Prime Minister Justin Trudeau at Fort York Armoury in Toronto on Feb. 24.CARLOS OSORIO/Reuters
Okay, so readers don’t love the idea of raising the goods and services tax.
That was the general tenor of feedback I received on last week’s column, in which I discussed a report from the C.D. Howe Institute that recommended, among other things, that Ottawa raise the GST to 7 per cent from 5 per cent.
A few people agreed that with the government facing a growing list of costly fiscal challenges, and an aging population that will weaken the tax base, a bump in the GST would be a prudent, if unpleasant, option to help keep government finances on a sustainable path over the longer term.
But most of the people who wrote to me didn’t just disagree with the idea. They were offended by it.
Their prevailing message: Ottawa needs to clean up its own spendthrift habits before it even thinks about knocking on my door to ask for – okay, insist on – more of my money.
The distaste for the idea was summed up well by Conservative MP Michelle Rempel Garner, in a Substack commentary rebutting my column.
“The public is constantly being asked to pay more but rarely sees an improvement in service delivery. And rarer still is a proposed tax hike preceded by concrete action to reduce government bloat and improve service delivery with existing funds,” Ms. Rempel Garner wrote.
“After being told for three years to trust the government and do their part, many Canadians have had enough. A 2-per-cent GST hike would be rubbing salt in an open wound.”
All of which more or less supports the main point of that column: that our leadership has avoided discussing these kinds of uncomfortable policy options to address our fiscal challenges for too long, for fear of how badly the voting public will react. People don’t like paying taxes and they certainly don’t like paying more taxes. Many feel that the taxman already takes a conspicuously large bite out of their paycheques, and they resent government excess and waste.
Politically, there’s no good time to propose a tax increase. Even after an expensive pandemic in which Ottawa ballooned its debt in order to save Canadian jobs and businesses. Even with swelling demands on a health system that is already in crisis. Even with a demographic cliff ahead.
That would probably be the case no matter who was in power. But it’s also apparent that the government of Prime Minister Justin Trudeau (which, to be clear, has not proposed raising the GST) has created a set of fiscal conditions that feeds that distrust and resentment. Government has become considerably bigger and costlier under Mr. Trudeau’s leadership.
On a per-capita basis, federal program expenses are up about 50 per cent since Mr. Trudeau’s Liberals came to power in 2015. Program spending in the current budget year is equivalent to about 16 per cent of gross domestic product; that’s not only up more than three percentage points since 2015, but it’s higher than at any time since 1993-94, excluding the extreme years of COVID-19 emergency expenses. The number of federal employees has swelled by more than 30 per cent during Mr. Trudeau’s tenure.
Yes, the Liberals have delivered some large programs with strong economic rationales that have contributed to the growth in the government footprint, such as the expanded Canada Child Benefit and the affordable child-care program. Nevertheless, the pace of spending and, especially, the expansion of the civil service, looks an awful lot like “government bloat,” as Ms. Rempel Garner put it. When voters start hearing musings about future tax increases, they are more than justified in pointing to the above numbers and asking whether our government has allowed itself to become unjustifiably fat and expensive.
“Even the most vocal supporters of tax increases, who argue the premise that there isn’t enough funding for core government services, would have to agree that Canada’s Liberal government hasn’t been the wisest stewards of the country’s finances,” Ms. Rempel Garner said.
To be clear, the C.D. Howe report that proposed the GST increase does, in fact, recommend reining in federal operating spending – and, specifically, proposes caps on wage expenses in departmental budgets. It’s not an either/or proposition; the solutions to the fiscal pressures that Ottawa faces in the coming years can, and should, come from both the spending and revenue sides of the equation.
But if public policy makers are ever going to broach the sensitive topic of a GST increase, they’ll need to recognize that the bar is, reasonably, set very high to convince a deeply skeptical public. They’ll have to be clear on the rationale, and the payoff. And even the most open-minded voter will want to see that government is doing its share, by tightening its belt and containing its spending.
Especially this government. Until it shows that it can control itself, and embrace the notion of getting the job done with less, there will be little appetite among voters to entrust it with more.