I think you are quite right about cutting taxes, particularly the GST. it is a kind of knee jerk reaction for conservatives here and elsewhere to promise to cut taxes on the assumption that it will spur growth and employment. Although targeted reductions can have that effect general reductions in taxes like the GST have no such effect, phony statistics cited by Republicans with respect to the US tax cuts to the contrary. Having said that i do not think the present debt and deficit issues were caused by the reductions but rather the massive spending at every level made in my view necessary by the recession. On balance I actually think that Harper and Flaherty have done a pretty good job.
Debt to GDP ratio
- Thread starter Questor
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So you think that a GST rate of, say, 50% would not put a damper on economic activity? Baloney! The problem is in dealing with relatively small changes spread across a large population: Liberals prefer to target their programs at a very few friends, so that the appearance is magnified. But the inefficiencies of such a system are terrible economically and provide all sorts of disincentives to economic activity on their own.I think you are quite right about cutting taxes, particularly the GST. it is a kind of knee jerk reaction for conservatives here and elsewhere to promise to cut taxes on the assumption that it will spur growth and employment. Although targeted reductions can have that effect general reductions in taxes like the GST have no such effect, phony statistics cited by Republicans with respect to the US tax cuts to the contrary. ...
The fact is that the GST cut did have an impact, and continues to have a positive effect.
As for the question of government surpluses or government deficits: I prefer to have my own money in my own pocket for as long as possible. I don't want the government to take 30 years to pay for what it does today, but neither do I want to pay this year for what they will do two years from now.
I did not sat that but i do not believe that a reduction of the GST rate by 1 percent has any impact on economic activity. Employers do not hire, people do not spend and government revenue certainly goes down.So you think that a GST rate of, say, 50% would not put a damper on economic activity? Baloney! The problem is in dealing with relatively small changes spread across a large population: Liberals prefer to target their programs at a very few friends, so that the appearance is magnified. But the inefficiencies of such a system are terrible economically and provide all sorts of disincentives to economic activity on their own.
The fact is that the GST cut did have an impact, and continues to have a positive effect.
As for the question of government surpluses or government deficits: I prefer to have my own money in my own pocket for as long as possible. I don't want the government to take 30 years to pay for what it does today, but neither do I want to pay this year for what they will do two years from now.
Everyone would prefer to have his/her money in his.her pocket. The fact is that certain services must be performed or supplied by government and they have to be paid for.You do not want to pay today for what the government will do 2 years from now but you assume that everything happens with a snap of the fingers. That is not the way things work in the real world.
There was a recent study out by one of the Canadian right wing think tanks that said that the GST cut made no discernable difference to the economy.The fact is that the GST cut did have an impact, and continues to have a positive effect.
I think it was a stupid move since everyone (except 'we won't run a deficit' Harper) could see tough times coming. Even though personally I'm against these consumption taxes (gst and pst) and wish we instead could turn the balance back a bit on our graduated taxes. Since the 70's the rich and corporations have been paying less and less in taxes (through income and corporate tax cuts) while the middle and lower taxes have seen their costs rise (gst, pst and payroll taxes).
I don't have the pie charts handy but the total income of the "rich" and the corporations is quite small compared to the middle and lower classes. Also, many major punlic corporations are owned by middle and lower classes either directly and/or via mutual funds and pension funds.Since the 70's the rich and corporations have been paying less and less in taxes (through income and corporate tax cuts) while the middle and lower taxes have seen their costs rise (gst, pst and payroll taxes).
The current deficit issues were clearly caused by tax reductions and government spending. The fact that you put the word "massive" in front of the word "spending" indicates your own bias on the issue, just as if I put the word "ineffective" or "unwarranted" in front of "tax cuts" would indicate my bias.Having said that i do not think the present debt and deficit issues were caused by the reductions but rather the massive spending at every level made in my view necessary by the recession. On balance I actually think that Harper and Flaherty have done a pretty good job.
Your statement is undoubtedly true but it is meaningless. Everything about the economy at all times is a function of taxes (revenue) and spending. It is simply a balance sheet. The real question is are the taxes and spending necessary or appropriate in the particular circumstances. i agree that the GST should not have been cut but at the time it was, although it certainly reduced revenue, it did little harm (or good for that matter). The bigger issue is fiscal policy. In the circumstances that Canada and the world found itself last year regardless of how we got there stimulative fiscal policy was required (i.e massive spending). Yes that is my view or bias. The real test of leadership is now that we appear to be out or recession and the economy is growing how the government, together with the Bank of Canada, will reduce the deficit without causing another dip and without causing inflation. It is a balancing act for sure and i believe that Flaherty and Carney are pretty adept.The current deficit issues were clearly caused by tax reductions and government spending. The fact that you put the word "massive" in front of the word "spending" indicates your own bias on the issue, just as if I put the word "ineffective" or "unwarranted" in front of "tax cuts" would indicate my bias.
Some of us believe the least painful way to increase tax revenue is to grow the economy..... perhaps more policies focused on that would help the debt GDP ratio.....
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Hard to disagree with that and I doubt anyone of any political stripe would. Real question is how do you grow the economy? In times of recession it usually involves among other things stimulative monetary and fiscal policy. That means on the fiscal side spending which at some point has to be paid for either by reducing spending or raising taxes or a combination.Some of us believe the least painful way to increase tax revenue is to grow the economy..... perhaps more policies focused on that would help the debt GDP ratio.....
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