And there’s no question that, since coming to office in 2006, the Conservative government has cut taxes. But they’ve mostly been the wrong taxes, cut for the wrong reasons. Tax cuts aren’t just about reducing the overall tax burden on citizens — although that is important. But cutting the right taxes at the right times can spur economic growth, employment, savings rates. Cutting the wrong taxes can end up accomplishing nothing at all — beyond robbing the state of the revenue it needs to do its work, and winning a few points in the polls, short-term.
Back in 2004, the Department of Finance put together a working paper entitled ‘Taxation and Economic Efficiency’, which concluded that cutting taxes on savings and investment yield higher efficiency gains for the economy than cutting taxes on consumption. So the worst possible tax cut you could contemplate would be one which affects consumption only — like a cut to the GST.
So much for expert advice; the Harper government cut the GST by one point in 2006 and another point in 2007. This reduced government revenues by about $14 to $15 billion annually, roughly $110 billion over the past nine years. Oddly enough, this lost revenue accounts for about 80 per cent of the increase in federal public debt over that period.
Over the 10 years between budget 2006 and budget 2014, and including the PM’s “family tax package” announcements of October 2014, tax measures introduced by the Harper government have cost the treasury almost $332 billion. That’s equal to almost 17 per cent of annual GDP and almost one-half of total federal debt. https://ipolitics.ca/2015/02/23/mr-harpers-taxing-troubles/