Lower GST gets mixed reviews

Lower GST gets mixed reviews

Posted By Fort McMurray Today

Posted 4 years ago

If you buy a brand new trailer priced at $200,000 after Canada Day, you will save $1,280, and $210 if you buy a sedan priced at $21,000.

And when you buy a $100 pair of jeans you will save $1.

Those savings, big or small, are courtesy of the federal government?s lowering of the Goods and Services Tax (GST), effective July 1.

?It?s a good thing. Any time there?s less tax it?s a good thing,? said local worker Jeff Pearson. But after giving it more thought he said the GST reduction will only be significant when buying big ticket items like cars and houses.?

?It?s a bit of a pittance. It?s only one per cent. There?s a motive to everything. This is probably a Band-aid (solution) to something. ?Why do they want to give us something like this? It?s an unfortunate mindset to have but I am cynical about this,? he said.

Lorraine Parenteau, a sales clerk, would rather see personal income tax reduced rather than get a GST reduction, if it?s only one per cent.

?I don?t see real savings with this. With what I make, I can?t afford to purchase big items like a car in the near future, and I think that?s how you can really see the difference,? she said.

Due to the minimal decrease in the GST, Parenteau said it?s unlikely she?d change her spending habits. ?I don?t have much money as it is and I don?t expect to have more with a one per cent GST reduction.?

McMurrayite Mike Brausseau is not sure what to make of the tax cut. ?GST is money taken out of our pockets. If the government is planning to reduce it, that?s good. But wouldn?t that mean the the GST rebate I receive would be lower??

Local resident Susan Phillips echoed Brausseau?s sentiments. ?Lowering the GST is great ? (it?s) more money in my pocket because I will be only paying six per cent, but those getting GST rebate will get less.?

While consumers are in a quandary over what to make of the tax cut, local businesses said the shift from a lower GST would not be complicated.

?I would assume that most businesses that operate with computer systems are prepared to make the change,? said Mike Allen, president of the Fort McMurray Chamber of Commerce and owner of Campbell Music. In his store?s system all he has to do is just change the number from seven per cent to six per cent, he said.

?I would suggest that in most cases there won?t be significant change. It all depends on businesses? accounting systems, but most people would be set up in a way that it?s a fairly simple change.?

Love Mates owner Virginia Falkenberg agreed with Campbell. ?It?s only a matter of programming the per cent to the computer,? she said.

Derwin Parsons, manager of McMurray Business Machines, a supplier of cash registers, said the transition will be easy.

The smaller businesses Parsons supplies machines to should be able to change on their own, he said.

?It?s not a complicated thing. Larger companies would have more problems because they have more items than smaller companies.? Parsons said.

Dan Kelly, a spokesman for the Canadian Federation of Independent Businesses, said the shift sounds simple but there are some small wrinkles that need to be ironed out.

For example, businesses that already include GST in their prices may have to re-ticket their items, while some may have to adjust their price lists and catalogues, he said.

The input tax credit -- the tax paid by stores to their suppliers on items bought before the changeover -- will have to be adjusted.

If it doesn?t, businesses will lose one per cent because they paid seven per cent of GST instead of six per cent, Kelly said.

?We?re not sure exactly how that?s going to work. It will be quite confusing for the first few months,? the spokesman said.

Another problem will be tracking down refunds on items that were bought days before the shift. If not handled properly, a customer who wanted to return an item could lose one per cent of the paid GST after July 1.

?We?re hoping that the Canada Revenue Agency will put out a document on how to handle the intricacies. If there?s enough time and flexibility by the federal government then it would be a smooth transition,? Kelly said.

For a retailer like Falkenberg, the tax cut is ultimately good for consumers.

?But for independent businesses, it doesn?t matter whether it?s one per cent or 10 per cent, it?s still a lot of bookkeeping to do,? she said.