PM kicks off final GST cut at electronics store

Harper, with Finance Minister Jim Flaherty, announced the reduction of the goods and services tax to five per cent at a Mississauga electronics store this morning.

"The two-point reduction will save the average working family hundreds of dollars per year on day-to-day purchases, not to mention hundreds more on a new car or thousands on a new home," Harper said.

It was the same store Harper visited when he announced his intention to reduce the goods and services tax from seven to five per cent within five years, before being elected prime minister two years ago.

Harper first cut the GST to six per cent last year and said today the drop to five per cent would go into effect on New Year's Day.

"At midnight tonight we will deliver on that promise three years ahead of schedule," Harper said.

The announcement completes one of his major campaign issues during the 2006 federal election.

John Williamson, of the Canadian Taxpayer's Association, said the combined two percentage point cut to the GST will save Canadians between $10 and $12 billion in 2008.

"And for your typical household across the country the combined saving is between $300 and $400 a year. So it is a welcome tax cut and it's one that I think most Canadians recognize is going to be helpful," Williamson told CTV Newsnet.

"And I think more importantly than that, because the economics can be questioned, but it's one that was important because the government promised they would cut the tax to 5 per cent and now they've done so."

The leaders of every federal opposition party have said they expect an election to be called some time this year.

Harper said the cut is a permanent tax cut for all Canadians, and that the GST rebate will be maintained for all low-income Canadians.

Williamson said that's simply not true. He said the GST cut is "not great policy, but it's not bad policy" either because at least $10 billion will be returned to consumers.

"When the GST was implemented in the early 1990s people were saying it was a harmful tax on the poor because it disproportionately hit them, which was true for a bunch of reasons, actually," Williamson said.

"So now to turn around and say somehow that cutting the GST is not going to help the poor is absurd logic and is not good economics as well."

Canadians were originally hit with the GST in 1990 by Brian Mulroney's Conservative government. Jean Chretien's Liberal party promised to scrap the tax, but changed its mind when in government.

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Kris
said
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As much as people may like the aesthetics of a sales tax cut I would agree with those that say consumption taxes are not the best ones to cut if you're looking for real tax relief. Income taxes are the way to go but I doubt we'll see much more progress on this front beyond the 15% rate it's at currently.

Kevin
said
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It's nice to have a government that follows through on a promise instead of governing by the media or polls. As a Albertan that survived Klein I understand accountability; like what he did or not, a promise is a promise. Good luck Mr Dion! Try to spin this one.

H. T. Schmerdtz, Kelowna
said
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It's time Ottawa recognize the GST for what it is; regressive. For Williamson to admit the tax unfairly impacts the low income is surprising but gratifying, if a little late in the game. Maggie Thatcher and Ronald Reagan helped the world recognize a regressive tax's power to throttle an economy, it is about time we did as well.

Mark
said
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"I'll axe the tax"
-Jean Chretien

Then what did he say? "We miss understood him"...and that tax stayed.

At least with Harper I have evidence that the man delivers on a promise.

Ask about such a thing to Chretien, Martin and McGuinty.

He's still got my vote.

eskiefan
said
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The unfolding of the new year will reveal whether the Harper tax cuts and other changes will be beneficial as intended. I'm optimistic and look forward to seeing that process. Here's wishing everyone a Happy and Healthy New Year and hoping the changes will assist in making the year more prosperous for us all.

Jeff S.
said
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Can you honestly remember any other Prime Minister in living memory that followed through with the vast majority of his promises? I sure don't!

I know that Harper did a flip-flop on the income trust issue, but that's about the only area you can criticize him for when it comes to keeping (or making all attempts at keeping) the promises he made in the last election campaign.

I definitely believe that he deserves the benefit of the doubt next time around when it comes time to vote in a majority government. Especially considering the poor alternatives!

MH from Ontario
said
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This doesn't make me wanting to shop. This is so-called saving because you have to buy in order to see small saving in year-end. Time for Harper government to go. I rather see lesser tax being take out of my pay stub.

