57 a.m.
I already commented on it, a few days back. After seeing the predictions of what the roster would look like, I really think Duceppe will earn the boneheaded play of the week award. Stephane Robidas on defense? EEK!
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calgarygrit, at 1:19 p.m.
This is beginning to sound like US politics. I hope we Canadians are smarter than that. Good infrastructure, services, healthcare and education - solidarity with the disadvantaged - all cost money. Obviously it needs to be spent wisely, but I'm willing to pay my share of the bill.
Harper is a selfish opportunist, whose goal is to divide and exclude. Remember his record!
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Anonymous, at 1:32 p.m.
Horny Toad, no, the liberal way is not to steal money, you goddamned fucking idiot. Liberalism is a several hundred year old philosophy that was the inspiration for the creation of all democracies on earth.
The Liberal Party, which you are thinking of, is not a several hundred year old philosophy, but a political party named after it, you dumb useless bag of shit.
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Anonymous, at 1:53 p.m.
blah,
it's a 2 phase campaign.
pre-christmas the slosh between liberal and ndp is irrelevant. for the cpc it's only about pushing past 30.
post-christmas will be interesting.
the ndp will be focused on taking ridings from the liberals.
Today's Toronto Star: "In addition, Broadbent said, the Conservatives have mellowed in the intervening 17 months".
Expect the NDP to attack the Liberals separately and the Liberals and Conservatives together.
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Anonymous, at 2:09 p.m.
Anonymous
We will have to see. I personally doubt Layton will be effective during this campaign especially if Harper stays on a roll. Layton's claim to fame during the last session of parliament was only possible because there was a Liberal minority.
The type of swing leftist NDP/BQ voter the LPC will require to win this election must be made to realize that it is in their best interest to have a Liberal minority. Nothing will convince them better than the threat of CPC majority. Much like the last election expect a general collapse in NDP support in key ridings during the last week and at the voting booths.
Do you remember the surprise and relief on Martin's face on the previous election night?
The real question is how scared can you make those swing voters that matter? Enough for a Liberal minority? Enough for a majority?
This is why I believe if the Liberals are leading during the final weeks it will not bode well for them on election night. Both core LPC and swing NDP voters will have less motivation. The Liberals need Harper and CPC to do well early.
Imagine a week before the election a national poll shows the CPC with a 3% to 4% lead over the LPC. Do you really think a gay pagan hippie in a Liberal/Conservative contested riding would vote NDP? I apologize ahead of time for stereotyping gay pagan hippies.
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Anonymous, at 3:04 p.m.
blah,
the cpc isn't looking at the liberal numbers or the over/under numbers. a a mid-campaign poll with lib 30 would mean nothing to them. a mid-campaign poll up near cpc 35 would mean a lot.
as for your stereotype it doesn't describe all that much of vote the cpc doesn't have. there is way more 3 way voter migration than anyone cares to admit.
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Anonymous, at 3:38 p.m.
"Large corporations will just pocket the increased revenue."
Actually, it would be "decreased costs" but I didn't expect to see a coherent thought, so I am not particularly surprised. Your argument is that suppliers will be under no competitve pressure to pass cost reductions on to consumers. If so, then they must be under no such competitive threat now - so why don't they just raise prices today by 2% - then the extra GST savings will be the icing on the cake!
If you don't believe that market forces work, that's fine - but just don't expect anyone to pay any attention to you. Sorry - I think you just took away the "dumbest response" title - not that it was ever in doubt.
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deaner, at 3:40 p.m.
deaner
Because a 2% increase in price may reduce demand and Canadian suppliers are already charging as much as they can get away with. As soon as they can get away with charging more they will. Your prediction does not reflect the realities of the Canadian market place. There is very little downward price pressure on major Canadian suppliers. In Canada, many products have only one or two major Canadian retailer or suppliers.
