Canadians Spending Beyond Earnings; GST Tax Calculation UpdateSave this online in Del.icio.us. [?] Vote For this Post
Statistics Canada reported a while ago that we're spending more than we earn. Our national statistics agency has determined that the additional spending comes not from savings but from debt. While I personnally hate debt like Martin and Harper, this means more than a bit of distaste. This means I need to correct the formula for calculating one's GST tax break under Harper's plan to cut the GST from 7 to 5%.
Step 2 reads: Estimate and then deduct the percentage of your income that goes to GST-exempt things.
Step 3 reads: Multiply the remainder of your income by 0.02 (2%).
Between steps 2 and three, I should add:
2.5) Add your annual debt to your post tax and post GST-exempt-spending income.
In the example at the formula page, the person had $17,500 of such spending. With a mortgage and a $10,000 student loan, averaging $750 a month of payments, this works out to a total of $26,500 of GST-taxed spending.
Step three would reveal that a person/family with such spending would save $530, with a 2% GST tax cut (In the first year of a potential Harper premiership, it'd be half that, because he intends to only reduce it by 1% his first year.