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HomeMy WebLinkAboutThe Lucknow Sentinel, 1989-08-30, Page 11a tateisiowSesitinel, ' & 8 `A 6 , 1.111 Psg 'I,. .4410011111011011G 11 DEFICIT A new Goods and ServicesTax MST) will replace the existitg'Federal Sales Tax. It will be charged at. a -uniform rate of 9 per cent on the vast majority of.goods and services consumed in Canada. The existing federal sales.tax rate is generally 13'/2%/eatthe manufacturer's level. The present federal sales tax system has been pushed beyond its limits and can no longer sustain the demands placed upon it. The structural weaknesses of:thesystem have given some corporations the opportunity to reduce the amount of tax they would otherwise pay. For a tax system with 75,000°taxpaying corpora- tions, there are 22,000 special arrangements and administrative interpretations required to keep the system in operation. The present federal sales.tax system is an increasingly unpredictable and un - retitle source of revenue for the federal government..Itmust be replaced. Our enormous debt has put pressure on the government's ability to mee' other priorities. Canadians know the risks of not acting to bring the debt under control. The size of the debt has left us exposed to increases in interest rates, and vulnerable to international economic' shocks. The reliability and stability of our sources of revenue are all the more important in such an environment. The new federal sales tax will secure year by year reductions inthe deficit, while ensuring we can continue to provide Canadians with a standard of services that is among the best in the world. TT OUR Our cut gent federal saiestax favours imports over Canadian rade.goods. We .are the only country in the industri eed world that is putting :itself at such a slis- aclvantage. "The existing system also mikes Canada's exporters less competitive in the world economy. Our present federal dales tax makes our annual economic output about $9 billion lower than it would be with the new. GST in place. Under the GST, we will be able .to comp -relay remove tax from our exports and make Canadian products more competitive abroad. And in Canada, Canadian;made prod- ucts will be able to compete more effectively with imports. The benefits tothe Canadian economy Irom sales tax reform wgllrextendacross all rlons ,andsectorsof theeconoray The,Atlantic andTrairie r-egions:for :example, -w l benefit significantly tbecausetheir:economies are resource-based. and export -oriented -two sec- tors : that will benefit::the most from sales taj---- reform. -The GST will lower the cost of the machines, supplies and equipment companies have to buy to produce their products. This will lead to higher levels of investment and expand our output Higher output will lead to more jobs. i ^fnan,ew*,Ta f sf,rm percenteee.chenge 25 Once:.the GST is in place, families;.earning-less than°.$30 O00,. a year will be better . off. This will be achieved through: a ;combination of•incce:-tax ehauges.=First, low income Canadians will receive:thenew GST Credit. Second,.thexniddle.personal income:tax irateewill be'redueed from. 26 per cent •to.25, per .cent. The GST Creditwill be..paid -every three months and in :advance of expenses. Eligible. Canadian households.will reeeive.thheir.first cr.editcheque inDecember 1990, before the January 1, 1991 GST start -update. About9million Canadians will receive Credit cheques. The GST.Cr-edit will be. calculated.onthe basis of income .tax returns. Every incometax return,will contain a one -page -form showing Canadians how to apply for the GST Credit. The amount of the Credit will:depend on faimily size and income. 'The basic.adult credit will be $275.,Most single adults will be- able to get an additional 'credit of upto11:40, for a total of $415. The;child credit will be. $100. Single parents .will receive an adult Credit:of $275 for one of their :children. !Canadian households with incomes :up to -about $2540O0anntaally will beentitled to the full Credit. • A fazxlily of twoadults and two •children, .eligible for the full,Cr daty wall for example:receive 'cheques of $187.50, four times over the course of the year, for. a total of,:$750. t` yy 4 k faire[SYatem EAmWe wlth.Ghidren oe,teatede cellor 6 r ,:.R•td rded,$y4ton -• (,00d. and ,erv,.e.. for .1sr well, • Idwme lee deductu., .Pure➢et $yptom lcdeel :Wet In. Lncling f51 Household .f Woe (thousand+ Q r EUMINATE HMODI MIOLES0 eight now, everywhere in this country every tinie•Canadians buy agood .or service made in Canada, they are paying federal sales tax. For example, a substantial amount of sales tax is presently' buried in house prices. Under the existingsystem, it is dearly impossible for -Canadians to know how much federal sales fax they are paying. There are four different rates ona variety ofdifferent.produccsandthe tax is buried throughout the production process. It will be clear to Canadians when they are paying the 9 per cent GST. The broad base of the GST means it will apply to almost everything. The few exceptions will be widely known: Some retailers in Canada will have cash registers that are capable of showing the GST separately at the check-out counter, while other retailers will not. The federal government will provide an incentive to retailers to assist them in acquiring the cash registers to show the GST separately. In all cases, the federalgovernment will provide retailers with signs for their stores that clearly indicate that the 9 per cent GST is being applied. PROPOSED ,© For consumers, the GST will be similar to a retail sales tax, at the rate of 9 per cent on the retail price of goods and services. The GST will replace the existing federal sales tax, which is hidden at the manufacturer's level. 2. The GST will apply to virtually all goods and services sold in Canada; however, Canadians willnot be charged tax when they buy the following GOODS: basic groceries; prescription .drugs; medical appli- ances such as eye -glasses and wheel chairs; residential rents and existing houses. 3. Canadians will -not be charged taxwhen they buy the following SERVICES if ans,- maggages, securities -anrieineuneneeiedieleseteeeite andalental; arepnosteducation. etvicasellayc esexvices;:l3egal aid;. arid -. municipal:transit and passengerierry;services. . Newly constructed houses will be taxed, however, most new home buyers will not see a significant increase in the price of a new house resulting from the GST, because there will be a $900 million GST housing rebate. in many parts of the country price increases will be less than half a per cent. Indeed, many communities should see lower prices as a result of the GST rebate. The main exception will be Toronto, where extraordinarily high land prices may cause prices of new housing to increase by about 11/20/0. S. Because the present federal sales tax will be removed, prices will not automatically rise by 9 per cent when the GST is introduced. The prices of some things will be lower, and others higher. The prices of many big-ticket items for example, that are taxed at 13.5 per cent under the,present system, will be lower once the 9 per cent GST is in place. Theprice of other items that are not taxed under the present system. will :increase. Finally,._well before the GST is up and running, the government will -be telling Canadians:about the GST and informing therm about. the kinds of price 'changes they can expect for key goods and services when the GST -.replaces the -existing federal sales tax. For instance, here are a few examples of what consumers might expect: ITEM Air Conditioner Car Snow Tires Hotel -Accommodation PRE TAXYREFORM($) POST-TAX.REFORM($) 780.00 770.00 15,000.00 14,700.00 200.00 203.00 90.00 95.0() (French) gelecornmariipations-Oevice for :tt;te kering impaired) 41 IP9orgwept ,(hint ttfo4AaFilyipc 5 u7 a '.P,k904p lj 1 1