I just moved back to Canada from the US, and now have to pay a 20% to 40% premium on everything from TVs to cell phones to internet access. Does it really cost Bestbuy/Futureshop $300 more to sell a $2000 TV in Toronto than in Detroit or Boston? If so why did they take $300 of the price when confronted, how much markup was there on this product? What is 2% compared to that.
Do you seriously believe a 2% decrease in GST will result in an equivalent reduction in the price of gasoline at the pump?
The bulk of this price decrease will be eaten up increased prices and profitability of the retailers.
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Anonymous, at 5:01 p.m.
"Does it really cost Bestbuy/Futureshop $300 more to sell a $2000 TV in Toronto than in Detroit or Boston?"
Hmm, let's see... wages are higher, payroll taxes are higher, corporate taxes on capital and income are higher, while market size is lower and distribution costs are higher. Yeah - I believe it might be more expensive to operate in Canada - don't you? Since we were speaking of groceries and rent, as the two largest 'GST exempt' categories of purchases, I am not sure what the example of a $2K TV has to do with the discussion at hand, anyway. On taxable goods like TVs (or cell phones, and internet access charges, to look at your other examples) I expect a reduction in GST to be passed on to the consumer directly and immediately.
"Because a 2% increase in price may reduce demand and Canadian suppliers are already charging as much as they can get away with."
Incredible, both that they have just found exactly the profit-maximising point, and that it won't change even after a reduction of input costs. Sorry - pull the other one.
"Do you seriously believe a 2% decrease in GST will result in an equivalent reduction in the price of gasoline at the pump?"
Yes - given that gasoline retailing is the most competitive retail business that exists. I have no doubt that the savings will be passed on, and equally, no doubt that the impact will be masked by any number of other factors that contribute to gasoline pricing decisions.
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deaner, at 6:15 p.m.
ok pass this to as many people you can - GST reduction -ya right
first we all heard that good -old harper gonna gut the gst by 2% in 5 years 1% imediatley...
first to thoes who dont remeber or to young the gst was brought in by mr.harpers Conservative (aka torries) party second do any of you remeber what happen when the gst was brought in... when companies added the gst to the price they decided to "round up" the prices giving them selfs a nice little raise in income and making things more expensive !!!
NOW FOR REALITY -- when harper drops the gst by 1% do you really think prices will go down reflectint this drop...absolutley not- i own my own company and i fully intend on keeping this 1% for my self this is not being greedy it has to do with my personal economics ,how much money do you think it will take for me to change my advertizing,not going to happen...gst might drop but prices will not change- add your coment tell me if you think im right
By
Anonymous, at 2:18 p.m.
Welcome to Mr. Harper, aspirant PM, the “20 Billion Dollar Man.” The thrust of his campaign was that he was a very careful policy wonk, not given to kissing babies or small talk, but a capable man, careful with details ...
Now, just one week before the election, he unveils a five year plan with a “missing” 20 billion dollar gap in it. His one economist who checked it for him, says “Oops! Left out a couple of things, but it balances if you don’t think about them”.
Some endorsement. Some check.
But so what? Harper tours Quebec offering them money for votes: lots of money. We will take it from the federal government and give it your provincial government, he says. Vote for us and we will shovel billions your way.
And Quebec voters warm up to this modern day Santa Clause in a blue suit. Heck, why not elect him as PM; just look at the goodies we will get.
Sorry, folks, but someone has to find the missing 20 billion dollars. Guess who that will be? Perhaps those lazy folk in the Maritimes (after all, Harper told the Americans back in 1997 that you folks living there had a false sense of entitlement and needed to move or do something)? Or those social programs which will have a priority second to the tax cuts designed to favour the very wealthy?
It is clear now that Harper is a follower of Bush. Harper’s economics – given his 20 billion dollar gap is just plain voodoo economics, to quote Bush Snr, and his tax cuts for the wealthy is just slavish copying of Bush Jnr.
Welcome to Bushland, Canada. A PM so smart he cannot add.
By
Anonymous, at 5:09 p.m.
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