Harper’s GST Plan

How idiotic does your plan have to be if you’re a right-winger who is being attacked by the Fraser Institute? Well, Stephen Harper’s new economic plan to cut GST has provoked just that.

"From an economic point of view, it wouldn't be my first choice," Bill Robson, senior vice-president of the CD Howe Institute, told CBC Newsworld on Thursday.

"If you want tax cuts that are going to promote work, going to promote saving, help us invest more and raise living standards in the future, the GST is not the tax you would go after."

Robson said it

…

Earlier in the day, Harper announced he would lower the seven per cent goods and services tax by one percentage point immediately and by another point within five years if he becomes prime minister after the Jan. 23 vote.

Jason Clemens, an economist with the Fraser Institute, said he also opposes reducing the GST.

Jim Davies, who teaches economics at the University of Western Ontario in London, also said he would prefer income tax cuts.

"Most serious work done by economists who specialize in public finance indicates that the GST is a more efficient tax source than the income tax," Davies told the Canadian Press. "If the income tax cut is designed properly, it can provide similar benefit to lower-income taxpayers."

"Stupid, stupid, stupid, stupid," he said.

I can’t remember the last time I heard the Fraser Institute criticise a Conservative. The election means there is some chance that Stephen Harper could become the next Canadian Prime Minister, which is an incredibly frightening notion. However, stories like this raise my hopes he’ll screw up the campaign over the month. Then again, I’m sure a number of people will see GST cuts and will automatically associate it with more money in their pocket and will blindly vote for Harper.

The notion of tax cuts for the sake of tax cuts, which is what these are, is objectionable at a time when Canada faces huge demands on its health care system, rising pension costs, cuts to education funding and some severe shortcomings in its social programs. Paul Martin, Jean Chrétien and the Liberals did a fine job of balancing the books of Canada and getting the country in a good fiscal position. Harper’s tax cuts will undo all of that or will result in decreased spending on social policies which will severely harm parts of Canada’s welfare state. This is a terrible move by Harper (realistically; I’m well aware it may be a fine move to win votes) and I’m glad to see the Fraser Institute call him on it.