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Time to Scrap the GST, Write to Your MP Now!

ice_dog

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Jan 13, 2002
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As u recall, the Canadian GST is the brainchild of Brian Mulroney. It is also fair to say that GST is a big reason for the downfall of the Progressive Conservative. At one time, the PC had only two seats. MUlroney was public enemy number 1.

In his 1992 campaign, Chretian 'promised' to scrap the GST, but later denied he ever meant that.Rememeber the confrontation between Chretian and the waitress from MOntreal in one of CBC's town hall meeting hosted by Peter Mansbridge? That was more than 6 years ago, I think. Chretian has never forgiven CBC for this 'ambush'.


Obviously, this GST has helped the liberal to balance the budget tremendously, and achieve the eventual surplus. As a matter of fact, the surplus has been running for several years now. Guess Mulroney did the dirty work,but the smart liberal has been getting the credit for balancing the budget

According to estimate, the recent surge in gasoline price at the pump will bring in another 1.5 million GST for the Federal Governemnt.

It is about time for the government to scrap the GST or at least reduce it by half. This is not just for benefiting the 'rich'. It is to give the average joe a break.

Write to your MP now !
 

Svend

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Feb 10, 2005
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I agree.
All sales taxes are regressive because poorer people pay a higher percentage of their income on them. The most poor do get GST rebates but this just creates more bureaucracy.
The NDP has a policy to reduce the GST but not eliminate it. The Conservatives seem to have backed off making any changes. I think the first party to totally get rid of this daily reminder of our anger will do quite well in the next election.
 

someone

Active member
Jun 7, 2003
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Svend said:
I agree.
All sales taxes are regressive because poorer people pay a higher percentage of their income on them. The most poor do get GST rebates but this just creates more bureaucracy.
This is a misconception that a lot of people have. It is true that the poor spend a higher proportion of their “current income” (their income in any given year) on goods and services. However, in terms of “permanent income” (the present value of a person’s income over their lifetime e.g. a doctor is “poor” when he is a student and when he retires but his permanent income is still high) a consumption tax on all goods and services is roughly proportional to income (“roughly” because it won’t be proportional if bequests after someone dies are not subject to the GST). Moreover, it the consumption tax does not cover food or rent (as is the case with Canada’s GST), it is actually progressive in terms of permanent income (the poor spend a higher proportion of their life time income on food and rent). You add on the GST rebate and it is even more progressive.

It is also important to remember that the GST replaces an invisible manufacture’s sales tax that created a greater economic distortion, so it was not really a brand new tax. Moreover, it you get rid of it, you will have to make up the revenue somewhere else.

Other advantages of the GST are that it.

1. Is paid by those who earn income from the underground economy (e.g. even drug dealers and SPs have to pay it when they spend their income.)
2. It has a positive effect on Canada’s terms of trade. Indeed, given the number of countries that have either a GST or a VAT, Canada would be at a disadvantage without it.

All this being said. I realize that people hate it and few are going to be convinced by my points. Still, you might ask why so many countries now have either a GST or a VAT.
 

wollensak

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Jul 7, 2002
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ardbeg
Well Argued

Someone makes valid points in defense of the GST.

The GST, like it or not, is the tool that has allowed Canada to pay down the debt. It is easier to administer than other forms of taxation as well, so the bureaucratic overhead is less. Notice how you never see the politicians dicking around with the GST? It's the cash cow. Also the costs of undoing the thing or changing the rate would probably be horrendous.

We're stuck with it. Other countries have much higher VAT rates than we do.
We of course look at the USA where they don't have any consumption taxes
and feel sorry for ourselves.
 

