The GST Cut is not so Stupid

Patrick Grady

MPRA Paper from University Library of Munich, Germany

Abstract: This paper argues that the two-percentage point cut in the GST to 5 per cent proposed by the Conservatives in the January 2006 Canadian federal election and implemented in the 2007 budget was not “stupid” as suggested by many economists. To the contrary, it fortuitously turned out to provide needed fiscal stimulus of a particularly potent type just as the economy turned down. It also had a progressive impact on the incidence of the tax system. And finally the lower rate would make it easier to harmonize the GST with provincial sales tax.

Keywords: Goods and Sales Tax (GST); tax cut stimulus; income distribution impact of GST cuts; harmonization of sales tax (search for similar items in EconPapers)
JEL-codes: E62 H21 H25 H77 (search for similar items in EconPapers)
Date: 2008-02-01
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:59231

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