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Re: Harper wants a reduction in the GST (and why reducing the GST is not a good idea)

Just wanted to metion a couple things that came up to my mind while reading ur argument... I could be wrong, i prob should look more into it but im too lazy

quote:

Originally posted by rabbitjoker 2) Lowering GST will not increase personal savings or reduce personal debt.

Yup, it is true that GST does help the economy. But thinking in a two-period closed economy macro level, it would all depend on how the consumer chooses to spend the increase in disposable income.

quote:

Lowering the GST will encourage increased consumer spending (and increased inflation).

I think that an increase in consumer spending will not technically lead to a increase in inflation. Who controls inflation has you've said is Bank of Canada by adjusting the interest rates (Low Vs. High interest rates)... a increase in consumer consuption only reflects the increase in disposable income, it could potentially lead to an increase in interest rates (becuase of the increased money flow) which would then lead to decrease in the money supply (because of high interest rates) therefore if anything decreasing or keep Inflation constant.


Again... im possibly wrong

quote:

Originally posted by malek intrests on the mortgage of the house you live in is tax deductible??!?! oMGBBQ

If it is your primary residence, no. If it an investment property (a property used to generate income of some sort), yes. One deducts the interest as an expense against the income genreated.

quote:

Originally posted by rabbitjoker If it your primary residence, no.

thought so

Again, this GST break will simply offset the price increases in gas and electricity. There will be no inflation. If we were to worry about inflation then we should be worring about Liberal spending.

As one economist put it. "Usually government spending is increased to stimulate the economy. However, our economy needs no stimulation. What the Liberals are doing here is stimulating voting instead."

ahahahahahah Brilliant!

And if we were to take this inflation scenerio a step further and assume it's real, then the Liberals should be on the hook for the tax cuts they just proposed as well. Of course the media and lefties would never dare do that would they?

Re: Re: Harper wants a reduction in the GST (and why reducing the GST is not a good idea)

quote:

Originally posted by Ub3rBreaker Yup, it is true that GST does help the economy. But thinking in a two-period closed economy macro level, it would all depend on how the consumer chooses to spend the increase in disposable income.

Decreasing consumption taxes does not change post-tax income. The benefit is only realized if one continues to consume (spend). Thus the reason why a reduction in consumption tax does not increase consumer savings nor does it decrease consumer debt. Reduction in income tax is not related to consumption - thus it's effects are more directly related to savings and debt reduction.

quote:

Originally posted by Ub3rBreaker I think that an increase in consumer spending will not technically lead to a increase in inflation. Who controls inflation has you've said is Bank of Canada by adjusting the interest rates (Low Vs. High interest rates)... a increase in consumer consuption only reflects the increase in disposable income, it could potentially lead to an increase in interest rates (becuase of the increased money flow) which would then lead to decrease in the money supply (because of high interest rates) therefore if anything decreasing or keep Inflation constant.

You've left demand out of your analysis.

quote:

Originally posted by Jayx1 Again, this GST break will simply offset the price increases in gas and electricity.

engergy costs are not included in the CPI therefore have no direct effect on inflation.

quote:

Originally posted by Moral Hazard engergy costs are not included in the CPI therefore have no direct effect on inflation.

But since all our extra money is going to pay the increases in these things, it wont be spent on other things that may drive inflation. That was my point.

quote:

Originally posted by Jayx1 *THEY* did not implement that tax. The party that did this no longer exists. And yes you are correct about double standards. The PCs were damned when they put in the GST and the Conservatives are damned when they want to reduce it. But hey everyone thought it was a great idea when the Liberals promised to scrap it in their red book promises of 1993. Of course Liberals being Liberals they broke that promise. What else is new?

come on, did you say that first part with a straigh face? :P

Then why did they not just keep the Alliance name and ditch the Conservative one, given that 95% of the MPs were alliance MPs, right? Answer...because they are most definitely tapping into the history of the old Conservative Party (when it suits them).

And you're right, the PCs were damned when they put it in and damned now for suggesting lowering it...but if you're against double standards, then you're against double standards. You can't have it both ways.

i.e. It's a double standard in itself to cry double standard when the Cons are criticized (first for implementing GST, then when they seek to repeal it), yet you invoke a double standard when the Liberals are involved (collectiong too much tax, then giving it back).

so...you either have to allow the Liberals to spend without criticism for over collection...or you have to bash the Conservatives for repealing what they implemented in the first place.

so which will it be?

quote:

Originally posted by rabbitjoker If it is your primary residence, no. If it an investment property (a property used to generate income of some sort), yes. One deducts the interest as an expense against the income genreated.

correct!

quote:

Originally posted by Matt That's a really good idea, kind of like how you would close all your Liberal scandal threads before the Gomery report came out.

