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"The
two-point reduction will save the average working family
hundreds of dollars per year on day-to-day purchases, not
to mention hundreds more on a new car or thousands on a
new home," Harper said.
It
was the same store Harper visited when he announced his
intention to reduce the goods and services tax from seven
to five per cent within five years, before being elected
prime minister two years ago.
Harper
first cut the GST to six per cent last year and said today
the drop to five per cent would go into effect on New
Year's Day.
"At
midnight tonight we will deliver on that promise three
years ahead of schedule," Harper said.
The
announcement completes one of his major campaign issues
during the 2006 federal election.
John
Williamson, of the Canadian Taxpayer's Association, said
the combined two percentage point cut to the GST will save
Canadians between $10 and $12 billion in 2008.
"And
for your typical household across the country the combined
saving is between $300 and $400 a year. So it is a welcome
tax cut and it's one that I think most Canadians recognize
is going to be helpful," Williamson told CTV Newsnet.
"And
I think more importantly than that, because the economics
can be questioned, but it's one that was important because
the government promised they would cut the tax to 5 per
cent and now they've done so."
The
leaders of every federal opposition party have said they
expect an election to be called some time this year.
Harper
said the cut is a permanent tax cut for all Canadians, and
that the GST rebate will be maintained for all low-income
Canadians.
Many
critics and economists say that the GST cut is bad
economics, and less effective than other tax cut options.
Others believe the cut will disproportionately benefit
wealthy people who make more expensive purchases.
Williamson
said that's simply not true. He said the GST cut is
"not great policy, but it's not bad policy"
either because at least $10 billion will be returned to
consumers.
"When
the GST was implemented in the early 1990s people were
saying it was a harmful tax on the poor because it
disproportionately hit them, which was true for a bunch of
reasons, actually," Williamson said.
"So
now to turn around and say somehow that cutting the GST is
not going to help the poor is absurd logic and is not good
economics as well."
Canadians
were originally hit with the GST in 1990 by Brian
Mulroney's Conservative government. Jean Chretien's
Liberal party promised to scrap the tax, but changed its
mind when in government.
Source
: CTV.ca - Canada, dated 31/12/2007
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