JOHNSON – Permanently axing GST might be better that axing carbon tax
(Image: Pixabay)
PM JUSTIN TRUDEAU gave us GST relief during the holidays, in effect from Dec. 14 until Feb. 15, and expected to cost $1.7 billion. He also announced a $250 cheque in the mail next year, so added together, both total a cost of nearly $6.4 billion.
You could almost see the Liberals rush to push this out in time for the Christmas season, by selecting items that are either easy to initiate (on their end … not retailers), or perhaps targeting specific voting groups.
Soo … is this ALL about timely political pandering? Is it about attracting voters by these small savings, or is there a bigger game at play?
Looking at the $250 cheque next spring, the ‘Working Canadians Rebate’, for anyone earning up to $150,000, is expected to roll out to 18.7 million Canadians before the next election.
There are so many questions about this:
– Why just $250? Most people living at about the median income level will likely say ‘thanks … but whatever’. You wanna get my attention with an inflation helper … start by doubling this amount to even start grabbing my attention.
– The $150,000 cap seems bizarrely high. How many Canadians at $149,000 a year will even notice a $250 auto deposit into their account? Is this just about grasping for every possible voting demographic right up the tax scale?
– If this amount was doubled to $500, and the income cap was cut by 50 per cent to $75,000 … would this seem more like a government responding to its citizens that have actually been hit the hardest by today’s real cost of living?
– Should we question an expenditure like this, on the eve of Trump threatening a 25 per cent tariff, on Canadian imports? Clearly, Chrysta Freeland was not OK with this, and in fact used this as the jumping board to separate herself from the sinking ship that is Trudeau. This timing may turn out to be extremely prescient, should this be the beginning of a play for leadership of the Liberal Party.
Let’s dig a little deeper:
It is a tough time for Trudeau’s government. They have trailed the Conservatives by double digits in public opinion polling for more than a year. Conservative Leader Pierre Poilievre has certainly made his point that the upcoming election next year will be all about a “Carbon. Tax. Election”, in his halting speaking form, which he uses to make sure his base can process each word clearly … and is doing his best to hyper focus all conversation around the Carbon Tax.
What are the chances that the Trudeau Liberals are targeting the GST in this way because they realize that the Carbon Tax debate is a no winner for them at the polls, and is trying to worm the conversation back into their realm, with stuff that is very taxpayer centric?
What do they have, to react to the needs of struggling Canadians?
The GST. What if this targeted small GST relief package is just the beginning of a twist in the conversation? What if in the new year the Liberals extended the GST relief package to other items including the GST paid on heating and vehicle fuel … and then setup as a pre-election proposal, the removal of the GST completely?
Imagine that.
There has been a lot of argument that taxes play a strong role in living affordability, and a direct correlation between cost of living and the Carbon Tax has been clearly made. But the Carbon Tax is not just the only retail facing tax we pay; in fact, the GST is worth far more.
Throwing out the bone of canceling the GST altogether, will catch far more attention regarding helping Canadians catch up to the cost of living … than any energy specific related tax … by a very long shot, and gives them a counter argument to Poilievre during the election.
Imagine how much your family might save if you kept all of the GST you spend?
The question is … can we as a country afford killing the GST? Just what are the numbers?
– Total GST revenues in 2023 = $16 Billion dollars
– Total of ALL 2023 ‘revenues administered for the Govt of Canada’ = $388 Billion
– Meaning the GST is just 4.12 per cent of all the revenue (taxes) we pay to just the Feds.
4.12 per cent or $16 Billion amounts to lots of cash … and it is … but if looking at it another way, it doesn’t mean so much on the federal government,s side if they are balancing it against a general revenue of $388 Billion.
Just for comparison, the federal government in 2023, collected $5.7 Billion in Carbon Tax.
$5.7 vs $16 Billion. The GST is 3 times more valuable to Canadians than the Carbon Tax.
That’s the kind of money that would be put to far better use in Canadians pockets and would equal a $400 savings for every single Canadian, newborn to 100y/o – every year.
We horribly disliked the GST in 1991 when it first came out … but that was during better days, and although we reacted negatively to the new tax structure … we got over it and got used to it and it became the forever eyeroll of Canadian taxation at the cash register.
These days with cost-of-living indexes through the roof, should we relook at consumer facing taxations like this and recognise that it ain’t so sunny these days … and we need it back.
Maybe axing the GST entirely, actually makes more sense than killing the Carbon Tax.
