How Much Of The GST Cut Will You Really See?

That’s when the GST cut officially goes into effect, lowering the amount you pay for just about everything from seven percent to just six.

But whether you’ll actually feel the benefit depends on what you’re looking to buy.

Car dealers were forced to lower the tax early, because they didn’t want customers waiting months before they decided to buy a new vehicle.

“Once the announcement was made, we essentially told people we’ll take it off for them,” recalls dealer Jim Durrell. “Has it helped? Yeah, it’s helped quite a bit.”

There’s a certain irony in the fact that the more you spend, the more you’ll save. Buy a $25,000 car and you won’t have to shell out about $250-300.

Purchase a big ticket item like a house, new furniture or even an expensive TV, and your wallet will smile.

But not everyone’s necessarily going to be ready by Saturday. And that’s a big problem.

“It hits every business,” notes Garth Whyte of the Canadian Federation of Independent Business. “And so there’s a million businesses involved at least. And they’re not going to be ready, some of them.”

Smaller items may not be cheaper, either. Newspapers won’t reduce their prices. Neither will cab drivers. And the price of parking spots in the city will stay the same. Buy a Coke from a vending machine and you won’t be drinking in any savings.

Gas should theoretically go down by a penny a litre but with price fluctuations and the long weekend, you likely won’t notice.

Your morning coffee at some franchises won’t sink as operators simply boost their java prices to keep the cut for themselves.

The problem: merchants aren’t required to pass along the GST reduction to consumers if they don’t want to. And many won’t.

Still, any savings are better than none. A two income household making $70,000 a year will pocket about $300-$350 annually.

“What people will find.at the end of the day that they’re still pretty tight in that pocketbook,” suggests Mike McCracken of Infometrica. 

But there’s at least one instance where the GST cut will actually wind up costing you more. How can that be?

If you think of the bizarre machinations of government, which gives with one hand and takes with the other, it’s no real surprise.

A hike in the so called sin taxes means that the GST will go down on booze, but you’ll still wind up paying more for a bottle.

The Tories raised the levy on alcohol and cigarettes in the May 2nd budget.

And while the difference involves prices set per litre and complicated percentages between provincial and federal excise taxes, the bottom line is this – most of us will be paying more for booze, even though one of the taxes on the always popular item has been slashed.

That kind of logic infuriates John Williamson of the Canadian Federation of Taxpayers.

“For a government that’s trying to present itself as a friend to taxpayers, this is a bad idea,” he complains. “Because they tried to get cute with spirits, the tax on spirits is going to go up.”

He calculates that the provinces are in for a $50-70 million windfall from the change, all of which will come from your pocket.

“It makes no sense for government to cut (the GST) on one hand and just reach into consumers’ pockets to get it right back,” Williamson sighs.

Your best bet: check the date. All liquor distilled before Canada Day won’t be subject to the higher sin tax. That means you should be safe for about two months, depending on the inventory of your local outlet.

It’s enough to drive taxpayers to drink. But they’ll soon have to pay more to do it.