MB
said
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"Many critics and economists say that the GST cut is bad economics, and less effective than other tax cut options. Others believe the cut will disproportionately benefit wealthy people who make more expensive purchases."
The general Public is not aware of the implications stated in the above statement, please take time to understand what it means & you will agree that it GRANDSTANDING by the Conservative Gov't.

Kriilin Namek
said
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The GST cut benefiting the wealthy is misleading in that wealthy people spend proportionally less and usually have other methods to avoid taxation than do the poor. I personally would rather see a high consumption tax, and low income taxes, but I earn a good salary.

Alex MTL
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Thanks harper. Now, in order to save $300, I have to spend $30,000. Really smart there buddy.

I guess you forgot what REALLY drains the wallets of canadians, the income tax.

But I guess you don't care about anyone but the rich right since they are the only ones who will benefit from reducing the GST. Gee, sounds familiar, like a certain president the world is currently groaning and moaning about.

Sean Calder
said
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"Others believe the cut will disproportionately benefit wealthy people who make more expensive purchases."

That's both true and untrue. It's true that people who spend more will save more, but it's hardly a disproportionate benefit. After all, in order to get the higher savings, they have to spend a proportionate amount more, and are still paying a proportionate amount more in taxes compared to those making multiple low-end purchases.

People who can afford to make multiple high-end purchases are putting that much more money back into the economy (creating jobs, supporting the tax base etc), thus supporting the programs and services provided by the Federal Government.

No matter how you look at it, everyone will save 1% on their total taxable purchases, regardless of how much or how little you spend. 1% is still, and always will be 1%. How much you save will depend on how much you're willing and/or able to spend.

Normy
said
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I am sure they could have cut elsewhere but I don't think anyone is going to complain about a cut in the GST.

Wes
said
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I appreciate the fact that the government carried out an election promise. If the government had done anything else they would have been accused of breaking a promise. I understand that the GST raised the revenue needed to stop deficit spending in the 90's, however it has served its purpose and can now be reduced.

Kevin
said
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This is good news for families struggling to put clothes on their children or saving up to buy winter tires or any of the thousands of other things more wealthy Canadians buy without a second thought. When moneys tight every little bit helps.

JACK E. CALGARY
said
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THE CONSERVATIVES ALSO BROKE AN ELECTION PROMISE ON TAXING INCOME TRUSTS.3/4s OF CDNS DO NOT HAVE A PENSION AND THE TRUSTS ARE/WERE PROVIDING MONTHLY CASH FLOW TO PAY THE BILLS. MULRONEY TRIED TO "FIX" THE OAS AND SENIORS REVOLTED. SENIORS WILL EXPRESS THEMSELVES ON TRUST TAXATION AT THE NEXT ELECTION.

Mel Kidd
said
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I disagree with the critics. The poor are already benefiting, paying practically nothing and getting back about two hundred dollars each year. With the GST cut, at least money is in my own pocket. In tax cuts, much like our employment insurance and pension, government cut one dollar from one, get back a dollar and half from another. Smokescreen.

Aika
said
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Wow, finally! How late. I probably am in no place to discuss this, but even though I question the true motive to this GST cut, I appreciate it - after all, Mr. Harper HAS promised it (long, long ago). So I guess I'll just enjoy whatever savings that come of this!

Chris
said
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Hey I love any kind of tax break! Every little bit helps. I'm voting Conservative if an election is called.
Sad that the other parties will probably jump the GST back to 7% again.

Scott M
said
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I am sure many will complain it is not enough or it would have been better to have cut income taxes.

My view is that it is a highly visible tax that will not ever be raised lightly and over time, it keeps on having an impact.

Personal tax cuts can be "lost" amid our complicated tax system and one is never sure if the net result is a gain over the long run.

