Vox Pops: How Does GST affect us?
Hello to all our fellow readers and welcome back. Today, we will be talking about GST. What is GST you guys ask? Well, GST or Goods And Services Tax is a form of indirect tax because the tax collection from the government is not directly obtained from the taxpayers. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the value added to a product, material, or service, from an accounting point of view, by this stage of its manufacture or distribution. The manufacturer remits to the government the difference between these two amounts, and retains the rest for themselves to offset the taxes they had previously paid on the inputs.The value added to a product by or with a business is the sale price charged to its customer, minus the cost of materials and other taxable inputs. A GST is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the GST, collections, remittances to the government, and credits for taxes already paid occur each time a business in the supply chain purchases products.
So, we reached out to the public and find out how GST affects them. Below are some of the comments made by the public.
GST sucks the people money faster. Unlike individual taxation when a person is taxed when he or she has earning income and meet certain criteria. GST is taxed from the point a person is conceived as a foetus in the mummy's womb. Go see obstetrician also being tax. Small kids go shopping to buy sweets also being tax. Last time also no GST. However......If government uses the tax income wisely then it may be forgiven so we can strike a balance.
Zenn Wong, aged 44, Singaporean citizen
My products became more expensive to the consumers, as they will have to bear the extra 6% tax burden, which makes them less wiling to spend. We as businesses now has the extra workload and burden to collect the tax behalf of the government, which requires us to invest in software, training and people to make sure we do it correctly. GST affects our cashflow as we need to fork out more cash for our supplies first. Also, because we give credit terms to our customers, we have to pay GST from our sales to them first even though cash has not been collected yet. So, GST has increased our need to more working capital to run our business.
Marcus Fei, aged 36, Managing Director of Euryka Naturopathics
It makes you think twice about buying unnecessary items . I have yet to see how the government's earnings from GST have translated into benefits for the country. Although at the moment most people are still sceptical about GST , hopefully in the long term everyone will be able to appreciate the need to pay GST.
Professor Dr. Sheila Nathan
As a taxpayer and Canadian I feel that there are a number of ways in which we can pay for the services that we ask our government to provide.
Whereas income tax permits no control over the amount of tax we contribute because it is taken from us at source (our employer), a consumption tax, like the GST allows us some modicum of control because we are taxed when we purchase things and thus we can choose not to or to limit the amount we purchase. I feel that this is a more fair way in which to collect taxes personally.
Because in Canada both taxes are levied, I personally resent the amount of tax that is paid because we are taxed on our income and then also taxed at the time of purchase. To make matters worse, this is a federal tax in Canada and is combined with sales tax by the provinces at the same time. In British Columbia for example the total GST and sales tax amounts to 10.5%. When you consider that this is taxing income that has already been taxed through the income tax at a rate of up to 40%, the effective tax paid is actually as high as 14% of our pretax earnings instead of 10%. Adding up the tax that we pay on our income in Canada the situation starts to resemble slavery rather than freedom for we are taxed as follows:
Income tax: up to 40%
GST:5.5%
Sales tax:5%
Fuel surcharge:20%
Auto insurance:30%
Road tolls:1-2%
As you can see, if you spend all that you earn, the tax paid on your income can be over 50%, accounting for the first three. When you add up the hidden taxes in Canada that include government charges in fuel sales, auto insurance and road tolls, the rate continues to climb. These are just a few of the over a hundred small user fees and taxes that are charged by the government in Canada - it is excessive.
However it will tend to increase the burden on the poor more than the rich for they spend a larger portion of there income on daily needs. As a standalone tax, the GST would tend to drive the economy underground and create black markets as people sought to keep the government from collecting its share. This is seen daily in Canada as people ask to pay in cash for tradesmen and such.
To summarize, i feel that the GST is a more fair way to collect tax than the income tax. In the Canadian example where it is collected in addition to income tax (as in all countries), I feel it is another grab at my money and I resent the heavy tax burden the government places on me. If the GST were doubled however while the income tax were cancelled, I would welcome this move.
All of this has to be viewed in light of what the government does with the money that it collects. I feel that the government is a poor Stewart of resources, is wasteful and thus I feel that my money could be used more effectively by private enterprise to achieve the same goals that government attempts to reach. I also feel that the governments of the western world are not longer true democracies but that they serve large corporate enterprises to a greater degree than they do the people and for this reason also resent giving them my money.
Mark Nelson, Canadian Citizen
It makes you think twice about buying unnecessary items . I have yet to see how the government's earnings from GST have translated into benefits for the country. Although at the moment most people are still sceptical about GST , hopefully in the long term everyone will be able to appreciate the need to pay GST.Professor Dr. Sheila Nathan
Whereas income tax permits no control over the amount of tax we contribute because it is taken from us at source (our employer), a consumption tax, like the GST allows us some modicum of control because we are taxed when we purchase things and thus we can choose not to or to limit the amount we purchase. I feel that this is a more fair way in which to collect taxes personally.
Because in Canada both taxes are levied, I personally resent the amount of tax that is paid because we are taxed on our income and then also taxed at the time of purchase. To make matters worse, this is a federal tax in Canada and is combined with sales tax by the provinces at the same time. In British Columbia for example the total GST and sales tax amounts to 10.5%. When you consider that this is taxing income that has already been taxed through the income tax at a rate of up to 40%, the effective tax paid is actually as high as 14% of our pretax earnings instead of 10%. Adding up the tax that we pay on our income in Canada the situation starts to resemble slavery rather than freedom for we are taxed as follows:
Income tax: up to 40%
GST:5.5%
Sales tax:5%
Fuel surcharge:20%
Auto insurance:30%
Road tolls:1-2%
As you can see, if you spend all that you earn, the tax paid on your income can be over 50%, accounting for the first three. When you add up the hidden taxes in Canada that include government charges in fuel sales, auto insurance and road tolls, the rate continues to climb. These are just a few of the over a hundred small user fees and taxes that are charged by the government in Canada - it is excessive.
However it will tend to increase the burden on the poor more than the rich for they spend a larger portion of there income on daily needs. As a standalone tax, the GST would tend to drive the economy underground and create black markets as people sought to keep the government from collecting its share. This is seen daily in Canada as people ask to pay in cash for tradesmen and such.
To summarize, i feel that the GST is a more fair way to collect tax than the income tax. In the Canadian example where it is collected in addition to income tax (as in all countries), I feel it is another grab at my money and I resent the heavy tax burden the government places on me. If the GST were doubled however while the income tax were cancelled, I would welcome this move.
All of this has to be viewed in light of what the government does with the money that it collects. I feel that the government is a poor Stewart of resources, is wasteful and thus I feel that my money could be used more effectively by private enterprise to achieve the same goals that government attempts to reach. I also feel that the governments of the western world are not longer true democracies but that they serve large corporate enterprises to a greater degree than they do the people and for this reason also resent giving them my money.
Mark Nelson, Canadian Citizen
