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Canada - Flaherty issues warning over GST

Federal Finance Minister Jim Flaherty is warning that Canadians may not get a GST cut on Jan. 1 if the NDP keeps blocking the Harper government's effort to pass legislation enacting it before the Christmas break.

But New Democrats say the Conservatives are making empty threats because there's no obstacle to lowering the goods and services tax to 5 per cent from 6 per cent as planned.



 

NDP finance critic Thomas Mulcair said the Tories are trying to goad his party into supporting the bill, which also offers $6-billion in annual tax cuts for corporations - reductions that the New Democrats resolutely oppose.

"He's full of prunes," Mr. Mulcair said of Mr. Flaherty. "He's trying to intimidate us."

Yesterday, Mr. Flaherty stood in the foyer of the Commons and said that NDP intransigence could frustrate plans for retailers to trim the tax.

"Now we have the NDP blocking progress of the bill right now in the House of Commons. That does put into jeopardy the GST cut and this is not a good time for that," Mr. Flaherty warned yesterday.

"The NDP is trying to deny this tax deduction for Canadians."

But it's not clear exactly what could hold up the cut.

Parliamentary tradition doesn't require that underlying legislation be passed before a tax cut takes effect.

Long-established protocol in Ottawa allows the Canada Revenue Agency to administer proposed tax cuts as if they were law as soon as a document called a ways and means motion is tabled in the Commons - and this was done last month.

Mr. Flaherty's office later said that the minister was trying to say that retailers may not feel comfortable cutting the GST to 5 per cent if the legislation isn't passed.

But the Retail Council of Canada said members will be ready to cut the GST on Jan. 1. Its members account for two-thirds of general merchandise retail sales and have 40,000 outlets across Canada.

"Retailers successfully implemented the last GST cut and will be ready, come Jan. 1, 2008, to do it again," said Kim Furlong, vice-president of federal government relations at the Retail Council of Canada.

The House of Commons is scheduled to rise Friday and isn't due back to consider legislation again until Jan. 28. The legislation in question, C-28, was introduced in the Commons on Nov. 21, but is now at third reading. It must still go to the Senate and be passed there before it receives royal assent.

Source : Globe and Mail - Canada, dated 12/12/2007

 

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