I was going to do a post today about the current allegations that Ann Coulter plagarized substantial portions of her new book, Godless, but found it hard not to engage in the same kind of ad hominem dialogue that she uses to justify her arguments (such as noted here, where she tries to prove intelligent design by attacking liberals rather than using scientific facts). Attacking someone personally isn't going to get anyone anywhere.
So instead, I'm going to talk a bit more about the GST cut from 7% to 6% (I went into detail the other day as to why I think now was a bad time to introduce it).
The last few days, we've seen the Harperites bemoan the fact that many businesses and cities are not passing on the savings from the GST to consumers. Parking meter and lot fees are still the same, as are fares on VIA Rail. And we haven't seen vending machines drop the price of a can of pop by a penny, because those machines don't take maple leafs to begin with. Matter of fact, at the restaurant chain where I work, there was a broad-based increase in prices that more than offsets the GST reduction.
Blame that on higher fuel prices, as well as a quirk in the free trade treaty that allows processed food companies to buy frozen milk from the States while restaurants must buy fresh -- and at rapidly increasing levies set by the milk marketing board.
It's no different in other industries. Their costs aren't going down either. Someone has to absorb the cost. That's usually the consumer. So they're figuring a miniscule savings isn't worth the trouble of converting hundreds or even thousand of prices where the GST is already built in. Several small business owners tell me they've had to reprogram their computers or cash registers so the new tax would "take." That goes into overhead, which means -- naturally -- higher prices.
This reminds me of 1991, when the GST was introduced in the first place. Although it was strategically a smart decision, the Mulroney Government made the mistake of printing out a "meat chart" of how much people should have expected to save when the old hidden tax was removed. Naturally, people were running into furniture store and car dealerships wanting their 13% price cut. It wasn't going to happen. In fact, because in part of the massive conversion costs of having to collect two sales taxes instead of just one, the GST wound up fueling inflation and right in the middle of a recession and the first Persian Gulf Crisis -- in fact overall, prices tracked upwards about 6.5% that year.
If the Harper government wanted to give more money back to consumers, they should have increased the GST credit by about $14 a month, per person -- or increased the basic exemption by $1100 rather than cutting it by $400 as they did. That would have pumped $5 billion back into the economy and would have been more than made up by trickle-up benefits as ordinary people -- not just fat cats -- made more durable good purchases.
Oh, and another thing: The fact that the GST is harmonized with provincial taxes in New Brunswick, Nova Scotia and Newfoundland-Labrador: It won't affect them too much since the provincial portion of 8% is untouched. Québec is a different story. Since their provincial sales tax (the TVQ) cascades on top of the federal rate, the 7.5% rate was really 8.025%. With the federal cut to 6%, the provincial tax dropped slightly as well -- to 7.95%. Since they weren't about to raise it on people, they raised corporate taxes instead. Which flows through to consumers in the form of -- higher prices. So even people who buy Québec produced or componented products in other provinces will indirectly pay them.
Overall, this is not smart policy. Even minor improvements in the GST credit and that other very effective negative income tax, the Child Tax Benefit -- rather than doing what Harper did, destroying it and making it partially taxable -- would have been much more effective.
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