is expected today. CTV is reporting that the Conservatives will announce that it is their policy to cut the GST - expected to go from 7% to 5% over a two-year period. (and I should mention how wrong I was here)
I know the economists will have a field-day with this one, go through the nuances of income vs. consumption taxes but what will be more important is how the average voter reacts.
I have never gone through the calculation of how much pay in GST in a year but I expect a 2% cut would be fairly significant. Consider that you pay GST on pretty much everything you spend on, except necessities - groceries, children's clothing, etc. and on your mortgage.
If I added it all up I would not be surprised if I paid the GST on about $20,000 worth of consumption - or $1,400 in GST. Reducing the GST to 5% could put $400 in my pocket. Or about the same as the Liberals promised cut. I am curious, is this above and beyond the Liberal plan or does it replace it?
Update: First things first; the visuals. Stephen Harper appeared with television screens behind him showing "5% GST". This visual will be in all the news cycles that discuss this plan and you immediately what the plan is - even if you can't hear the story. Good.
In announcing the cut in GST Stephen Harper reminded people of the broken tax promises of Premier Dalton (I will not raise taxes - well let's call it a premium) McGuinty and the broken dropping of the GST promise by Jean Chretien and Pal Martin (who called the GST regressive and unjust). This positioning plays right into the mainstream Ontario voter. Again smart.
The GST will go to 6% immediately and then you could call it "five in five". I am not sure why it takes 5 years to do everything...My math above may not have been correct but it gave the right result - a family of four making $60,000 will keep an additional $400 of their own money. Mr. Harper said you will see if every time you shop and claimed that cutting the GST is the best way to give progressive, broadbased tax relief. According to him the government collects twice the amount of GST now than they did when it was introduced. "Do you make twice as much money as you did then? Do you see twice the services?".
Mr. Harper also got into the technical aspects of the GST. This cut is not intended to boost productivity. Those programs will be announced later in the campaign. This tax relief is intended to be highly visibly, progressive and broadbased and something that will very difficult to reverse.
Above and beyond all of this it is coherent with the entire program that the Conservatives are creating - accountability
and transparency.
Update II: The following is from the Conservative press release.
...Harper observed that while the Liberals were in power the amount of GST taken from Canadians has doubled, from $15.9 billion to $31.8 billion. The increase exceeded inflation and outstripped growth in people’s earnings. Were the old Manufacturers’ Sales Tax in place, it would only generate $24 billion, far less than the Liberals are taking from Canadians with the GST.
Meanwhile, the Liberals have spent money on themselves and their friends, and wasted billions of taxpayers’ dollars. The total federal surplus was $63 billion during the last eight years and is projected to total $55 billion over the next six.
The Conservative Party opposed the Liberal tax package in Parliament. Reducing the GST is one part of the Conservative plan to reduce taxes for all Canadians. We will deliver some additional targeted tax cuts, and will deliver additional broad based tax relief when affordable.
...“This will be a tax cut that you will see every time you shop, tax relief that you experience, a tax break that no politician will be able to take away without you noticing.”
Update III: Readers of CTV.ca seems to approve of the move with 48% voting that a cut in GST is their preferred method of tax relief. (so far anyway)