D.W. Hubbard
said
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It seems we have a goverment that says what it means and does what it says, a gst cut will benefit us all. Some might say that it benefits the rich more as they have more diposable income to spend, perhaps, but every t.v. bought every new car, and house will help keep our Canadians workers employed. So to all you Liberal supporters eat your heart out...

Andr� Raymond
said
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Excuse me anyone remember we have a National Debt, if the government did proper economics they would have applied any surplus towards that sum. We have many decades to pay up if ever our National Debt.

Wally
said
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This is wonderful news! As a Canadian who lives below the poverty level, I can now save up to $20 a year on the low-priced purchases I make, which will allow me to completely change my life and get out of this dire situation. Furthermore, I can now sleep comforted that the people of means in this country will be contributing to the programs and services I need to live even a comfortable existence, because the tax money from their large-scale purchases pays for those programs. Yes, thank goodness for Harper, healing the country! Bless that forward-thinking man, who cares more for the people than the vote, who is healing my wounds...

Woohoo
said
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1000$ in savings sounds good to me. but even better to my parents who have 5 kids living at home. Glad to have a government that keeps its promises.

Dixie from Alberta
said
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What a refreshing change from the previous government - promise made -- PROMISE KEPT. Thank you Prime Minister Harper. I for one appreciate every last little tax cut. Happy New Year Canada.

Susana
said
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Whoopee - I save a few pennies - I am of the poor working class, I'd rather have a big income tax cut...with this GST cut the rich get richer in Mr Harper's neighbourhood while we can maybe afford an occasional Big Mac! Happy New Year!

James
said
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What a joke. Is it any wonder why Harper keeps making these announcements at electronics stores and not places where "real" people shop on a daily basis for everyday goods like a depanneur or a grocery store? You only save with the GST cuts when you buy EXPENSIVE goods. How often do people go out and buy new TVs? How often do people buy new cars? How often do people buy new computers, DVD players, or Printers?

I prefer income tax cuts.

Sunny Day
said
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Nice Photo Op... A family would save "hundreds" but a single who spends $8,000 after Taxes and Rent would save $80?! I'll take it anyway. No car purchase though.

After all it was the PCs who introduced the GST in the first place.
Hopefully, the Government will provide better services given that it has grown under the Conservative Minority.

Vincent
said
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1% reduction... big deal. It is literally a penny on the dollar.

Why are businesses getting a reduction from 22% to 15% but regular Joe's get a 1% GST reduction?

If they really want to impress cut they should cut income taxes as all the economists have recommended.

JoeC
said
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Income taxes should be reduced to zero over a ten-year period, and the GST increased over that same time period to compensate. Our economy is consumption based, and so our taxes should also be consumption based, not income based.

Bill
said
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This is a true tax cut that you can enjoy with every purchase no matter what the value. All too many times you never actually see the tax cut announced because it is mixed in and does not happen till the end of the year. Enjoy and keep them coming.

John
said
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Let's not forget that if you don't buy anything, you don't save anything. A better tax cut would have been to my income taxes. The cut in the GST does not really help the poor at all as most of what they buy doesn't have the GST applied anyway.

Mohamed
said
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Even though I disagree with Mr. Harper on virtually all elements of his foreign policies, I find his internal policies really good. Canadians need more tax cuts as the current taxing level is pretty high. Canada is a wonderful place to live in and a lower taxing level will encourage more buisnesses to move to here. Would not it be great if the total purchase tax (PST+GST) is 5% or less like some American states!. We are still a little bit far from this figure but who knows it may happen one day. Happy new year everyone!.

Less tax = A better Canada
said
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Canadians should be very proud to have a Prime Minister who not only lives up to his word on GST cuts but did so ahead of schedule as he was able to.

Mr. Harper has done a remarkable job in a minority Parliament without the help of opposition who preferred to sit on their hands and be a thorn in his side at every turn which is NOT the role of a good opposition.

