OTTAWA -- Spendthrift consumers aren't the only ones watching and waiting for the touted cut to the goods and services tax, one of the highlights of the federal Conservative government's blueprint for the new parliamentary session.
Big banks, insurance companies and other players in the financial services sector also stand to enjoy millions of dollars in savings each year from the one percentage point reduction, say tax specialists. It's a fact that hasn't exactly been emphasized by Prime Minister Stephen Harper and his minority Tory government.
Instead, they've presented the cut in the GST, to six per cent from the current seven per cent, as a long-awaited break for the little guy.
"For an average family of four with an income of $60,000 a year, this would mean about $400 less in taxes - savings they will see every time they go to the gas station, the shopping mall or a restaurant," Harper said on the campaign trail late last year as he headed to the Jan. 23 federal election.
He re-emphasized that point Wednesday in the House of Commons.
Under his tax plans, "every single household in this country will be better off," said the prime minister.
The Conservative's GST policy - which Harper says will include another one percentage point cut in five years - will form the centrepiece of his government's budget expected in the next month or so.
That first cut to the consumption tax is estimated to carry a pricetag of about $32.3 billion over five years to federal coffers.
Yet about 17 per cent of that - more than $5 billion - won't lead to savings for families or individuals but instead will be claimed by banks, insurers, some professionals including doctors, and residential landlords, according to calculations by Toronto tax lawyer David Robertson.
Unlike most businesses, these cannot recover the GST they pay for operations.
But that won't likely impress many Canadians who may have expected the tax break would be more carefully targeted to average families, said Robertson, a tax expert with law firm Fasken Martineau.
"I think individuals would be saying 'wait a second, the government is telling me that Canadians are overtaxed, so why are they giving 17 per cent of the tax break. . .to big business,' " said Robertson, whose study of tax breaks is based on a briefing note he prepared several weeks ago for Liberal MP Michael Ignatieff.
Ignatieff, a former Harvard University professor, is expected to announce soon he will enter the race to lead the Liberal Party.
"What (the Conservatives) said is their purpose and what their policy will actually do are at loggerheads with one another."
The same applies to some other professional services provided by doctors and dentists, residential landlords - since the GST isn't applied on rent - and even some educational institutions.
The financial services sector in particular has been absorbing the costs of the GST for years but not able to pass them on to customers in the same way that other business do, said Michael Templeton, a partner and tax expert at the law firm McMillan Binch Mendelsohn.
So the tax change will save them potentially millions of dollars.
"In addition to banks benefiting from the GST reduction, basically it's really all financial institutions that will benefit from that GST reduction," he said in an interview.
Calls to several major banks for comment weren't returned Wednesday.
It's impossible to know whether the Conservatives intended to spread the tax largess so widely, said Templeton.
But lowering taxes via the highly visible GST must have been irresistible for its political value, said tax specialist Jamie Wilks, who also works at McMillan Binch Mendelsohn.
"I think it's largely political," said Wilks.
"I don't think people were feeling, when there were income tax cuts, that necessarily they were seeing it, or it was so small that it wasn't really perceptible," he said.
"They (Conservatives) wanted something that was quite visible, politically."
Consumers may yet seen a benefit from the tax break for financial services institutions if they chose to pass on their savings, says Jack Mintz, president of the C.D. Howe Institute, a Toronto-based think tank.
A tougher global environment is forcing many companies to lower their prices where possible, he said.
"So reducing the GST for financial services may get you a small break as a result," said Mintz.
Templeton isn't so sure that will happen, placing the odds on lower prices due to a lower GST as "remote and slim."
For an average family of four with an income of $60,000 a year, this would mean about $400 less in taxes - savings they will see every time they go to the gas station, the shopping mall or a restaurant,"
gee but all the prices of these items will stay the same like it did last time they made changes to the taxes remember the gst was suppose to remove the hidden taxes like the excise taxes that still exist
also it was suppose to be when introduced that certain items would go down in price ummm still waiting
so where what i have to say about the gst reduction which other either provincial or federal taxes will you put up so you do not loose any money crooked government