Well now, let us see what Harper left Justin with, shall we?
This is an expanded version of a chapter in The Harper Factor: Assessing a Prime Minister’s Policy Legacy, edited by Jennifer Ditchburn and Graham Fox.
policyoptions.irpp.org
Interest rates and Canadian monetary policy
Lower interest rates during the Harper years, shaped by monetary policy from the Bank of Canada, contributed to growth by lowering the cost of
servicing debts for households, businesses and governments and boosting domestic asset prices and net worth. The target overnight rate reached a peak of 4.5 percent in July 2007 and started a steep slide in January 2008 before reaching 1 percent or less in 2009-15. It must be emphasized that the slide in interest rates since 2007 was part of a global phenomenon of monetary policy loosening. In fact, the (real) Canada-US short-term interest rate differential turned somewhat in favour of Canada in 2008 and remained so until 2015.
Because of the low and declining interest rates, household debt service payments continued to trend downward relative to disposable income even as the debt-to-income ratio rose substantially. At the same time, lower interest costs relative to government revenues gave more room to the Harper government (and to provincial governments) for spending on direct programs and transfers and for reducing taxes without increasing the federal (or provincial) deficit (figure 6).
WAIT A MINUTE, HOLD ON, did Harper cause the housing bubble? Hmmmmm, the righties seem to blame Justin, Hmmmmm...
Cost competitiveness
A substantial loss of Canadian cost competitiveness depressed Canadian real net exports and hence real GDP in the Harper government years relative to 1984-2005. Along with the increased presence of China as a competitor in the US market, it contributed to a fall in Canada’s market share of US manufacturing imports. That loss of competitiveness contributed to a significant widening of Canada’s current account deficit relative to GDP during the Harper government years, more than offsetting the effect of a rise in the terms of trade during the period.
Measured in terms of unit labour costs (in US dollars) in Canada versus costs in the US (relative to the 1984-2005 average), a loss of Canadian cost competitiveness in the business sector emerged in 2004 (3.7 percent). This loss (represented by the black line in figure 5) grew to a peak of 49 percent in 2011 before retreating to 16 percent in 2015. A substantial appreciation of the Canadian dollar accounted for 70 percent of the total loss of competitiveness during 2006-15 relative to 1984-2005. This appreciation was largely driven by a sharp increase in commodity prices, notably oil prices. A slower rate of labour productivity growth in the business sector relative to the US, which on its own would have accounted for 50 percent of the competitiveness loss, was nearly half offset by slower wage growth in Canada (figure 5).
While greatly reducing taxes overall, the Harper government decreased its relative reliance on broad-based consumption taxes and increased its relative reliance on income taxes. (Between fiscal years 2005-06 and 2014-15, federal tax revenues fell from 13.3 percent of GDP to 11.6 percent. At the same time, the share of federal revenues represented by taxes on goods and services, largely GST, fell from 21 to 17 percent.)
This broad structural shift, which reversed the thrust of the Mulroney government tax reform, was somewhat detrimental to long-term growth because it limited the scope for reductions in personal and corporate income taxes that would have been more favourable to long-term growth than reductions in consumption taxes. Notably, some of the high effective marginal rates of personal income tax (and rates of clawback of personal transfer payments) could have been reduced more had the GST rate not been reduced from 7 to 5 percent. Lower effective marginal rates of income tax would have enhanced incentives for individuals to work and save. Importantly, however, the federal government provided the incentives needed for Ontario to join the harmonized sales tax, thereby enhancing economic efficiency.
The Harper government introduced a large number of micro tax measures that should have somewhat strengthened tax compliance and in so doing generated fiscal savings for the government. (See table A5.4 of the
2015 budget document for the list of integrity tax measures introduced since 2010.) Moreover, it announced in the 2013 budget the rationalization of several business tax preferences over the subsequent several years.
Overall, these measures should buttress the integrity of the tax system, although the reduction in the small business tax rate announced in the 2015 budget certainly does not.
On the other hand, the Harper government introduced a large number of “boutique” tax preferences targeted to special groups (such as transit and sports equipment credits). These introduced unwarranted complexity and inefficiency into the system. A reduction of general rates of comparable magnitude would have been economically (although not necessarily politically) preferable.
The Harper government introduced on a restricted basis two measures that began to fundamentally change the structure of the personal income tax system: income splitting and the tax-free savings account (TFSA). On income splitting, the government first permitted pension income splitting, effective as of the 2007 tax year. Then in October 2014 it announced limited income splitting for couples with children under the age of 18, effective as of the 2014 tax year. These income-splitting measures have resulted in a partial shift from an individual-based system to a family-based one for certain groups but not others, while leaving in place the progressive rate structure designed for individual-based taxation. Whether the individual-based system is preferable to a well-structured family-based one is a matter of debate, but it is clear that by introducing limited income splitting the Harper government has left Canada with a hybrid system in urgent need of reform
It seems to me Justin inherited a mess from a Harper Conservative Government and then had to deal with a pandemic which was a worldwide issue. Just to compare, Justin was re-elected for his performance during Covid and so was Dougie while his counterpart in the US was turfed and cried like a fat baby all the way back to Mar o Lago.
It is your right to vote for Pee Pee, and it is my right to vote for Justin so let the cards fall where they may. Is Justin perfect, no, is any politician perfect, NO but I will take Justin over a puddle of piss who courts convoy twats and supremacists any day of the week, month, and year!