Wednesday, April 12, 2006

Coming Soon to a Cash Register Near You


The federal government has confirmed that the proposed GST cut will be included in the upcoming budget.

Hopefully it won't be funded by cancelling the Liberal government's previous income tax cuts.

To give with one hand and take with another will not, I suspect, make taxpayers applaud.

8 comments:

Mike Stefaniuk said...

Adam, I want to direct you to a paper by the Fraser Institute (perhaps you've heard of them):
http://www.fraserinstitute.ca/admin/books/chapterfiles/Dec05ffcuttax.pdf#search='marginal%20efficiency%20cost%20%20fraser'

Basically, it looks at an OECD study that calculated the marginal efficiency cost of various taxes (check the article for various figures).

One thing worth noting is that the GST has the lowest of all MECs and the income tax has a higher MEC.

Why does the CTF applaud the reduction of what is a very efficient tax that provides a good source of revenue?

Samra said...

They don't seem to be applauding taking away any tax cuts at all. Not sure what you were reading.

Mike Stefaniuk said...

Samra, I don't think you were reading my post very closely. What I am questioning, is why the CTF is in favour of a GST cut when it is clearly a very efficient tax economically speaking? If the CTF is interested in promoting economic development, should they not instead be pressing that the funds used for the GST cut be used to cut a more inefficient tax instead? I don't think we need a tax cut, but at least the CTF's argument would have more merit if they for example, argued that instead of a GST cut, those funds be used to further cut income taxes.

samra said...

Again you misread the original post, the CTF is questioning why the government is taking away the Liberal tax cut to implement the GST tax cut since the net benefit to taxpayers is nearly the same.

As for which cut is more 'efficient' there are arguements and counter arguements both ways. The CD Howe Institute for instance gives a pretty convincing arguement on why a GST cut is better than just the 1% savings would lead you to believe.

http://www.cdhowe.org/pdf/ebrief_26.pdf

sask.taxpayers federation said...

Cutting the GST scores more political points. People think the Tories know what they're doing. Time will tell.

samra said...

I'm surprised the NDP'ers here don't favor cutting a regressive tax like the GST over an income tax.

From Wikipedia:

"The "Value added tax" [GST] has been criticized as the burden of it relies on personal end-consumers of products and is therefore, as any sales tax based on the consumption of essentials, a Regressive tax (the poor pay more, in comparison, than the rich)."

Sask.Taxpayers Federation said...

The Right wingers don't like us middle class(Baby Boomers) and it shows. Cutting the GST is cheaper than a general tax cut. They are still on the honeymoon. Wait till one of their MP's blows their cover. He's trying to censor all news coming out of the PMO's office. Harper knows he has some loose cannons in his caucus.

sask.taxpayers federation said...

I'd put a luxury tax on all SUV's. I'd slow semi trucks down to 100kmh on all 2 lane highways and 90kmh on single lane highways. Semi trucks are ruining Sask grid roads.

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