I came across an interesting article in the Edmonton Sun, written by Lorrie Goldstein and Rob Granatstein that discussed the reduction of the GST to 5%, effective Jan 1st 2008. In the article, Lorrie makes arguments in support of the GST cut, while Rob opposes it, using the same arguments put forward by the Liberals and the NDP.
It makes me wonder why those on the left of the political spectrum are so vehemously opposed to tax cuts. Everyone benefits from tax cuts, both rich and poor. Whenever a tax reduction is made, we get to keep more of our money and that extra money in our hands helps to drive our economy creating more jobs and opportunities for everyone.
This exchange between Lorrie and Rob intrigued me the most:
Granatstein: What ordinary Canadians know is they have to spend money to get any benefit out of the GST cut. And it helps the rich more than the poor. The more you spend, the more pennies you save. A GST cut doesn't help me pay my mortgage, doesn't help me put anything into my dismal RRSP, it doesn't let me decide where I want to spend it. And resale homes are GST exempt. So I guess that's out, too.
Goldstein: You also have to earn money to get any benefit from an income tax cut. What's your point? Whenever provincial and federal governments cut income tax rates, people who are opposed make exactly your argument -- that the cuts amount to only a few dollars a week. Fact is, most of them don't believe in making one tax cut over another cut, they just don't believe in any tax cuts. I do. I believe people know how to spend their own money better than government.
Did the Tories do us a favour by reducing the GST, or was it just opportunistic politics? (Edmonton Sun)
Friday, December 28, 2007
Did the Tories do us a favour by reducing the GST, or was it just opportunistic politics?
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9 comments:
There is no reason that those who oppose the cuts can't give their extra money to what ever charity they want too. Why does all charitable giving in Canada have to be involuntary.
If you need to ask this question you shouldn't be writing about politics.
The arguments against the GST cut - that it favours the rich more than the poor - leave out one central tenet of economics: poor people spend more, as a percentage of their income, on consumer goods and food than the rich do, who are more likely to save it. Thus, those who spend more as a percentage of their income will benefit more.
As well, if it really favoured the rich, then why did the NDP propose the exact same tax cut in the 2000 election?
Someone should let Granastein know a bit about the real world. 'The poor' aren't paying mortgages, they are renting. And they certainly don't stress about how to save up for RRSP's.
They are still buying toilet paper and gas for the clunkers tho.
Is he having a pity party all by himself?
Income tax cuts have the side-benefit of making labor in Canada cost less, both for Canadian and International employers, which makes it more attractive for companies to employ people here.
The GST cut, on the other hand, makes imported goods just as proportionally cheaper as Canadian-produced goods, encourages more consumption, but does nothing to encourage employment of canadians over other options available to employers.
So there is a difference.
How does lowering income tax rates (which I pay with MY earned money) help lower labour costs? The employer would still be paying out the same amount to myself even if my tax rate was reduced to zero.
David's company must be like mine; feeling my money is their money.
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