Harper touts reduction in GST

The Canadian Conservative government is good at more things than just controlling the press; they follow through with their promises. At least the ones that suite their vision of Canada. [ q url="http://www.thestar.com/article/289875"]Prime Minister Stephen Harper got an early start trumpeting his own horn today by re-announcing a long-anticipated cut to the GST that was to go into effect after he rang in the New Year at his official country retreat at Harrington Lake, Que.

But while revellers across Canada would pay less tax Tuesday when they got their New Year's Eve bill, Harper said he'll be keeping watch on the looming storm on Canada's economic horizon.[/q]

Yesterday afternoon, while walking down Robson street, I was stopped by a reporter for Fairchild TV and asked whether the GST reduction would affect my spending. "Not really, except for big ticket items like cars or electronics (neither of which I'm in the market for)," I said.

But my real issue with this tax cut as apposed to a reduction in income tax is that the GST reduction is only actualized when you purchase something. It does not encourage saving, rather spending. And with the current economic woes threatening our neighbours to the south where consumer debt is at record levels a tax break to encourage saving rather than spending seems more appropriate. The GST reduction however is ideal from the government's perspective, especially a minority government that could face an election at any moment ( in theory at least), as it will increase economic activity and 'pump' the numbers so the government can claim that the economy has grown.