DISCLAIMER:I am not an accountant and do not profess to be. If anyone out there can correct me if I am way off base please do. If I am off by a few dollars here or there, oh well. It’s close enough for guesstimating.

The goods and services tax (GST) will be reduced by 1 percentage point as of July 1, 2006.

It’s about time. Canadians have been waiting for this one since the Liberals promised it over a decade ago. Yet it took the Conservatives to deliver. I think that tells you a bit about who are the talkers and who are the doers around Ottawa.

Here is a simple calculation to figure out your savings per gas fill up.
Savings per fill up =[0.01(TxP)]
…………………………(1.1342)

where T is Tank Size (in liters) and P is Price of gas (per liter in dollars). Extending this, you could replace TxP with the amount of money you spend on GST taxable goods.

But to stick to gasoline expenses, below is a chart indicating how much you would save annually for 1 to 4 weekly fill ups based on the price of gas (from 90 cents to $1.00 per liter) and tank sizes from 60 to 80 liters.

The green boxes represent size of your gas tank.

DISCLAIMER:I am not an accountant and do not profess to be. If anyone out there can correct me if I am way off base please do. If I am off by a few dollars here or there, oh well. It’s close enough for guesstimating.

From The Budget In Brief, page 9.

A children’s fitness tax credit for up to $500 in eligible fees for physical fitness programs for each child under age 16.

I am going to quote an accountant friend of mine on this tax credit. He said:

A tax credit generally is only a flat rate reduction of income tax of 15% federal and 6.05% provincial, the lowest marginal tax rates, or $110 in this example. It is the same type of deduction as a summer camp or caregiver.

So what does this mean to you? Let me show my my handy dandy table to give you an idea on what it may mean for you.

Now as I have blogged on numerous occasions, the Better Half and I have a couple of active children, ages 9 and 13. I am not positive of the total we spend on their athletic registrations but it is definately over $500 for one and close to it for the other. This means that the new credit will put about $200 back in my pocket.

Thanks Mr. Flaherty. That’s just enough money to get my son a new pair of soccer shoes and pay for one night hotel’s stay when my daughter competes at Provincials later in the month. Or perhaps I could take that savings and buy my kids an RESP!! (I learned that one from reading Brent Colbert) Apparently it shelters the growth from taxes and triggers a matching amount from the government. How sweet is that to have tucked away when the kids apply to post-secondary education?

I hope Canadians are paying attention.

I have written a few things about the 2006 Tory budget here and here. But I am trying to analyze how some of the savings affect the average Joe like me. I will try to put one or two of these up a day as I work through reading the budget.

DISCLAIMER:I am not an accountant and do not profess to be. If anyone out there can correct me if I am way off base please do. If I am off by a few dollars here or there, oh well. It’s close enough for guesstimating.

The Canada Employment Credit is the item I want to talk about today.

The new Canada Employment Credit – a tax credit on employment income of up to $500, effective July 1, 2006, to help working Canadians. The eleigible amount will double to $1,000 as of January 1, 2007.

What does this mean? Well first off, it only applies to Employment income. i.e. it is for those who are WORKING!! If you sit at home riding the dole, or welfare or any other form of non employment income, this is not for you. To take advantage, go get a job. What a concept.

Secondly, it is $500 for the latter half of this year which does equate to a $1,000 a year right away, it just happens to start halfway through the year.

But let’s compare this in a chart that shows how this compensates for the increase in the lowest tax bracket rate from 15.5% to 16%.

Taxable Income	Taxes at 15.5%	Taxes at 16%	Increase	CEC Reduction	Net?
$5000	$775.00	$800.00	$25.00	$160.00	+$135.00
$10000	$1550.00	$1600.00	$50.00	$160.00	+$110.00
$15000	$2325.00	$2400.00	$75.00	$160.00	+$85.00
$20000	$3100.00	$3200.00	$100.00	$160.00	+$60.00
$25000	$3875.00	$4000.00	$125.00	$160.00	+$35.00
$30000	$4650.00	$4800.00	$150.00	$160.00	+$10.00
$35000	$5425.00	$5600.00	$175.00	$160.00	-$15.00

The break even point happens to be $32,000. So all you lefty Dippers bitching about this taking money out of the poorest peoples hands. You can all stick it in your ear. Anyone earning under $32,000 will come out ahead. Anyone working from $32,000 and above will see a slight increase. Since we have a progressive tax system, anyone earning above $32,000 will be very slightly behind. This level flattens at about $36,368 (or $37,358 for sticklers who want the $1,000 taken into account). At this point anyone making over this amount would be dropping an extra $21.84 into the public purse.

i.e. it hits those making more and benefits those making less provided it is employment income. I have to stress this point again.

I personally am tossing in the $22 bucks. To make this up, I will have to buy $2200 in GST taxable goods this year, or $1100 in GST taxable goods when the full cut is implemented to make it up. I am pretty sure I far exceed this which should put me in the black.

“Somehow, either through good luck or good management or voter ignorance, the Conservatives have been able to disassociate their decision in Afghanistan from their overall performance … in the province of Quebec.”

Allan Gregg – From The Globe And Mail, May 6th, 2006

Is Allan Gregg for real?  This man is the Chairman of the Strategic Counsel polling organization.  How could he be so ignorant of the facts?  In his quote above, he makes it sound like it was a Conservative decision to go to Afghanistan. He also makes it sound like anyone who is supportive of the LIBERAL government decision to support the Afghanistan effort was either managed, lucky or ignorant.  How insulting could he be?  He should shave his goatee and go into hiding with comments like this.

EXCUSE me Mr. Gregg, but Afghanistan is NOT Iraq.  Our troops being there was a decision made while the LIBERALS were in power, supported by pretty much every member in the House of Commons after airplanes were used as bombs on September 11th, 2001.  Do you remember this day sir?  Apparently not.

Your quote, and the Globe and Mail’s shameless promotion of it by bolding it on page A9, today is blatant propaganda. The Tories have done nothing but stand by a decision made by Canada.  How can our nation gain any national respect if we are to make commitments to a UN-mandated mission, and then back down when it is our turn to lead said mission?  If we walk away from Afghanistan now, it would be the end of the relationship Canada carries around the world as a strong, principled nation that stands up to it’s commitment.

I was disgusted and appauled by the comments made by Gregg.  But I was just as disgusted by Richard Blackwell, the G&M reporter, for using the quote without qualifying it.  Now I remember why I only read the G&M when I am stuck reading what hotels offer as I am this morning.

I must preface this by saying that I am not an accountant. Nor do I profess to be a tax expert of any kind. But I am not that far off with the following chart. It indicates what your tax increase may be with the clawback of the Liberal Income Tax cut for the lowest tax bracket.

In simpler terms. The increase from 15% to 15.5% on the tax rate for income that goes to approximately $35,000. (After that I think you go up to the next bracket.

As you can see, for someone making $25,000, the increase will be about $125. For many with one or more children under 6 in the household, you come out far ahead with the $1200 Universal Child Care payment.

In fact, I even calculated how much GST taxable goods and services you would need to buy at a 6% GST and a 5% GST to counter the approximate income tax increase. Most may not spend 50% of their income on GST taxable goods, but you probably do spend 25% of your income on these things which means once it hits 5% you should be far ahead.

Jim Flaherty put it this way. The Liberals taxed us too much. He took $2 out of every $3 that we were being overtaxed and gave it back to us. That’s why this goes all over. It is to make sure every Canadian gets some relief or help in some way.

(click to enlarge)