Photo by Manchester Library
I was pretty disgruntled on the weekend owing to the fact that not only did I spend most of it filing tax returns, I discovered that I actually owed the government money instead of getting a refund after all that hassle! As I complained to my mom and contemplated how our PM couldn't possibly know how much I stimulate the economy when I have the money to shop, an idea came to me: What if the government granted Canadians a tax credit for shopping as part of their economic stimulus plan?
The more I thought about it, the more brilliant it seemed. I went for a walk and the obsessive-compulsive cogs of my brain kept turning until I came up with the following specs:
- The tax credit only applies to durable goods purchased in Canada--"durable" meaning goods meant to be consumed for an indefinite amount of time lasting at least one year or more. This excludes stuff like food, tobacco, prescription drugs, toilet paper, tampons, etc. Goods that would fall under this category include clothes, accessories, electronics, etc.
- Taxpayers can claim this tax credit by submitting purchase receipts and highlighting the eligible items on the receipts. The eligible amount will be the sum total of these items before taxes.
- In its first year (the 2009 tax year), the tax credit will be equal to 5%; in the second year it will be 4%; in subsequent years it drops to 3%.
I came up with all sorts of wonderful reasons for why it's a win-win for everyone:
- This measure is much broader in scope than the home renovations tax credit and thus has a higher likelihood of succeeding! Think about it: How many young twenty-somethings fresh out of university and just embarking on their careers own their own homes? Not very many that I know of, but as we're saving up for that dream home, we have a bit of disposable income to spend shopping for clothes and electronic gadgets. And it's not just young folks who would benefit from such a measure--think of families outfitting their kids for back-to-school. The point is, the number of people who shop far exceeds the number of homeowners who just happen to want to renovate.
- The blow to retailers would lessen slightly if they can reassure customers that they can recoup part of the money they spend come next tax season. This could prove particularly helpful to small, independently owned businesses and new ventures.
- Think about what a huge political boon this would be! There's been talk for years of eradicating the GST (for American readers, that's the Goods and Services Tax, which is currently 5%). The Conservatives can argue that they as good as eliminated the GST during a time of economic difficulty with their tax credit--a huge plus for any political platform. Think of how many votes they'd win among consumers (i.e. everyone) and business owners. The really ingenious part? Most people probably won't be as vigilant with receipt-tracking as they could be, which means revenues from the GST won't necessarily drop down to 0 for 2009. Also, because the percentages are staggered and eventually decrease, there will still be some GST revenue in the long run.
Anyways, just a fun idea I was tossing around in my head. What does everyone think--yay or nay? If you're really enthusiastic about it, please write a letter to your local MP and refer them to this blog. I would do it except I'm busy clocking overtime to pay my taxes.