Jack Layton has opposed the conservatives proposed GST cut on the basis that ‘cutting the GST doesn’t help protect health care, won’t deliver a single nurse, will not build a single unit of affordable housing,’ etc. He went as far as to say it was wrong, because it could affect health care.Â
In reality, a GST cut is the only form of tax cut that will address Jack’s concerns.  Most of the areas that Jack mentioned must pay the full GST on any taxable purchases, but they are unable to recover all of them as input tax credits. Thus a cut of the GST rate will free up more cash. A very quick analysis reveals the following:
- Public Health Administrations, universities, and schools pay the GST on their purchases, and receive a fraction of it back. Cutting the GST will reduce many expenses and capital costs, enabling more workers to be hired.Â
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New residential housing is subject to the GST less a possible rebate, thus cutting the rate will both reduce the cost per unit and enable more to be build.Â
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Residential landlords must pay GST on their purchases and can not claim it back, so cutting the rate will reduce their costs. This will either be reflected in the rental rates or provide additional incentives for building new units.Â
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Crown corporations in the insurance business will have both their claim and operating costs reduced, and hopefully pass on the savings to the consumer.
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Management fees paid by mutual funds are subject to GST, so reducing the GST will allow seniors a more prosperous retirement.Â
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Cutting the GST may mean I leave a larger tip for my waitress, it will certainly reduce the cost of her purchases, allowing her to purchase more.Â
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Many taxable benefits have the GST added to them, so it will reduce those worker’s taxable income, and save them tax at their highest marginal rate.
I must add that the idea of cutting the EI rate, a favorite Conservative cause for years, will have an even larger effect.Â
The NDP endorsed the idea of cutting the GST prior to it becoming conservative policy. I saw one example of this in “Dispatches from the Socialist Gulag�, and encourage my readers to follow the link.
In addition to the above example, I also quote Mr. Peter Stoffer, NDP from Hansard:
I respect the member for Saanich—Gulf Islands as a former fisheries committee member. He never once mentioned the dreaded GST which all Canadians hate. Would he not join us in the New Democratic Party, not physically but in terms of policy, in reducing the GST? A break on the GST would be the fairest tax break for every Canadian from coast to coast to coast regardless of income.
and Hon. Lorne Nystrom (NDP):Â Â From Handard
The whole tax system has to be made fairer and more progressive. I think the GST is among the most regressive of all taxes, except for the GST tax refund for some of the poor people in the country. It is a very regressive tax because it becomes a flat tax.
again in the same speech:
In my opinion, the GST should be scaled back as a first step.
This page, from Library and Archives Canada’s cache of NDP election material from the 1997 election, states that “Alexa McDonough and Canada‘s NDP will fight to reduce the GST and to phase it out.â€?
Why is it that cutting the GST seemed like a great idea when the NDP introduced it, however when the conservatives bring it up, it is the ‘wrong idea?’
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