Keep the income tax cuts, ditch the GST cut

I read in the Star yesterday that the income tax cuts enacted by the Liberals before their fall from power and effective January 1, 2006 may be kept by the Conservative government, which has all along threatened to reinstate them to make room for their GST cut.

I have always been in favor of income tax cuts before consumption tax cuts. Income tax cuts encourage saving and investment, and put more of our earnings in our pockets (at least initially). The only way I save money from the GST cut is by spending money, which is a weird way to think about saving. With an income tax cut, the saving is built right in.

The Liberals love telling you the Conservative GST cut will help the rich more than the poor, where their income tax cuts help the poorest first. This is just wrong.

The very poorest members of our society already pay no income tax due to the basic personal exemption. Cutting the rate on the lowest bracket has no effect on them, and they pay the 7% GST just like the rest of us. The GST cut reduces taxes for everyone, including those who make so little they aren’t paying income tax, and the GST is the more regressive tax so cutting it makes the system theoretically more progressive.

Electric atmosphere at Jays opener

I was at the Toronto Blue Jays baseball game last night at the Rogers Centre and man was it crazy.

Over 50,000 people there to watch the Jays? What is this, 1993? I had a good seat down the third base line, giving me a great view of Bengie Molina’s home run in the 4th inning.

Jays ace Roy Halladay was awesome, new free agent signing B.J. Ryan came in and shut the door in the 9th, and Troy Glaus and Lyle Overbay had runs too.

The only downside was the massive headache this morning, not making the long drive to Pickering, where I’m working this week, any easier. On a disgusting side note, there was a guy urinating on the subway last night when I was on my way home.

Alcatel buying Lucent for $13.5 billion

The French telecom company Alcatel is buying Lucent in what is reported to be a $13.5 billion acquisition made to improve R&D capabilities in both organizations.

Lucent’s CEO, Patricia Russo, doesn’t speak French but will become the new CEO of the Paris-based giant. I wonder how well that’s going to work out. It will be difficult for her to communicate her executive vision to the troops if she can’t speak their language.

Some details:

  • Alcatel will own 60% of the common stock of the combined company.
  • Both companies will have equal representation on the board of directors, with two additional independent directors.
  • Revenues will be approximately $25 billion.

Lucent has some sensitive US government work that will be overseen by an independent subsidiary with three US citizens on its board of directors. The deal still has the potential to become a “political football” much like the Dubai Ports World deal that fell through and when Lenovo bought part of IBM.

Building and rebuilding in the GTA

The Toronto Star has two stories on their front page today about development in Toronto and the surrounding area worth noting.

The West Don Lands development is a community being built over derelict industrial buildings east of downtown. And Vaughan’s proposed corporate centre and downtown is an idea that is seeing the light of day because of the recently announced TTC expansion into the city.

These are exciting developments to me for different reasons.

The downtown residential and commercial Don Lands project appeals to me because it’s reclaiming some prime land that has gone unused for too long in a great location, and it’s the first step to truly revitalizing Toronto’s waterfront.

I’m excited about the Vaughan idea because it just means more business in the area, and more business is good for the economy. It remains to be seen, however, if Vaughan is willing or able to make the necessary investments in public infrastructure.