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CCPA report on tax cuts

The CBC reports this morning that, “Tax cuts could diminish the standard of living for the vast majority of Canadians who enjoy the public services that they fund, according to a study by the Canadian Centre for Policy Alternatives released on Wednesday.”

The article notes that, “The majority of Canadian households enjoy a higher quality of life because of the public services their taxes fund, the study argues…Using the statistics (from Statistics Canada, the Canadian Institute of Health Information and government figures regarding labour and household incomes), the report finds that the average per capita benefit from public services in Canada in 2006 was about $16,952. (The study’s co-author Hugh) Mackenzie and company also argue that about 80 per cent of Canadians would have a higher standard of living if the GST hadn’t been cut, and that 75 per cent of Canadians would be better off if their provincial governments invested in public services, such as health care and education, rather than income tax cuts.”

The CBC reports, “Households with incomes under $110,000 would have been better off if the federal government had not cut the GST by two percentage points and had transferred the money to local governments, according to the paper. For households with incomes between $110,000 and $200,000, the net gain of the GST cut does not exceed $50 per year, after factoring in the loss of publicly funded services, the study finds. Overall, the tax cuts implemented in Canada in the last 15 years have had the net effect of reducing the living standards of most Canadians, the reports says.”

The CCPA report, ‘Canada’s Quiet Bargain: The Benefits of Public Spending’ by Hugh Mackenzie and Richard Shillington, can be read at http://www.policyalternatives.ca/

The CBC report is at http://www.cbc.ca/canada/story/2009/04/14/tax-study.html