Si le gouvernement fédéral décide de rendre permanentes certaines dépenses après la pandémie de COVID-19, il devra être clair sur la façon dont il propose de les financer. Un examen des programme pourrait permettre certaines économies. Du côté fiscal, ce qui serait le moins dommageable économiquement serait de ramener le taux de TPS à 7%, en élargissant l’assiette de la taxe et en apportant les ajustements nécessaires au crédit d’impôt pour la TPS.
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The C.D. Howe Institute has initiated a special project to rapidly provide expert policy advice to Canadian policymakers as they navigate fiscal policy during the COVID-19 recovery. The Institute’s Fiscal and Tax Working Group is co-chaired by John Manley, former federal minister of finance, and Janice MacKinnon, former minister of finance of Saskatchewan, and comprised of a group of experts from both the private sector and academia. The group’s third and fourth meetings were held on October 6, 2020, and November 11, 2020. This communiqué reflects the conversations held at these meetings.
The group discussed and debated the following questions: At the first meeting, what is the right tax policy mix for Canada to remain competitive? And, at the second meeting, how to sustainably finance an ongoing expansion of federal program spending over and beyond the spending required to help Canadians cope with the economic consequences of the pandemic.
At the turn of the century, Canada’s taxes as a share of GDP was approximately four percentage points higher than the OECD average. While falling in the subsequent 15 years, it has been on the rise since 2014 (see Figure 1), setting the stage for the current conversation.
Where Canada stands out is in its ambitious post-pandemic spending plans. Most other OECD countries are not planning similarly ambitious post-pandemic reforms. In the midst of the crisis, one shared worldwide, members agreed that now is not the time to raise taxes to pay for planned increases in government
spending for necessary pandemic relief, nor for committing to new post-pandemic program spending. Ottawa’s intentions to introduce substantial new permanent program spending in the Speech for the Throne threatens Canadians with tax hikes to pay for it. However, a thorough review of existing programs
to find cost savings would be better – personnel expenses would be a good place to start.
However, as we look ahead to the threat of tax increases, we must discuss the appropriate tax structure for Canada to remain competitive, grow, and get people back to work, all while replenishing government revenue.