GST vs Income Tax cuts
Today Conservative leader Stephen Harper announced he would lower the GST to 5% if elected a move which bought sharp criticism from many analysts. Liberal leader Paul Marin has announced that he would cut income taxes in lieu of a GST cut.
Cutting the GST would have some benefits to Canadians, it might prompt spending to increase slightly yet overall it won't have much of an effect on the economy in the scheme of things. The only main incentive is the fact that the additional dollars are more likely to be spent in Canada rather than south of the 49th parallel.
On the other hand, cutting income taxes would put more cash into people's bank accounts which could either prompt Canadians to spend their extra "earnings" or to save them for a rainy day. An income tax decrease would provide the same net but would provide a more fair and balanced way to provide tax relief.
On the third hand, why not restructure the GST. Adding additional exempt items to the list, bicycles being one item that comes to mind would permit Canadians to buy "essentials" while taxing "luxury goods."
Of course, would we be better off keeping current tax levels and reducing debt. Sure, I would like a few extra bucks in my wallet, yet putting Canada in a stronger economic position might be best for us all.
Harper's strategy might buy some additional votes this time around, but in the long term, it's not in Canada's best interest.
Cutting the GST would have some benefits to Canadians, it might prompt spending to increase slightly yet overall it won't have much of an effect on the economy in the scheme of things. The only main incentive is the fact that the additional dollars are more likely to be spent in Canada rather than south of the 49th parallel.
On the other hand, cutting income taxes would put more cash into people's bank accounts which could either prompt Canadians to spend their extra "earnings" or to save them for a rainy day. An income tax decrease would provide the same net but would provide a more fair and balanced way to provide tax relief.
On the third hand, why not restructure the GST. Adding additional exempt items to the list, bicycles being one item that comes to mind would permit Canadians to buy "essentials" while taxing "luxury goods."
Of course, would we be better off keeping current tax levels and reducing debt. Sure, I would like a few extra bucks in my wallet, yet putting Canada in a stronger economic position might be best for us all.
Harper's strategy might buy some additional votes this time around, but in the long term, it's not in Canada's best interest.
posted by Andrew at
5:44 PM
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