PWNED!

Hey I have no problems with Liberal tax cuts. I just find it amusing how they were against them until suddenly the polls suggested that Canadians want them. But how are we to believe that the Liberals will implement them? After all they are the party of broken promises arent they?

As for the PC debate. Im sure there are some who consider themselves the old PC party (those who are from the old PC party most notably) and those who do not. I dont happen to think they are. They are a new party with some elements of the old in it.

Just like Borden's Unionists were a whole new party back in 1918 when part of the Liberal party succeeded the party and joined the Conservatives to form a coalition government under the "union banner".

quote:

Originally posted by MarkT the Liberals are criticized for now spending the money that they "took" from us during the surplus years and are slammed by critics. the Conservatives will reduce the rate of a tax which THEY implemented in the first place, and it's a "good idea"?

The Liberals should be criticized for spending the money they took from us - espically here in Ontario.

The PC's did implement the GST and in fact it is a very good tax and much better than the one it REPLACED - it wasn't a new tax -

If any party had any guts what they should do is decrease the GST but apply it to EVERYTHING, including basic food items etc. The simplier the tax, the harder to avoid, the better. Lower it to 4%, put it on everything and give more and bigger rebates to the people who need it.

Will anyone have the balls to do it? No.

i also think we should have a flat tax that doesnt penalize sucess.

I also do not believe in inheritance tax. Why should i pay tax on something my relatives paid tax on in the first place? Thats just wrong.

quote:

Originally posted by musicsnob_NOT The PC's did implement the GST and in fact it is a very good tax and much better than the one it REPLACED - it wasn't a new tax.

Good point.

It replaced the out-dated 13.5% Manufacturers� Sales Tax (MST), which had been in effect since 1924. The MST was generally levied at a rate of 13.5%, but was also highly complex in that it was subject to no fewer than 22,000 special provisions and administrative arrangements.

http://canadianeconomy.gc.ca/englis...my/1991gst.html

Just think of how much business will save by not having to pay as much GST on supplies and equipment etc.

Eventually in a competitive world, those savings will be passed on to the consumer.

quote:

Originally posted by Jayx1 Just think of how much business will save by not having to pay as much GST on supplies and equipment etc. Eventually in a competitive world, those savings will be passed on to the consumer.

GST is already refundable to the business, when they file their taxes. So no savings.

quote:

Originally posted by Jayx1 Just think of how much business will save by not having to pay as much GST on supplies and equipment etc.

Come on Jay! You own a business and know exactly how this works. The GST companies pay is washed with the GST they collect. Business will save nothing by having reduced GST.

Re: Re: Re: Harper wants a reduction in the GST (and why reducing the GST is not a go

quote:

Originally posted by rabbitjoker Decreasing consumption taxes does not change post-tax income.

im not talking about post-tax income... im talking about disposable income, different things.

quote:

You've left demand out of your analysis.

How would demand affect my analysis?


EDIT: Besides... what u really should be considering here is the possibility of increase in the budget defit, in debt, and the decrease in investment that could go into the healthcare, public education and other gov. programs. Inflation is not the worst thing that could happen

quote:

Originally posted by rabbitjoker Good point. It replaced the out-dated 13.5% Manufacturers� Sales Tax (MST), which had been in effect since 1924. The MST was generally levied at a rate of 13.5%, but was also highly complex in that it was subject to no fewer than 22,000 special provisions and administrative arrangements. http://canadianeconomy.gc.ca/englis...my/1991gst.html

Wow, I never even knew that. I wonder how many other Canadians realize that the GST replaced a *higher* and insanely complex tax. Probably very few.

I do think that the Canadian government should eventually reduce consumption taxes, but not before eliminating income tax, paying off the national debt, and privatizing enough government institutions to eliminate the majority of government spending. Consumption taxes should go (to be replaced by a flat tax - haha, as if it would ever happen) but they should be the last thing to go.

quote:

Originally posted by Orko GST is already refundable to the business, when they file their taxes. So no savings.

not always and not for everything

quote:

Originally posted by rabbitjoker Come on Jay! You own a business and know exactly how this works. The GST companies pay is washed with the GST they collect. Business will save nothing by having reduced GST.

You obviously never saw my GST bills.

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