If the federal government requires an additional income to pay for new expenses, the leaders and economists of Canada say that this should lead to an increase in goods and services tax (
), according to the report published
The business council of Canada
on Wednesday.
“If the government should bring income, there is an insurmountable consensus that it should use (GST), because it is the least distorting option,” the report said “Budget consultations for 2025: what we heard.”
The consultation was held from August 4 to September 24 and included research on economists, politics experts, members of the Canadian business council (BCC) and former high-ranking officials in the summary
Expected on November 4. The survey includes answers from 18 experts and 57 BCC members.
The analysis said that federal finances are faced with four key pressure: a larger debt rally created in recent years; Structural counter winds in the economy caused by trade uncertainty and milder economic growth; Prime Minister
The agenda that promises significant investments; and new defense obligations taken under the North Atlantic Organization (NATO).
While most respondents said that the federal government is faced with the problem of expenses, and not problems with income, there is a growing financial pressure in the medium term, which should not be overlooked.
“I can’t see how to increase the cost of defense to five percent of GDP without an increase in income,” said one of the respondents quoted in the consultation.
A
It is expected that in this financial year it will reach 68.5 billion dollars, according to the latest forecasts on the financial budget published by a parliamentary budget employee, and the ratio of debt to GDP will remain higher than 43 percent in the medium term.
GST is currently five percent, but once there were seven percent almost two decades ago. Former Prime Minister Stephen Harper reduced the interest on the interest point in 2006 and on another interest point in 2008, fulfilling the key promise of the election during the 2005-06 federal election campaign.
Respondents of consultations published on Wednesday are not the first to increase GST this year to overcome the gap in federal finances.
In April, the CD Howe Institute published a report on a shadow budget with proposals for tax reform, including a gradual increase in GST.
“Well-thought-out consumption taxes cause less harm to economic indicators than personal income and business profit taxes,” the report said. “A two -stage increase in GST rate from five to six percent in mid -2025, and then to seven percent in mid -2026 will increase federal income by $ 27.5 billion. USA by 2027-28 years. ”
Experts and heads of consultation with the BCC also called on the government to devote themselves to key fiscal anchors, including the “approach to the toolbar”, which includes a combination of measures, such as a decrease in the ratio of debt to GDP, restricting expenses or the purpose of reducing deficit and reducing the ratio of debt merit.
Despite the fact that in the near future there was no risk of losing their credit rating, respondents warned that this stability is based on a reputation as a financial discipline built in the 1990s and 2000s, which has since undermined and “can be lost quickly and without a ton of warning.”
Respondents also recommended a program for revising state operating expenses with “teeth” and tax reform, which encourages investments in the Canadian economy.
• Email: [email protected]
