What if we kept the carbon tax, and got rid of the GST instead?
The term “revenue-neutral” has gotten a bit mixed up in the recent controversy surrounding the government’s carbon pricing plan.
Unfortunately for Conservative MP Michael Chong, that term might now be tainted for the foreseeable future.
There has been much buzz about the recent phenomenon of conservative provincial election victories. Trudeau came into office with seven Liberal premiers and two NDP premiers. There are now seven conservative premiers, one NDP-Green quasi-coalition, and two Liberal premiers.
One of those Liberals is Newfoundland Premier Dwight Ball, who will be up for re-election on May 16. He faces yet another conservative leader calling for a referendum on equalization payments, promising to defend the province’s oil industry from Ottawa, and accusing the premier of being too cozy with Trudeau.
Regardless of what ends up happening on the Rock on election day, the real anticipation is October’s federal election. It is hard to remember if there has ever been a more anticipated federal election with this many months left to go. Canadian politics tends to fall by the wayside between elections, and it is usually the Americans who have year-long campaigns.
If the Conservatives win the election in October, which is far from a foregone conclusion, the fate of the carbon tax will be high on the agenda. Canadians who will have voted for the tories over that issue will be expecting their “carbon tax repealed” headline in the news.
But maybe those voters would be just as happy with a headline that reads “GST repealed” instead. One of (but not the only) criticism of the carbon tax has been that it is not actually revenue-neutral, and that it merely just forces the government to spend all of the extra revenue.
Revenue-neutrality doesn’t mean you collect more then promise to spend it all. It means you collect more, then you collect less elsewhere. Michael Chong, during the Conservative leadership campaign, advocated for a carbon tax made revenue neutral through corporate and income tax cuts.
Michael Chong is not the leader of the opposition, showing that Conservative voters did not buy his idea. His proposal, however, now has a ‘status quo’ advantage that it did not have during the campaign — something that he will probably be eager to point out within our hypothetical tory government caucus.
Cutting income taxes would probably not settle any of the carbon tax anxiety until at least a year after the cuts, and cutting corporate taxes may never even be noticed by the general population.
Regardless of which tax is cut, the goal should be to ensure that the revenue collected through the carbon tax is the same amount of revenue no longer collected because of tax cuts elsewhere. It is just my personal opinion that a cut to GST would seem more concrete and would make for a better headline.
It would be a great headline to write.