I was out of town and away from the blogosphere during the recent controversy about TD Bank CEO Ed Clark’s “raise my taxes” comment.
As Terry Corcoran pointed out, CEOs are not actually proposing higher taxes on executive incomes or corporate profits. They are instead proposing to hike the GST, a tax that exempts all income in excess of consumption and all purchases by business.
About a month ago, The Globe and Mail reported the Canadian Council of Chief Executives’ musings about a higher GST. President John Manley said, “You don’t want to increase business taxes . . . If you have to increase taxes, your best tax to look at is a consumption tax.”
So, Canada’s business leaders have not become committed supporters of higher taxes and more public services. They are really proposing that, if more revenue is needed to balance the budget, the government should raise the tax that least affects them.
If the choice is between raising consumption taxes or cutting public services, then progressives obviously should prefer higher consumption taxes. However, I do not think that increasing the GST ought to be our top priority.
As Michael Bliss notes in today’s Globe, “the GST, being a consumption tax, is fairly regressive.” Of course, an enhanced GST credit could compensate the poor. But a higher GST would be rather ineffective at redistributing money from wealthy Canadians and foreign shareholders.
I disagree with Bliss that “spending restraint ought to be the first weapon in deficit fighting.” But I wholeheartedly endorse his main point that discussion of tax increases should not be limited to the GST. We should look at more progressive options, such as personal and corporate income taxes.
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- The NSA Scandal is all about Economics (November 2nd, 2013)
- The Blackberry mess and what Canada needs (September 24th, 2013)