In the coming weeks, the
government will hold consultations to help it prepare
for the federal budget. Morneau has also said the
government plans to create an advisory council made up
of experts from Canada and abroad that will help Ottawa
brainstorm on how best to kick-start economic growth.
The previous Conservative
government lowered the GST by two percentage points
during its decade in office -- a move that eliminated
about $14 billion in annual revenues.
The Harper Tories chopped
a percentage point in 2006 to drop the GST to six per
cent. They trimmed off another point two years later.
Most economists opposed
the Conservative move to slash the GST, which was widely
viewed as more of a popular political decision rather
than a solid economic one.
Prime Minister Justin
Trudeau has promised in the past not to increase the
GST.
His Liberals, however, are
currently staring at considerable fiscal hurdles, as
they look to follow through on pricey election pledges.
The party has already
backed away from its election vow to cap annual deficits
at $10 billion over the next two years, blaming the
sluggish economy and a weaker-than-expected fiscal
situation they say they inherited from the Tories.
Meanwhile, the party has
started highlighting the importance of fulfilling
another fiscal goal from its platform, one that's lesser
known but easier to meet: lowering the debt-to-GDP
ratio.
The government has
promised to keep the ratio, which represents a
government's capacity to pay back debt, on a downward
track every year until the next election. Ottawa
calculates the ratio by dividing total federal debt by
the overall size of the economy, as measured by nominal
GDP.
Economists say that by
focusing on debt-to-GDP, the Liberals could still lower
the ratio even if they run annual deficits of up to $25
billion in the coming years -- as long as the economy
records decent growth.
Morneau has also said that
along with the debt-to-GDP vow, the government will
stick with its other "fiscal anchor": balancing the
federal books by the fourth year of its mandate.
Experts say balancing the
budget in four years will be a much tougher task for the
government than reducing the debt-to-GDP ratio.
Earlier this month,
parliamentary budget office projections suggested the
government could be on track to run annual deficits up
to $15 billion once the Liberals' costed, big-ticket
election vows are included in calculations. On top of
that, the party has also made several uncosted promises.
The Liberals also recently
conceded their new tax package -- which raises taxes on
the highest earners and lowers the rate on the middle
tax bracket -- will actually drain more than $1 billion
net from the treasury each year. Initially, the party
had projected that the plan would be revenue neutral.
Source::
Toronto Sun, dated 15/12/2015. |