Yellowknife (May 05/06) - One of the 28 tax cuts announced in the Conservative's federal budget on Tuesday that will affect every Canadian is the reduction of the Goods and Services Tax to six per cent.

Hau Huynh of Arctic Jewellers holds a $40,000 diamond ring. The one per cent reduction in GST in July will save a buyer $400 on this ring. Huynh says the federal budget's Excise Tax reduction will save jewelry consumers even more. - Jason Unrau/NNSL photo

The reduction is to take effect July 1, but some retailers do not expect a spending spree to take place in its wake.

"I don't think it will affect sales at all, really. It's only a buck on $100," said The Source By Circuit City Manager Kiel Lukaniuk. "And it won't affect my work, as head office looks after merchandise purchasing. My remittance to the government will just be one per cent less."

Manager of CD Plus Aaron Hernandez had similar thoughts.

"Unless you buy a load of CDs you won't save that much," he said.

"But we just finished memorizing what all the CD prices come out to after tax, so I guess it will affect us that way."

While a one per cent GST break for consumers should not affect sales of small ticket items, the impact of the reduction will save buyers of automobiles and precious gemstones a little more.

For example, the purchase of a $40,000 automobile will mean a $400 saving.

For jewelry retailers in particular, the GST reduction combined with phased elimination of the Excise Tax on gemstones could mean big reductions.

"The price of Canadian diamonds will definitely drop, but it's the reduction of the Excise Tax to six per cent that will really be good for buyers," said Arctic Jewellers co-owner Hau Huynh.

Previously, the Excise Tax on semi-precious and precious stones was 10 per cent. Huynh says in July, that will be reduced to six per cent and eventually eliminated. Combined with the reductions in GST reduction and Excise Tax, someone buying a $40,000 diamond ring would save nearly $3,000.