Where forth art thou?: GST increase means paying more

Tuesday, February 13, 2007

GST increase means paying more

This was forwarded to me by one of the readers.

What the 7% Goods and Services Tax (GST) really means

Example 1
In 2006, if after rebates etc and your net taxable income is $60,000, the income tax you need to pay is $2,700 (8.75%). If you spend $800 a month on needed goods and services, the GST paid for 5% will be $480

Total=$3,180 in Tax paid.

In 2007, if after rebates etc and your net taxable income is $60,000, the income tax you need to pay is $2,600 (8.50%). If you spend $800 a month on needed goods and services, the GST paid for 7% will be $672

Total=$3,272 in Tax paid.
From $3,180 to $3,272, the effective increase is 2.89%.
Example 2
In 2006, if after rebates etc and your net taxable income is $400,000, the income tax you need to pay is $61,650 (21%). If you spend $4,000 a month on needed goods and services, the GST paid for 5% will be $2,400

Total=$64,050 in Tax paid.

In 2007, if after rebates etc and your net taxable income is $400,000, the income tax you need to pay is $58,700 (20%). If you spend $4,000 a month on needed goods and services, the GST paid for 7% will be $3,360

Total=$62,060 in Tax paid.
From $64,050 to $62,060, the effective decrease is -3.11%.



Example 3
In 2006, if after rebates etc and your net taxable income is $25,000, the income tax you need to pay is $187.50 (3.75%). If you spend $800 a month on needed goods and services, the GST paid for 5% will be $480

Total=$667.50 in Tax paid.

In 2007, if after rebates etc and your net taxable income is $25,000, the income tax you need to pay is $175 (3.5%). If you spend $800 a month on needed goods and services, the GST paid for 7% will be $672

Total=$847 in Tax paid.
From $667.50 to $847, the effective increase is 26.89%.

1 comment:

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