Svend

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Feb 10, 2005
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I still think any sales tax is regressive, and I'm glad the manufacturer's tax was abolished since it was a job killer.
I can see the point of a consumption tax if we're trying to discourage the use of a product.
We're not stuck with it, there are many options.
I just think we need to come up with a different tax that isn't in our face with every purchase. Whether it's raising the general income tax, putting a small tax on every stock transaction or something else, I'd like to see something else.
 

someone

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Jun 7, 2003
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Svend said:
I just think we need to come up with a different tax that isn't in our face with every purchase.
You could do what most counties do and simply bury the GST in the price.
 

cyrus

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Jun 29, 2003
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I will not support GST unless it replaces the income tax or a big part of it! As IMO any consumption tax is better than income tax; it makes sense from many points of view
1- Every one pays it, poor or rich
2- A drug dealer or a lawyer it doesn't matter either
3- It ties to ones actual purchase power and the will to spend
4- More disposable income encourages more consumption
5- Easy to administrate
With some modifications, the government also could ensure that the have not don't pay as much as those who do have more....i.e., reducing the tax rate on more essentials and increasing it on more luxury & durable goods
The only issue I see is on how to deal with those incomes that get saved in an interest bearing accounts rather than get spent, but I am sure there will be creative ways to take care of that too!
 
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ice_dog

Member
Jan 13, 2002
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someone said:
This is a misconception that a lot of people have. It is true that the poor spend a higher proportion of their “current income” (their income in any given year) on goods and services. However, in terms of “permanent income” (the present value of a person’s income over their lifetime e.g. a doctor is “poor” when he is a student and when he retires but his permanent income is still high) a consumption tax on all goods and services is roughly proportional to inco.....

All this being said. I realize that people hate it and few are going to be convinced by my points. Still, you might ask why so many countries now have either a GST or a VAT.


The underground economy is a legal issue and should be address as such, i.e decrminalize it. The progressive way to gain an advantage in trade is through productivity increase. Prior to 2003, the exchange rate helped the Canadian exporters tremendously, but that's anotheer issue.

To sove these problems by putting the burden on the average tax payer is unfair.

It seems to me that the crux of your argument centers on the premise that 'the end justificies the means'
 

cyrus

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Jun 29, 2003
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ice_dog said:
The underground economy is a legal issue and should be address as such, i.e decrminalize it. The progressive way to gain an advantage in trade is through productivity increase. Prior to 2003, the exchange rate helped the Canadian exporters tremendously, but that's anotheer issue.

To sove these problems by putting the burden on the average tax payer is unfair.

It seems to me that the crux of your argument centers on the premise that 'the end justificies the means'
Yes these are other issues!
As for underground economy being a legal issue, well it is also an economical issue and a huge one too!
 

chd

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Nov 28, 2004
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GTA
The Gst If It Has To Stay
Should Be On Goods Only
The Tax It Replaced The Old Fst
Take It Off The Service Side
It Is Nuts To Pay When Using A Lawyer Or Any Tradesmen
Also There Should Be A Max Amount Per Ltr
That Any Level Of Gov. Gets From Gas
That Way They Do Not Win With Higher Oil
Prices
 

cyrus

New member
Jun 29, 2003
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chd said:
The Gst If It Has To Stay
Should Be On Goods Only
The Tax It Replaced The Old Fst
Take It Off The Service Side
It Is Nuts To Pay When Using A Lawyer Or Any Tradesmen
Also There Should Be A Max Amount Per Ltr
That Any Level Of Gov. Gets From Gas
That Way They Do Not Win With Higher Oil
Prices
One of the main advantages of the consumption tax is its simplicity i.e., lower cost & red tapes thus playing with it too much negate the purpose.
Also it is not a good idea to exclude services or any particular industry unless your intention is to give one advantage over the other! Very very bad idea!
i.e., a purely service economy is a poor economy . . . etc!
 

Don

Active member
Aug 23, 2001
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Toronto
I agree with the others who somewhat support the GST. I rather increase the GST and lower income tax.
 

ice_dog

Member
Jan 13, 2002
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cyrus said:
Yes these are other issues!
As for underground economy being a legal issue, well it is also an economical issue and a huge one too!
My point is that it is about time for our political leaders to show some
leadership, come up with some innovative solution, and set them apart from those tax acountants on Bay Street.

