Federal government should hike GST, abandon $100B stimulus plans as COVID-19 spending mounts: report

DM

The Liberal government should abandon most of its $100-billion stimulus plans and increase GST as a way to recoup massive COVID-19 spending levels, according to a new report that says Canada is in need of a considerable fiscal reset. The C.D. Howe Institute, a Toronto-based think tank, laid out a long list of recommendations on Wednesday for Ottawa’s upcoming budget, and warned about a “bleak outlook” for Canada should the government under Prime Minister Justin Trudeau neglect to correct course. Among the proposals are a two per cent hike in the federal Goods and Services Tax (GST), a reversal of the expansion of employment insurance, and a reduction in corporate tax rates, among other things. It also calls on Finance Minister Chrystia Freeland to abandon up to $100 billion in additional stimulus funds — promised in her fiscal update last year — as it is likely to add on to the debt burden while providing little economic benefit, according to the report. “The 2020 Fall Economic Statement contained little to enhance Canada’s growth prospects and much to raise anxiety about mounting debt and exposure to adverse events, notably rising interest rates,” the report said.

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