flahertys seamless handout to corporate canada

We were wrong. A few months ago, this paper suggested the national government might do well to carve a percent or two off the GST.

We were wrong.

A few months ago, this paper suggested the national government might do well to carve a percent or two off the GST.

Tomorrow, Finance minister Jim Flaherty will do just that.

As popular as the idea is, it wasn’t a great idea then and it’s not now.

First, as some noted a few months ago, it will cost business millions to reprogram their cash registers.

Second, it’s not great for the national government.

As the dollar strengthens and interest rates begin to creep up, Ottawa would do well to redouble efforts to pay down the national debt sooner rather than later.

A point off the national tax won’t help consumers much, if at all — more on that in a second — but it could go a long way to paying off the nation’s debt, which is why the GST was brought in by the Progressive Conservative Party in the first place.

And why won’t it help consumers?

Because, with lower taxes, business can adjust their prices up a smidge.

Same with a federal reduction in gas taxes.

If Flaherty lowers the federal gas tax, people will see lower prices at the pump.

For about a month.

After that, the oil companies would cite higher demand and raise prices accordingly, profiting from the tax room vacated by Ottawa.

So, lowering specific taxes may seem like a good idea, but, generally, it isn’t.

Better to monkey with the personal income tax — giving a larger personal exemption, or raising the poverty level.

That puts more money directly in the hands of Canadians.

Failing that, the feds should pump more money into federal programs that benefit citizens.

A national child-care program might be a good place to start.

Instead, the Conservatives are freeing up tax room that will soon be consumed by corporations. And, sad to say, the multinationals will benefit the most.

Canadians will cheer.

But they will be poorer for it. (RM)