What 2% Means

December 4th, 2005 at 2:52 pm

Conservative leader, and Canadian Prime Minister hopeful Stephen Harper proposes to cut the GST by 2% over the next two years,

Earlier in the day, Harper announced he would lower the seven per cent goods and services tax by one percentage point immediately and by another point within five years if he becomes prime minister after the Jan. 23 vote. [ CBC News: Economists dump on Harper’s GST-lowering plan ]

So what does that mean to Canadian voters? Let’s take a second here to do the math. The Conservatives are describing this tax cut in the following way:

The real choice is between tax relief for some Canadians and tax relief for all: tax relief you can see versus tax relief you never see. “This will be a tax cut that you will see every time you shop, tax relief that you experience, a tax break that no politician will be able to take away without you noticing,” said Mr. Harper. [ Stephen Conservative.ca: Harper to cut the GST to five per cent ]

Let’s take a second here to see what this actually means. The impact has been described as about $400 yearly for a family earning $60,000 a year. Mathematically, 400/60000 is 0.6%. Lets look at this from another angle… $400/12 months = $33.33, $33.33 / 30 days in a month = $1.11/day. That’s right, Stephen Harper is proposing to eliminate $4.5 billion from Government so he can buy you cup of coffee every morning (and not that fancy $2 Second Cup Coffee either, not even $1.35 Tim Hortons (at least in Ontario) coffee).

A cup of coffee a day is not worth more to me than having $4.5 billion with which the Government can use to support health-care, education, etc. See, this is one of those times where math is useful in the ‘real world’.