@noel.semple7 Every sales tax cut is a tax cut for the rich. Can we afford it?
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The NDP wants to eliminate sales tax on all groceries sold in Canada. So right now, groceries that are considered “basic,” like this litre of milk I just bought, are tax free. But other things you buy at a grocery store like this kombucha are taxed at 13%, just like almost all the other goods and services sold in Canada. Now, we’d all rather pay less tax, but the problem with this proposal is that it’s a tax cut for the rich.
Rich people spend a lot more money on stuff like this than other people do. And if you cut the HST you’re putting money back into their pockets. We’ve got a lot of people who are struggling in Canada. We’ve also got a lot of people who are doing fine and can afford to pay their fair share of taxes. And the government does a lot of things that are crucial to help people who need help, whether that’s the publicly funded health and education systems or social assistance or OSAP or 100 other things.
To give credit where credit is due, the NDP is the reason why a lot of those crucial social programs exist.
So they should understand the importance of taxation revenue to keep them funded. And right now we’re falling short. The federal government has an annual budget deficit of $65 billion. In Ontario, the deficit is about $14 billion a year. So before you cut taxes and drive the deficit up further, you’d better make sure that the benefit of the tax cut is going to people who really need it.
Making it cheaper for affluent Canadians to buy stuff like this just doesn’t seem to pass the test. Now the NDP marketing points out that non-rich people buy prepared foods that they pay HST on it as well. But rich people spend more on every category of item than poor people do. And if you want to help people who really need it, then you can’t do it with sales tax cuts.
You’ve got to do it with income tax cuts that are targeted at low and middle brackets or by increasing benefits, because it’s only that type of tax and benefit which can actually be targeted based on people’s income.
My new book The State of Happiness is being published in November and it’ll be available free as an e-book. And it’s all about how government can actually make lives better. And there’s a chapter in it about sales tax and the way New Zealand designed their sales tax to apply to everything.
And that has a lot of economic virtues. The goal of helping people who need help can be accomplished in much more intelligent ways than across the board sales tax cuts like what the NDP is offering right now.