GST Cut Not Felt In Canadian Cities

Canada’s Conservative government kept an election promise when it cut the federal Goods and Services Tax from seven to six per cent on July 1. The only problem is it hasn’t really made much of a difference.

Many Canadians, especially those living in cities where the cut’s been cancelled out by municipal governments adjusting fees, aren’t feeling GST savings.

Stuart Green, a spokesman for Mayor David Miller, said Toronto charges the six per cent rate on fees that don’t have the GST built in but won’t immediately change the prices for previous flat rates.

“The difference in the fixed rate prices where GST is built in, we are putting that aside into reserve,” Green said, estimating about $130,000 will be put toward city programs.

“Next year the fixed prices will be adjusted accordingly so that it is a slight reduction in the total.”

Green said the city decided on such a course of action because of the costs of reprinting things like parks and recreation guide, which lists the prices. To do so would cost around $300,000.

Montreal’s also keeping the status quo on its rates, though the issue will be revisited in the city’s next budget.

“For now this is seen as a temporary measure for 2006,” said Darren Becker, a spokesman for Mayor Gerald Tremblay.

He denies the city’s robbing citizens and adds the municipal government had to look at expenditures in the face of a possible $400-million deficit.

“Citizens may be up in arms but I don’t think they’re aware of the fact that all these measures … to accommodate the change in the GST would have cost more than they would have saved. Is that responsible? This administration doesn’t think so.”

So what do the feds think?

Jacqueline Couture of the Canada Revenue Agency said if a city or business charges a seven per cent, it must give seven to the federal government.

“What some businesses may do is they may choose not to reduce the price,” she said. “That one per cent is used as an increase and that we have no control over.”

A consumer who is charged seven per cent GST can request a refund or apply to the government for a refund, although it would have to be a minimum of $2.

Adam Taylor, a spokesman for the Canadian Taxpayers Federation, said cities should pass the tax break from the lowered GST on to citizens.

“This was a tax cut that was supposed to benefit taxpayers and consumers, not municipal governments,” he said.

“We think they should pass the savings on just as businesses have had to do. There’s no excuse to say this is an administrative headache and it’s not worth doing.”

Top Stories

Top Stories

Most Watched Today