The G.S.T. affect

This blog,usually, does not and will not write on government matters nor on fiscal policy.However it is the opinion of Workathon that economic growth would be higher if the G.S.T. tax was reduced to 3%.Firstly putting more money into the hands of consumers will always have a higher multiplier affect tnan in the hands of the government .That is ,expenditures by consumers will increase gross income by more than the same expenditure by the government.This has something to do with the government infrastrucure and the nature of products consumed.But a dollar of consumer income will increase gross income by more than a dollar and more than a dollar in the hands of the government. In addition,the G.S.T. tax raises an increasing amount of revenue for the government because it grows as national income grows.So this year at a 5% rate it raises about $85 billion in 2013.This is in addition to all other sources of revenue.This puts a tremenduous amount of money into the hands of the government and every year it increases.All this money(and some is wasted) has resulted in a very slow rate of growth for the Canadian economy.Growth will start to rise if the G.S.T is reduced to 3% and the consumer multiplier kicks in.