Friday, April 28, 2006

Why the wait for the GST cut?

Apparently the GST cut won't be until July 1st. Canadian small business owners claimed they needed time to convert over. The election was the end of January - you've had three months to prepare already! Some argue that it will depress economic activity as people hold off big ticket purchases. I suspect that's more likely than whatever the hell the Bank of Canada is playing at with interest rate policy.

By contrast, the Irish government announced a 1% VAT cut on 6 December 2000 which they implemented 25 days later - a cut that was reversed the following year (with three months notice) due to revenue shortfalls. However, giving notice makes sense when you're raising rates as people can bring forward expenses and thus tax revenue but giving notice when cutting makes no sense.

hat tip - Maple Leaf Politics

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