Canada - GST cuts don't benefit many

It's interesting to listen to the rhetoric coming from the federal Conservatives these days. Apparently, we're supposed to believe that the one per cent reduction in the Goods and Services Tax aired in last week's mini-budget will be of considerable benefit to the average Canadian.

A little math suggests otherwise.

Consider an individual with a salary of $30,000 - about the average annual income in this part of the world.

For the most part, there's a general acceptance that accommodation costs account for one-third of most family spending. Whether one is paying a mortgage or rent, GST is not applicable.

So of that theoretical $30,000, we now have $20,000 to deal with.

For the sake of argument, let's assume that half the remaining $20,000 goes towards food, savings and other non-GST taxed items.

That leaves $10,000.

And one per cent of $10,000 is but $100.

Even being generous, and assuming an individual earning $40,000 spends $20,000 on GST-eligible purchases, the Conservative plan trims results in $200 savings annually.

That $200 saving is hardly a big impact to the average Canadian.

We wonder why the Conservatives didn't offer a greater reduction in personal income taxes - something desperately called for by an overtaxed Canadian populace.

There is, however, a likely explanation. It takes little effort to formulate the suggestion that the GST reduction is liable to have a far greater benefit on the spending of large corporations. Next to salaries, the biggest expenses to most businesses rests in GST-eligible consumables such as electricity, gas, and raw materials.

By hiding that GST-related perk in the guise of helping the average taxpayer, perhaps the Conservatives have slipped a business tax break past us all, in a manner that won't hurt the Conservative chances of obtaining the precious majority they so dearly seek.