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THE ISSUE
Hard-working Canadians are still angry that the Liberals lied about the GST. Their promises were unambiguous:
The GST is a “regressive and unfair tax on living, which will harm the economy by squeezing consumer buying power and creating an administrative nightmare for small businesses.”
Paul Martin Press Release (April 9, 1990).
“We hate it and we will kill it.” Jean Chrétien, Hansard (May 2, 1994)
“I would abolish the GST. The Manufacturers Sales Tax is a bad tax but there’s no excuse to repeal one bad thing by bringing in another one.” Paul Martin, Montreal Gazette (April 4, 1990)
“The leadership candidate is committed to scrapping the GST and replacing it with any one of a number of better alternatives.” Paul Martin Press Release (April 9, 1990)
“I hope we don’t try to hood-wink people into thinking our commitment was contingent on the provinces agreeing to harmonize their taxes with the GST.” Paul Martin, Ottawa Citizen (June 21, 1994)
“The federal government will scrap the hated GST within two years, Jean Chrétien pledged Thursday. In his most definitive statement on the national sales tax since winning the Oct. 25 election, the Liberal prime minister called the GST the worst tax in Canadian history.”
Julian Beltrame, “GST dead in 2 years, PM vows,” Windsor Star (November 19, 1993), p. B12
“If the GST is not gone, I will have a tough time, the election after that. It’s the only specific promise that I’m making very clear, and it is going, it’s gone.”
Jean Chrétien, CBC Prime Time News (February 11, 1993)
“But the commitment we’ve made to the public is we want to get rid of the GST. I’ve always said that the GST will go.” Jean Chrétien, CTV News (January 22, 1993)
The GST is a value-added tax paid by the final consumer. Businesses do not pay GST because they receive a rebate. In other words, ordinary Canadians are the ones who bear the burden.
Under the Liberals, the GST has continued to pull more and more money from taxpayers’ pockets. When Paul Martin became Finance Minister, the GST collected $15.9 billion.1 This year, ordinary Canadians are paying $31.8 billion.2 That’s a 100% increase. During the same time, inflation was only 27.3%3 and Canadians’ incomes increased by just 63%.4
Meanwhile, the Liberals have been running huge surpluses, which reflect excess taxation beyond actual need. Up to March 2005, they collected $63 billion in excess tax5 and they are planning excess taxation of $54.5 billion over the next six years.6
The surpluses are in addition to the billions wasted on boondoggles such as the sponsorship program, the old HRDC job training scam and the failed long-gun registry.
Mainstream Canadians – hardworking people who pay their taxes and play by the rules – need a new government that will put their interests ahead of self interest. This election provides these Canadians with a chance to tell Liberal Ottawa that they’ve had enough; that they’re tired of being forgotten; that it’s finally their turn. This election is a chance for all taxpayers to say “it was our money” and “we want it back.”
THE PLAN
The GST affects everyone – families, seniors and young people just getting started in life. Cutting the GST will help everyone deal with the rising costs of living, put money in people’s pockets and spur the economy right away.
A new Conservative government will reduce the GST by one percentage point right away.
Then we will reduce the GST by another point, to five percent, over five years.
In New Brunswick, Newfoundland and Labrador, and Nova Scotia, the Harmonized Sales Tax (HST) provinces, the reduction will be the same: 1% right away, and a further 1% over five years.7
The immediate saving to ordinary Canadians will be $4.5 billion. When the GST cut is fully implemented, the total benefit will be much greater.
Because the GST is a regressive tax, low- and middle-income Canadians will benefit most from cutting the GST.8
The GST replaced the old Manufacturers Sales Tax and was supposed to be revenue neutral. In fact, if the Manufacturers Sales Tax had been retained it would this year generate $24 billion, far less than the Liberals are taking from Canadians with their GST.9
The Conservative Party opposed the Liberal tax package in Parliament. Reducing the GST is one part of the Conservative plan to reduce taxes for all Canadians. We will deliver some additional targeted tax cuts, and will deliver additional broad based tax relief when affordable.
THE CHOICE
The real choice is between tax relief for some Canadians that just gets clawed or taxed back by other governments and tax relief for all: tax relief you can see versus tax relief you never see. Canadians deserve accountable government that gives back money that it does not need – not politicians who spend, waste and mismanage your money to benefit themselves and their friends.
1. Department of Finance, Fiscal Reference Tables (September 2005), Table 6, “Excise Duties and Credits.” Reflects GST revenue net of rebates.
2. Estimate for fiscal year 2005-06, Conference Board of Canada, Parliament’s Numbers (October 2005).
3. Consumer Price Index, all items: 1993, 101.8; October 2005, 128.5. Statistics Canada.
4. Personal income, net of transfers. Change between 1993 Q2 and 2005 Q2. Statistics Canada.
5. Fiscal Reference Tables (September 2005), Table 1, “Fiscal Transactions,” years 1997-98 through 2004-05.
6. Department of Finance, Economic and Fiscal Update 2005 (November 14, 2005), forecasts surpluses totalling $54.5 billion between 2005-06 and 2010-11, after deducting billions for debt repayment, new spending prior to Nov. 14, and reserves for contingencies and “economic prudence.”
7. In these provinces we will lower the federal rate in accordance with the terms of the harmonization agreements.
8. The regressivity is offset somewhat by the refundable income-tax credit for low-income Canadians. The credit starts to be phased out at incomes over $29,618 and, depending on marital status and number of children, disappears at an income level between $36,558 (single person without children) and $43,498 (single parent or couple with two children).
9. In 1989-90, the last full year before the MST was replaced by the GST, it generated $17.7 billion in revenue.
