Wednesday, January 10, 2007

The GST Cut Will Have No Effect on Spending!!!

...unless you live in the real world. CTV is now reporting that consumer spending is up 7% in the third quarter, year over year. If you read this short little blurb of a story, that nowhere mentions the GST cut as a possible cause of this spending increase, you will notice that this increase has not been distorted by high energy costs, which actually went down from 26% from last year to 7.5% this year.

How can the media and the opposition, who were screaming at the top of their lungs that a cut in the GST would be meaningless to the individual as well as have no influence on helping the economy, be constantly so wrong and still keep their respective jobs. I figured they would be so tired of being wrong all the time that they would just throw in the towel. I guess you have to give them props for hanging in there.

15 Comments:

Anonymous Joseph Krengel said...

There's a flaw to your logic... namely you didn't include any in your argument. You are doing this:

A = GST decreased
B = Spending increased

Therefore A = B

Unfortunately you haven't really done anything to prove this. Perhaps the spending increase can be attributed to the milder weather? I know, howabout we attribute it to an actual fact? The very article you cite identifies that health and personal care products accounted for a major portion of the increase. As the Canadian population ages these increases will only magnify their effect on spending habits. I'm not claiming that I know for a fact that the GST didn't cause the increase, I just find it unlikely; especially given that one of the most conservative, taxation conscious think-tanks in the country released a report claiming that consumption taxes do not impact spending habits.

12:01 PM  
Anonymous Surecure said...

Yeah... it sounds like

A = Increased Human Activity
B = Global Warming

Therefore A = B

1:04 PM  
Blogger "Expert" Tom said...

You are right Joe, there is no direct causal link to show that cutting the GST has any impact on spending. Of course it would be impossible to prove that it did in such a chaotic system with so many variables as an economy. If you use common sense though, you can at least pontificate that the GST cut may have had an impact on this years consumer spending numbers.

And you are right again, 'health and personal-care products' were up 10%, and could have edged the % increase higher, but the amount spent on health-care in this public health care system we have would be fairly small for an individual compared to overall spending and they do include 'personal-care' products, I'm sure ranging from Shampoos to massages. All in all, the 'logic' in my post matches the 'logic' in your comment. We both can't prove anything we are both just speculating based on a gut feeling.

1:41 PM  
Anonymous Joseph Krengel said...

The difference between your comments and mine is that mine actually has general research behind it. I've never seen a single study or paper that attributes consumption taxes to overall spending habits... so it's not just a gut feeling.

If you're interested I do have a flagrantly liberal (note the small "L") blog post on the subject here.

2:17 PM  
Blogger Lord Kitchener's Own said...

Yes Tom, except that you claim right off the top of your post that YOUR speculation based on no evidence and no logic is the "real world" and that others who are speculating wildly are "constantly wrong". You even wonder aloud how these idiots manage to keep their jobs despite their clear inability to correctly identify the causal link between the GST cut and the spending increase, that must clearly exist, as you feel it in your gut.

It's great that you belatedly concede that you can't prove anything. Next time you can't prove your point though, perhaps consider refraining from beginning your argument from the position that you are right and a contrarian view is wrong... not only wrong but unreal (based, apparently - much to Stephen Colbert's delight - on nothing more than your "gut"). Your argument that you live in the real world and those that disagree are in some kind of fantasy land falls apart right around the time that you write "We both can't prove anything we are both just speculating based on a gut feeling". (actually, it falls apart when you confuse correaltion with causation, but that last sentence really opens up the flood gates between fantasyland and the "real world" doesn't it?).

I'm sure Mr. Colbert would scold you for your slight reverse though. Colbert would never let "facts" or "logic" dilute the purity of the "truthiness" he found in his gut. And neither should you.

Remember, reality has a well-known liberal bias. Don't let the factinistas get you down. If you feel the spending increase was a result of the GST cut it must be so. Personally, I believe the spending increase was caused by a little girl stubbing her toe at the 1970 World's fair in Osaka. How those Fraser Institute people keep their jobs despite their STUNNING failure to make this connection with all their "facts" and "analysis" will astonish me until the end of my days.

2:52 PM  
Blogger alsocanadian said...

Well, perfessers, I don't know bout any of that, but I know lotsa people who put off big purchases till after the cut.

