As I have pointed out here on many occasions the reduction in a consumption tax like the GST does little to put money in Joe and Jane Canuck's pockets. It is a populist illusion to cover for the real tax cuts the Harpocrites gave to big business.
NDP Leader Jack Layton said the GST announcement and other Conservative tax cuts will do little to increase wealth in Canada. In an end-of-year interview, Layton noted that the tax cuts could widen the gap between rich and poor, while the average family could see higher property taxes, post-secondary education fees and other bills."Those with the highest salaries - the millionaires, the big banks, the (profitable) corporations... The ones that don't need the help - are going to get the most help; the oil and gas companies in the tar sands, continuing to get subsidies as well as a big boost from the corporate tax cuts," Layton said.
Patti Croft, chief economist with the investment firm Phillips, Hager and North, said anyone making big-ticket purchases will benefit from the consumption tax reduction. But, she said: "In general most economists would prefer a cut in income taxes. It's a more efficient way to reduce the tax burden. By cutting the GST, hopefully it causes Canadians to spend more."
Ottawa realtor Duane Leon, however, predicted that even though the cut could shave thousands of dollars off the price of a newly built home, there would be little impact on the real estate market. Many builders have already announced that price increases in the thousands of dollars for new construction that will take effect early in the new year, he said, adding this will offset any benefits to buyers from the GST reduction.
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