Wednesday, April 15, 2009

Study says Cdns would have been better off if GST had not been cut

Update (Wednesday 5:30 p.m.): Dave at Galloping Beaver links the CCPA study referenced here to Preston Manning's recent piece in the Globe suggesting that a two tier health care delivery system, public and private, is an eventuality for Canada. By cutting taxes, government revenues are squeezed and the public services that Canadians benefit from have to suffer. Chief among them, health care. Dave's conclusion:
It is worth keeping in mind that as Harper keeps offering tax cuts as an incentive to vote for his party, the cost is higher than most Canadians are willing to accept and the result would likely be something much worse than Manning has fabricated on behalf of his party leader.
If the Conservatives want to have this phony, irresponsible debate where they posit tax cuts as absolute goods, oblivious to the government's deficit position, it's likely to take them down a road or two that's not exactly politically palatable. Just sayin...:)

Now the post, from earlier today picking up from the blog post title...

That is one of the conclusions from a just released study from the Canadian Centre for Policy Alternatives, "Canada's Quiet Bargain: The Benefits from Public Spending." This is a timely piece of research given the kafuffle yesterday on taxes. This study takes aim at the rising premium being placed on tax cuts in our political debates by providing some hard numbers to explain just how these cuts affect Canadians' standard of living.

From Canwest:
The study says most Canadians would have been better off if the Conservative government had not cut the goods and services tax, but instead transferred the proceeds of that tax cut to local governments to pay for more and better services. Similarly, it concludes the standard of living of most Canadians would have been improved if provincial governments spent more on health care and education over the last decade or so rather than bringing in broad-based income tax cuts.
From CP:
...80 per cent of Canadians would have been better off if the federal government had not cut the GST, according to the research.
According to the study, Canadians get an average of $17,000 worth of benefits from their tax-funded public services, which also include such items as pensions, child-care benefits, roads and police services.

That translates to about $41,000 for a middle-income family - or 63 per cent of its yearly income.

For households earning $80,000 to $90,000, public-service benefits are equivalent to about half their total income, according to the study.

In other words, an upper-middle income Canadian household would have to devote half a year's wages to pay for the public services their taxes provide.

"The vast majority of Canadians are getting a quiet bargain by investing in taxes that produce enormous public benefits," the analysis states.
"Tax cuts don't give you money for free. They introduce a trade off between a private benefit in the form of lower taxes and a reduced public benefit.

"For most Canadians . . . that trade-off is not very favourable."
Timely and relevant information...if and when debates occur over tax issues in coming political skirmishes.