KRUGGEL: That big Liberal tax cut comes up short

Our leaders failed .... but we failed first. This tax cut is evidence of just how irresponsible voters in this country are

 

Mark Carney and the Liberals stole their tax cut idea from the Poilievre Conservatives. That's a fact one can carve in stone and take to the bank. It was a bad idea when the Conservatives floated it. It is just a bad idea now that Mark Carney is making it a reality.

First, let's just go over the $280 number. That's for the average Canadian family which likely means you. If you assume 24 pay periods in a year, pay day in lay terms that's $11.67 each pay day. If you're desperate for $11.67 every couple of weeks your financial situation is dire.

Second, an additional $11.67 every couple of weeks isn't going to change anyone's spending habits. It will not stimulate the economy. That number is tiny.

Third, this tax cut is being paid for by borrowing yet more money. The government is metaphorically taking a cash advance on its credit card and giving that cash to us.

That means taxpayers have to pay that cash back with interest each and every year. Thinking about it like that, that's not a tax cut. That's just a tax deferral. With interest.

So what should the government have done instead? Regardless if the government were Liberal or Conservative or NDP what would have been a better policy?

I think the better policy would have been to do nothing and not borrow money to pay for a tax cut. This tax cut will cost the government about $5.5 billion a year and likely more. By not spending that money the government would have been $5.5 billion closer to balancing the budget.

Why is balancing the budget better?

This is a question everyone that studies economics knows the answer to: when a government balances the budget year over year the debt shrinks in relation to the size of economy. As that happens debt service charges become smaller in proportion. So as government revenues increase they can be used for things other than servicing the debt like health care, the environment, the military, and other things.

The 2025 election was a statement of just how big a failure Canadian leaders and the voters have become. People chose badly, but none of the parties were offering a responsible vision either. Not one political party offered a platform of planning for long term fiscal sustainability. I blame the voters because voters wanted goodies not plans.

Our leaders failed .... but we failed first. This tax cut is evidence of just how irresponsible voters in this country are.