I never said the job of a primer minister is easy.
 

oldjones

CanBarelyRe Member
Aug 18, 2001
24,495
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Besides having to pay it, the GST aspect that irks me most is that it's only added on when I get to the cash, so I never really know how much I'm spending. All because Brian thought it would be a good idea. He said it was so there'd be no secret taxes and aware consumers would be alert taxpayers and demand thrifty governments: a fair enough argument.

But since almost none of us shop by running totals on a calculator, what really happens to me is that I underestimate the add-ons for taxes and buy a bit more than I would if the price included the tax. Great for the merchant, bad for me. To my way of thinking, changing the law so it required inclusion of the GST, instaed of forbidding it would make savvier consumers. Requiring that the total tax paid show as a separate line on the bill would still give us all the info we need to complain about high taxes.

Take a look at your next receipt from a gas station. That's how they've always done it.
 
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someone

Active member
Jun 7, 2003
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ice_dog said:
The underground economy is a legal issue and should be address as such, i.e decrminalize it. The progressive way to gain an advantage in trade is through productivity increase. Prior to 2003, the exchange rate helped the Canadian exporters tremendously, but that's anotheer issue.

To sove these problems by putting the burden on the average tax payer is unfair.

It seems to me that the crux of your argument centers on the premise that 'the end justificies the means'
Not really. My argument is based on a very standard result that every student who has taken a course on the taxation side of public economics learns. Over a person’s lifetime, a proportional tax on income is equivalent to a proportional tax on consumption (I’m ignoring a minor complication concerning the treatment of bequests/ inheritance). This is a very standard result. If you exempt a good that low income people spend a higher proportion of their income on (e.g. food, rent), it becomes progressive. As far as decriminalizing the underground economy, are you really suggesting that the illegal arms trade, child prostitution, etc. be legalized?
 

someone

Active member
Jun 7, 2003
4,307
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Earth
chd said:
The Gst If It Has To Stay
Should Be On Goods Only
The Tax It Replaced The Old Fst
Take It Off The Service Side
It Is Nuts To Pay When Using A Lawyer Or Any Tradesmen
Also There Should Be A Max Amount Per Ltr
That Any Level Of Gov. Gets From Gas
That Way They Do Not Win With Higher Oil
Prices
It is very easy to show that doing so would result in a greater "deadweight loss" from the tax. This is because it would distort the choices individuals make between goods and services. Simple indifference curves analysis that students taking first year economics learn, can be used to show that taxing both goods and services can raise the same revenue at a lower loss in utility to the average person.
 
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langeweile

Banned
Sep 21, 2004
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In a van down by the river
I think Canada should raise their GST and PST to a combined 30%. this way the goverment will have enough money to take care of everybody.
Why stop at healthcare and daycare.?
I think everybody should make at least $50000 per year and the goverment should pay for it.There should be also a goverment funded rebatte program if gasoline prices should get too high.
To make transition easier the goverment should also pay 50% of the cost of a hybrid vehicle.
Guaranteed pensions of 80% of your last income should become standard. If the goverment runs short of money., just raise the taxes again so they can keep up the spending.

This makes perfect sense to me?
 

oldjones

CanBarelyRe Member
Aug 18, 2001
24,495
11
38
langeweile said:
I think Canada should raise their GST and PST to a combined 30%. this way the goverment will have enough money to take care of everybody.
Why stop at healthcare and daycare.?
I think everybody should make at least $50000 per year and the goverment should pay for it.There should be also a goverment funded rebatte program if gasoline prices should get too high.
To make transition easier the goverment should also pay 50% of the cost of a hybrid vehicle.
Guaranteed pensions of 80% of your last income should become standard. If the goverment runs short of money., just raise the taxes again so they can keep up the spending.

This makes perfect sense to me?
Right up there with all your other contributions.
 

Svend

New member
Feb 10, 2005
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It would be about 18 billion, a lot but could be made up with increasing income tax by a small percentage and getting rid of a few loopholes in that system.
That's my opinion, anyway.

I'd also increase the basic exemption, double or triple it so that more poor people aren't paying tax.

Perhaps I'm wrong and people have come around to a general consumption tax?
 
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