Samuel
said
0 0

Tax cuts are music to my ears. But let's not stop at lowering the GST. Dr. Ron Paul, a libertarian minded politician running in the primaries in the states hopes to completely ditch the income tax. Perhaps nobody in Canada remembers, but the Canadian income tax entered during the First World War and has since hung around like that annoying fly you are always swatting at.
Both countries need to get back to small government instead of building imperialist empires and playing god.

Matt F
said
0 0

I cannot believe what I heard today, people were actually complaining about a tax cut! Saying that 1% is not enough. I guarantee that these people would be the loudest opponents of a 1% increase...

Another issue I don't understand is people complaining that this tax cut helps the wealthy... Sales taxes are a regressive tax. They actually impact poorer people more.

If you make $10,000 a month, a 1% savings on your purchases will not impact your life nearly as much as it would if you only made $1000 a month.

Isn't it obvious that those who pay the most tax get the most benefit of a tax reduction?

So please stop complaining about tax reduction. It happens too few times in this world.

JFJ
said
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Quote, "Many critics and economists say that the GST cut is bad economics, and less effective than other tax cut options. Others believe the cut will disproportionately benefit wealthy people who make more expensive purchases."

That is many critics and economists, but not all. So if the cut had been to another form of taxation, then the CTV report would have been virtually the same.

Maybe instead, Harper should have increased a tax just to please journalists.

You guys spend too much time in Toronto. You need to get out and meet real Canadians who are very happy to get a tax cut of any kind.

Jeremy
said
0 0

This tax cut will save you $100 on every $5000 you spend. Spectacular.

duane
said
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Congratulations to CTV for recognizing that Chretien's Liberals promised to eliminate the GST during the 1993 election, but reneged. They bragged for years about how they balanced the budget when they didn't do it at all, Brian Mulroney had done it with no thanks from either the Liberals or Canadians as a whole. And now we have the Liberals in a tie with the Tories? If we elect the Libs again we deserve everything we get!

Chris from Kitchener
said
0 0

I bought a car in 2006 when the first cut came into effect, and that saved me a few hundred dollars, which was nice. However, since I have no plans on making any large purchases this year, the reduction doesn't really mean all that much to me. Saving 20 cents here, and 15 cents there doesn't really add up to much in the grand scheme of things.

Ron Beacom
said
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Why not just pay off the National Debt. 7% 5% who cares. How much money are you going to save. This will not affect people's spending habits. Make it a flat 3% tax. GST rebates are a great way to steal from the GOVT

Steve Murphy
said
0 0

Wow, I save $100. income tax and lose a $100. in payroll tax. I`m insulted and exploited.I see no purpose for this self-serving government. Happy New Year all.

Dave in Que.
said
0 0

Yawwwwwwwwnnnnnnn.Now his buddies in the oil patch can save thousands while most of us might save $150 a year.whooopeeee.

Andre
said
0 0

Many critics and economists say that the GST cut is bad economics, and less effective than other tax cut options. Others believe the cut will disproportionately benefit wealthy people who make more expensive purchases.
1st - are these the same critics that did not want the GST in the 1st place?
2nd - larger purchase gives a higher discount but it is a flat discount and applies to everyone equally, this statement is irresponsible.

Canadian
said
0 0

Is there any better way to begin a new year than with a tax cut?
I don't think so.

Happy New Year, Mr. Prime Minister!

Jeremy
said
0 0

I dislike tax cuts greatly. Sure, I'll save $200 or so this year, but what will happen to social programs. The federal government will have less money to give to the provincial governments, they will have less money to put towards the national debt and they will still give themselves pay raises. I for one, would rather pay an extra $200 a year so that our social programs don't crumble due to lack of funding.

D
said
0 0

Well, It`s better than a kick with a frozen boot...

steve I. C.
said
0 0

Hopefully the manufacturing sector in Ontario will still have jobs so that citizens can afford to make purchases just to see the tax cuts. Only those people that can spend money are getting a tax cut.

J-F (Ottawa)
said
0 0

It's a start, but I would place a much higher value on tax deductions from my paycheck rather then save a few bucks on purchases.

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