dowlingm
Senior Member
VAT in Germany is 19% (7% on certain things). The tricky part with doing that in Ontario (or even returning to 15%) would be stemming the flow of GTA consumers to Buffalo.
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- Thread starter denfromoakvillemilton
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innsertnamehere
Superstar
I don't think anyone is suggesting a return to 15%, 14% would do the job.
However, given the apparent resistance of TO Council to accept anything else, maybe 2% would be a better move. Get all the money we need with 1 tool (and a stable tool at that).
Just a thought.
BurlOak
Senior Member
Due to the "S" in HST, there is also the underground economy that must be considered when increasing taxes.
AlvinofDiaspar
Moderator
BurlOak:
True, but if you are talking about movement within a point or two you aren't going to see that drastic a change in the underground economy (like when the GST was reduced 5 years ago). It's not like tobacco or alcohol where the duties are a significantly higher proportion of the tab.
AoD
True, but if you are talking about movement within a point or two you aren't going to see that drastic a change in the underground economy (like when the GST was reduced 5 years ago). It's not like tobacco or alcohol where the duties are a significantly higher proportion of the tab.
AoD
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The more I think about it, just doing a 2% Sales Tax increase may be the best option. That way we're only really doing 1 revenue tool, so there's not as much of a negative reaction. Most people don't even know that 1% was the 'default' option. A lot of the time it's just simply mentioned as "Sales Tax".
Do 1.5% for capital and 0.5% for operating, which not-so-coincidentally covers the 25% operating mandate that has been talked about. Some municipalities can even throw in a small property tax break if their portion of that 0.5% offsets their transit expenses enough. Municipalities would be much more likely to support it if a) they got money freed up in their budgets, or b) they were able to trumpet a tax break or freeze.
Do 1.5% for capital and 0.5% for operating, which not-so-coincidentally covers the 25% operating mandate that has been talked about. Some municipalities can even throw in a small property tax break if their portion of that 0.5% offsets their transit expenses enough. Municipalities would be much more likely to support it if a) they got money freed up in their budgets, or b) they were able to trumpet a tax break or freeze.
BurlOak
Senior Member
http://news.nationalpost.com/2013/0...evenue-tools-ended-in-thoroughgoing-disgrace/
So 22 Councillors changed there mind in a few months time. These are the ones who are in the way of transit because the biggest problem is flip-flopping. It is one thing to not like one someone else proposed. It is completely worse to not like what you agreed to a short time ago. I am too lazy now, but I would like to track down who these 22 are.
So 22 Councillors changed there mind in a few months time. These are the ones who are in the way of transit because the biggest problem is flip-flopping. It is one thing to not like one someone else proposed. It is completely worse to not like what you agreed to a short time ago. I am too lazy now, but I would like to track down who these 22 are.
TOareaFan
Superstar
Anyone know what the impact to the general economy of a 2% sales tax increase is? What impact on spending? Revenue? Jobs?
Well what impact did it have in 2006 before it was reduced to 13%? Were there any measurable benefits from dropping it from 15% to 13%? If there weren't any measurable positive benefits from the reduction, theoretically the inverse would also hold true.
TOareaFan
Superstar
That was achieved by cutting the GST portion of the pre-harmotization tax. If I recall correctly, nationally it resulted in about $6B less government revenue for each of the two 1% cuts. It was a time when governments were dealing with surpluses not deficits and it was expected that a decent chunk of the lost revenue would be offset by an increase in economic activity (ie. putting $12B annually back in the hands of consumers would lead them to spend more).
So, conversely, when people aren't saving and debt levels are increasing, it would seem that taking an additional 2% out of the hands of consumers would/could/should lead to a reduction in economic activity and some of the expected gains to the public purse would be offset by reduction of spending/revenue in other areas......no?
rbt
Senior Member
The 2% reduction was virtually unnoticed country wide.
A 2% regional increase will not impact most of Ontario at all and will have a minimal impact to Toronto.
We might see people going to London or Kitchener for high value items (cars) but for $200 in savings (assuming travel is free) on a $10,000 vehicle, it won't be worth the day trip for most people.
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TOareaFan
Superstar
I wasn't really thinking of the impact of shifting spending outside the region....more thinking about how adding a 2% sales tax will impact spending on other things. By all statistical indicators (things like falling savings rates and rising household debt) there is no indication that the average Canadian is sitting around at the end of every month wondering what to do with their extra cash. So, presumably, a general increase in the cost of things (whether it is 2% or 1%) would mean that household budgets (whether they are formal budgets or just fly by the seat of your pants spending patterns) would have to be adjusted.....no?
If that is so, and that 2% we want for transit building comes out of other spending....what is the impact?
Good points, but I really don't think a Sales Tax is a big percentage of household debt. The vast majority of the debt for most people is house and car, with the occasional credit card thrown in. Nearly all of that debt would still be there regardless of what the sales tax level is. Even through the recession, Canadians kept on spending (just look at retail earnings during consecutive holiday seasons). So I don't think adding an extra 2% to purchases would have that big of an impact.
You're right. I really didn't notice it, other than it made the math for figuring out a tip at a restaurant a little more difficult (15% tax, 15% tip, no math involved
). For big purchases, I can see a few people going to either the States or outside of the taxation zone, but that's not what the bulk of consumer spending is spent on. It's the every day purchases that account for the bulk of the revenue, and nobody is going to drive to Barrie to save $2 on their grocery bill.TOareaFan
Superstar
????
I am not saying the sales tax makes up household debt. I am saying that people (on average) are saving less and debt is growing. Together those indicate that people do not have (again, on average) an abundance of excess cash available to them. So, considering that the existing debt they have has to be serviced (whether that is mortgage debt, car loan debt or credit card debt) that portion of the average monthly expenditure is "fixed"....so if you then raise the cost of everything else by 2%....are you saying that it will have no impact on people's go-forward spending habits/patterns (again, not one specific person but "on average').
sixrings
Senior Member
the argument is that the average Canadian will not be taking 2% out of their RRSPs or investments because they haven't been saving to begin with. If anything people will buy less. We could tax people only 5% and people would still not save. Its like the argument of renting vs buying. I bought my house my other friends rented. All though their expenses are far less then mine they don't have anything extra then I do in savings. The extra savings they had simply went into purchasing more things that grow obsolete.