Nobody is talking about raising taxes these days. Not with the country in the midst of a pandemic-induced recession that risks getting worse if the rising infection rate forces new lockdowns.
Governments and central banks are focused on getting us through this and mitigating the long-term economic damage as best they can. Ottawa is running up deficits at a rate not seen since the Second World War in an effort to support businesses and individuals.
The Bank of Canada has joined the Federal Reserve Board and other central banks in slashing interest rates to near zero and using quantitative easing to provide liquidity through the purchase of securities like bonds and, in some countries, even ETFs and equities.
No one seems very concerned about what happens down the road. But the time will come when the pandemic will be behind us and the emphasis will shift to dealing with the massive debts we’re incurring.
The Canadian Taxpayers Federation says the federal deficit is approaching $400 billion and the national debt is on track to reach $1 trillion by year’s end.
“Ottawa has a massive deficit, so now is the time to focus spending on the highest priorities instead of shopping around for nice-to-haves that simply add to the credit-card bill,” said the federation’s federal director, Aaron Wudrick, referring to such plans as a national daycare program and pharmacare for all.
Getting the deficit down to more manageable levels will be tough, no matter what party is in power. Inevitably it will mean higher taxes, never an easy sell. But on what? Here are some possibilities.
Raise the GST. Most economists agree that consumption taxes are much fairer than income taxes. With the Liberals expressing concern over wealth inequality in this country, that suggests the GST would be a good, if unpopular, place to start.