Fact, a cupela car dealers round here had 1% off the GST sales before the cut to get people out...

LKO, you forget tom is an "expert", and logically, because he is right a contrarian view MUST be wrong.

Duh.

3:12 PM  
Blogger William E. Demers said...

Cuts on general consumption taxes tend to stimulate the economy, but even if it doesn't, it means that more money is saved which is a completely valid reason for reducing it.

We live in a country that overtaxes its citizens for social programmes that hardly work, and when they do work they benefit select people, not all people.

The lowering of the GST also helps the poor the most, despite the Liberals "it helps the rich most" slogans. Any tax cut helps the rich more in terms of raw numbers, but thats only because the rich have more money to begin with so X% of Y is going to be higher than X% of Z.

The poor need more money than the rich (I think Liberals would agree), so this GST cut is very helpful to everyone, but especially people in lowest tax brackets.

4:06 PM  
Anonymous Joseph Krengel said...

You are making a false assumption. There is a big difference between delaying a purchase due to an impending tax cut and not making a purchase because taxes are too high. Of course people waited a few extra weeks or months to save a bit of money on big ticket items.

However, that is not economic growth, it's just a shift from one quarter to the next.

4:08 PM  
Blogger "Expert" Tom said...

I find it funny that these libs are using a Fraser institute study but I digress. Your facts do not in any way show a direct causal link, as I've stated in my previous comment. My facts are "GST went down, consumer spending went up compared to time before GST was cut." The study may give more facts and anecdotal evidence, but its basically "sales tax went up/down, spending stayed the same" but unless they can isolate all the other factors that would cause people to spend more, then they can in no way show a direct causal link.

Thanks guys for thinking my 10 minute post was as good as a report that must have cost thousands, and mine is even more condensed.

Like I said, you can't say I'm wrong without the proof, and these studies are not proof, just more anectdotal 'gut feelings' from the Fraser institute.

And LKO,
"it falls apart when you confuse correaltion with causation"

I do not confuse correlation with causation, i specifically stated that no one can prove causation in such a complicated system with a huge number of variables but I definitly have the upper hand on correlation on this thank you very much.

I am glad though that you have quoted Colbert so much, it really shows how much you live in the real world and not fantasy land, doesn't it.

4:58 PM  
Blogger ktr said...

I am donating my GST cut savings to the Conservative Party!
How much should i write my cheque for?
Let's see, i go to the movies and so the cut has saved me zero. i save money by buying my junk food from vending machines and convenient stores which have passed on a net savings to me of zero dollars. Add that to the money i saved at the parking meter and i get...
hmm, maybe i should have bought a bmw or penthouse to cash in on the savings. NUTS!
well, hopefully the GST will be cut a second percentage to double my savings.

5:25 PM  
Blogger ktr said...

also, you failed to mention that the GST cut has prevent alien invasions. Since the cut July 1, we have had not been attacked or invaded once. Perhaps a probe or two was left up Harper's hiney though.

5:28 PM  
Blogger "Expert" Tom said...

ktr,

You pay heating bills? electricity bills? phone bills? Insurance? clothes? Personally I don't eat a lot of food out of vending machines but to each their own. Seems like if you cut out a few movies and the junk food you might be able to afford that bmw afterall.

5:49 PM  
Blogger alsocanadian said...

KTR, don't be so stupid! What you said was complete and utter nonsense! I can't believe you can be so naive and blind! You must really have your head in the sand! Your comment is truly the epitome of ignorance!

Everyone knows we have been invaded by aliens no less then 32 times since the GST cut...

6:56 PM  
Anonymous andy parr said...

As a Brit running a consumer orientated business in a high tax economy, my experience is that as tax goes up the amount of money people spend with me goes down*.

I'm no sophisticated economist, mind you, so the apparent correlation between people having more money in their pockets and, er, spending it is probably simplistic nonsense.

Much better to let the government take it and spend it on initiatives, conferences, single mothers, PR officers, implementing EU directives, drawing up and meeting diversity targets (drones on for another hour or so).

*Don't feel sorry for me, I'm still making a fortune.

PS I'm planning on moving to live in Canada soon, as we are increasingly being taken over by scum. Cheers!

12:52 PM  
Anonymous cleananglingpledge said...

So, I do not really consider it may have effect.

6:59 AM  

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