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December 04, 2005
Economists from another planet?
Many (or some?) economists believe that cutting GST is a bad idea since GST stimulates saving versus spending. While it is true to the certain extend, spending stimulates economy; if nobody spends nobody will be paid. Also GST stimulates spending in other countries. So, an affluent person will be tempted to go for a trip to US, bring electronics for up to CAD 750 legal limit and spend a significant amount in the hotels and restaurants. So, to this extend GST also stimulates economy, but in USA.
So, the mantra "GST stimulates saving versus spending" is really applicable only in countries where travel abroad is not an option. Like North Korea... or on another planet?
Posted by Victor at December 4, 2005 04:30 AM
Comments
Note that affluent people have more opportunities for spending money abroad, so elimination/reduction of GST favors to less well-doing.
Posted by: Victor at December 15, 2005 11:24 AM