Guy Quenneville
Northern News Services
Published Wednesday, November 7, 2007

YELLOWKNIFE - Yellowknife business operators say the federal government's plan to further decrease the goods and services tax (GST) from six per cent to five per cent starting Jan. 1 could mean considerable savings for certain consumers.

Ken Pearman of real estate company Coldwell Banker stands before a house-in-progress in the Niven Lake subdivision. Shoppers for new homes are among those who stand to benefit from the government's latest GST decrease, which will see the tax drop to five per cent as of Jan. 1, 2008. - Guy Quenneville/NNSL photo

"Any time there's some kind of tax cut, it's going to be good because more money is going into people's pockets, and maybe there will be more opportunities for them to spend it and get the economy going," said Yellowknife Chamber of Commerce President Jim Eirikson.

"Nobody notices how much you're saving at the till. But you are saving money, especially on larger purchases - anything large like automobiles and new homes."

According to the Ministry of Finance, thanks to the two-percentage-point reduction, a family purchasing a new $300,000 home can expect to save $3,840 in GST.

Ken Pearman, a realtor with Coldwell Banker, said the savings can be considerable for people buying newly-constructed homes in Yellowknife - a group that is shrinking as the amount of real estate space in the area decreases.

"It will affect only a small number of people real estate companies do business with. But it will affect that small number in a big way," he said.

"It will be a big help for our new homes."

The Ministry of Finance expects the cumulative two-percentage-point reduction in the GST will amount to $12 billion in total savings for consumers next year.

Greg Boucher, principal dealer at Yk Chrysler, said he did not notice a spike in sales at his dealership when the Harper government reduced the GST to six per cent in June 2006, but the tax reduction is still a positive thing.

"Whenever there's a tax reduction that puts back money in the hands of consumers, it certainly makes it easier for them to get into new vehicles," he said. "And that's obviously appreciated from people across the spectrum - whether it be the retailer or the consumer."

On a $30,000 vehicle, the GST reduction would mean savings of $300 for the purchaser, Boucher said.

"It's in their pocket, not the government's. So that's obviously a win," he said.

Retailers also stand to benefit from the government's plan to reduce the general corporate income tax rate to 15 per cent by 2012 and to reduce the small business income tax rate to 11 per cent in 2008-a year ahead of schedule.

"It allows us to consider expanding our business quicker or increasing our inventories as we get more operating capital," said Boucher. "That's obviously a plus, as we've been expanding over the last two years (renovating the Yk Chrysler building and buying adjacent property) and it allows us to consider other avenues for expanding."