Prime Minister Stephen Harper wants Canadians to tell our respective MPs that we support the Tory plan to cut the GST rather than the income-tax cuts introduced by the previous government. Speaking in St. John’s yesterday (as reported in The National Post), Mr. Harper said:
To ensure that it [a 1% cut to the GST] becomes a reality, Canadians like yourselves must write, call or e-mail MPs to let them know that it isn’t just our priority, but it’s your priority as well. To be frank, to hinder the implementation of these long-overdue tax-relief measures would be unconscionable.
I, for one, would do no such thing. In fact, I plan to write to my MP (who is a Liberal) that I strongly prefer to keep the cuts to my income taxes. To see why, let’s run some numbers.
The income tax cuts work out to roughly $350 per taxpayer. If you are a two-income household earning $35K each, the income tax cuts are clearly better as they put $700 in your pocket. Even if you were a single individual making $35K per year, to get an equal benefit with the cut in the GST you would have to spend more than your entire annual pre-tax income, which is not a sustainable situation.
Now consider the spending habits of Canadians. Assuming that the entire spending food, shelter and personal taxes are not subjected to the GST and the rest of the spending is, a cut in the sales tax would save the lowest income quintile household $91, the second quintile $167, the third quintile $239, the fourth quintile $337 and the highest quintile $538 respectively.
The cut to the GST is better only for two groups of Canadians: those who have no or very low income and those who are really wealthy. So, how exactly does giving a break to really wealthy Canadians buy Porches and yachts square with the Tory claim that they stand up for “working” families?