Note to Ignatieff: How a tax increase could be stimulative

Photo: Harper implementing my budget amendment to increase GST to 7% over two years.

Here was the suggestion that I made three months ago, on two prudent measures to stimulate Canada’s economy.

Friday, January 30, 2009
Okay. Here’s my amendment that will further stimulate the economy, protect the vulnerable AND cut the budget deficit in half


Harper’s budget is being panned by Canadians across the political spectrum, and for good reason. It's a hodge-podge of superficial measures that will lead our country recklessly into debt. Canadians need this budget like they need a hole in the head.

Here is the amendment that I would make to this budget that would serve to further stimulate the economy, protect the vulnerable and reduce Harper’s reckless deficit by HALF:

(1) Stimulate consumer activity over the next two year period by implementing a phased increase the GST, to 6% effective the start of 2010 and 7% effective the start of 2011. This will reduces Harper’s $85 billion budget deficit by $47 billion (or 44%) to $45 billion. Our children and grandchildren will thank us profusely, as we will be living within our means, in the same manner as we expect of them.

(2) Protect Canadian seniors by eliminating Harper’s income trust tax that has resulted in $108 billion of trust tax related takeover activity over the last two years, resulting in over 2,500 job losses and the loss of $1.2 billion in ANNUAL tax revenue.

This measure would restore $35 billion in lost retirement savings by 2.5 million Canadians (including losses by CPP, Caisse, OMERs, Teachers’ and others), and would serve to protect the remaining tax stream paid to Ottawa of $6 billion a year, that along with jobs is, otherwise, very much at risk. Restoring this income stream to Canadian taxpayers and Canadian seniors would provide an immediate fiscal stimulus to the economy, as these people would resume their former consumption patterns and standard of living. Cat food sales would experience a significant decline, however sales of Canadian made automobiles and Alberta beef would improve by a significantly greater amount. Meanwhile pressures on Canada’s social security system by otherwise impoverished pensioners and seniors would abate.

The only downside to this budget is that it would be free of criticism from anyone across the entire political spectrum, except for those who deny empirical evidence (as it pertains to income trusts or the stimulate effects of consumption taxes) and those who deny that Canadians should ever be asked to live within their means.

Bottom line: This amendment would reduce the budget deficit by half, stimulate the economy, and protect the vulnerable. Meanwhile all the other superficial measures of Harper's hole in the head budget, would remain in place, pending his removal from office.