That’s all just hopeful hyperbole. What we know today is that we get a small temporary GST holiday, and a cheque next year, and this is all obviously about re-election politics, and even if this is all it is … I’ll take it.
Do I care that it’s only offered as a political chess piece in the face of negative polls?
No, I don’t. I’ll just take the savings where I can get it … every dollar counts right now.
Would I applaud a full GST cut? Sure … but it won’t likely change my mind regarding Trudeau.
Do I see Poilievre considering axing any tax revenues like the GST from the average Joe or Jane’s family? Not in a million years, he still thinks tax breaks on corporations trickle down … a Reaganomic economic concept long considered a failure.
All that considered, on balance, the question becomes, if we are pitting both taxes against each other, I’ll take cancelling the GST over the Carbon Tax.
Any day.
David Johnson is a Kamloops resident, community volunteer and self described maven of all things Canadian.
ArmchairMayor.ca 
Pierre writes “the only discussion worth having should not be about whether taxes should be collected but rather how the public revenues should be spent.”
The discussion about GST and Carbon Tax (CT) needs to address the tax incidence–is it regressive or progressive meaning who pays it? Of course, how the tax revenues are spent is an important question, which can make a tax regressive or progressive.
If the income lost by the economy exceeds that obtained by the government, the tax is inefficient. Income loss happens in many ways, externalities for example, particularly how the government uses fiscal and monetary policy to achieve economic goals.
If the tax revenue is used for productive spending or has positive externalities (innovation) then it could be positive. Spending billions on the military, which is a non-productive tax user is regressive.
Carbon taxes (CT) are generally considered regressive, meaning they disproportionately impact low-income households, small businesses, and rural populations. However, the extent to which a carbon tax is regressive depends on how the revenue is used.
What about externalities, whose costs are passed on, which this article does not discuss?
If carbon is not the problem, we need to ask what is moving isotherms northward, melting the permafrost, causing forest fires, polluting the air in our cities, causing floods, food shortages, migration, hospital stay and disease all externalities, caused by the producer of carbon and in most cases the cost of these externalities are tough to account for, but in the end are paid by the low-income person.
If you think that we don’t have a Global Warming problem then Carbon Tax should be eliminated. I suggest we find a way for the producer to pay for these externalities. Removing the carbon tax may help the low-income person at the gas station now but not when you consider all the other costs caused by the producer externalities that low-income people must pay.
However, if there is a tax credit system which permits business owners, except the end purchaser, to receive a credit for all GST paid it becomes regressive and it impacts low-income earners. Some will say wait a minute the well off purchase more goods thus pay more tax. Yes, but profit flees Canada as they buy more high-end goods mostly imports.
Not only that high earners depend on societally paid and produced goods more than low-income earners so the tax they pay should reflect this. Domestically, GST significantly contributes to trading services, or cash deals in an underground economy, which some estimate at 35%, in Canada, which is a huge tax loss.
For example, using the CT revenue to cut capital taxes makes the tax more regressive, while using it for a lump-sum rebate GST Voucher, ICBC rebates, dental plans, and energy efficiency rebates, benefiting low income makes it more progressive. However, businesses can pass on the higher energy costs to customers, consequently consumers will bear more of the carbon tax burden. Using means-tested rebates can help low-income households without reducing the benefits of carbon pricing for others. This ensures that the tax system and transfers is a fair and progressive one
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Of course as with any tax someone will walk away disgruntled. Low income households do get tax rebates which I believe fully offset the carbon tax. As for the GST we don’t pay it on basic goods at least at the grocery store. But here is the one issue worth having the debate about. Using taxes paid by whose that can afford them to offset the hardship faced by the less fortunate. Generally speaking though Canadians should stop complaining and especially so unionized workers.
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the only discussion worth having should not about wether taxes should be collected but rather how them public revenues should be spent.
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Pierre one of the main things that we need to look at when looking at taxes is how much the government is spending, because that’s the true tax. The tax, direct and indirect, that we pay be it Income, GST, PST, CT we pay for it, not only directly and indirectly, but in the form of inflation or in the form of borrowing. Once inflation goes up our tax goes up. People that borrow to purchase things for their business even when they pay tax on it taxes are deductible which lowers the tax threshold on income but the ones that can’t deduct anything keep paying like the energizer bunny keeps going while we keep paying and paying. I think the inflation has been deliberately manufactured to deal with the Covid 19 losses and the transfers to Ukraine as well as other expenditures that are done arbitrarily and not voted for. Ignorance is bliss as they say so we let them get away with it. .
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