Trudeau government weakened Canada’s economy long before COVID-19



Commentary

The Trudeau government is preparing to formulate its first federal budget in about two years, so long before COVID-19, how policies to raise taxes in Ottawa, increase spending and borrowing, and tighten regulations will boost the economy. It is worth considering if it has been weakened.

In 2015, liberals campaigned to reduce income taxes for the middle class, especially families with children. After forming the government, the Liberal Party reduced the second lowest federal personal income tax rate from 22.0 percent to 20.5 percent. 2021 The tax year applies to personal income between $ 49,020 and $ 98,040. But at the same time, they eliminated some tax credits for income splits for children’s fitness programs, education, textbooks, public transport, and toddler couples, and previously made such deductions in their tax returns. Effectively increased the amount of income tax paid by the claimed Canadians.

In fact, 2017 analysis Of these two tax reforms, the reduction in tax rates and the abolition of tax credits show that 81% of middle-income households paid $ 840 more income tax (on average) than before these revisions. I did. A family is defined as a parent with one or more children or a child under the age of 18.

A Related analysis It was found that 61% of low-income households, including the bottom 20% of income earners, experienced a personal income tax hike because their income was too low to benefit from the tax cut. At the same time, they lost the benefit of tax credits.

In addition, in 2016, the federal government agreed in cooperation with nine participating states (excluding Quebec). Increase payroll tax For the Canadian pension plan starting in 2019. As a result, when the hike is fully implemented in 2025, 98.8% Many middle-income households will experience tax increases.

To be clear, the Liberal Party’s proposed policy, lowering the income tax rate, was good. Liberal and conservative that Canada needs to lower its personal income tax rate, thereby making Canada more competitive and improving entrepreneurship, risk-taking, investment, and incentives for labor efforts. There was successive government consensus, including both. But again, the Trudeau government has offset the benefits of lowering tax rates by abolishing tax credits, resulting in actual tax increases.

Especially when faced with this fact that the income tax of the middle class has increased, the government Consistent refrainIncluding that of Former Minister of Finance, Analysis is government relocation, especially Increasing Canada Child Allowance (CCB). In other words, the government believes that people must maintain more of their income through lower tax rates and government relocations.

It is worrisome that the government treats these two dramatically different sources of funding in the same way. Tax cuts allow individuals and families to retain more of their hard-earned money, thereby increasing their independence and their ability to feed themselves and their families.

Increasing CCB can create dependencies that require you to redistribute income from one group to another. CCB is Covered by future taxes — in other words, borrowing— Today, families with children receiving higher CCB do so at the expense of their own children. The child bears the future burden of today’s borrowing for CCB.

Finally, Canada’s economic performance decline Long before COVID. Specifically, from 2016 to 2019, while the growth of business investment, which is the center of long-term prosperity and is essential for economic recovery, was actually negative, income growth and job creation in the private sector The ratio of was lower than the previous term. ..

As with previous tax increases, increased government spending and borrowing, and increased regulation, the result was that the economy weakened and never strengthened. The federal government recognizes the economic reality of these policies as they are ready to recommend more of the same when the Canadian economy actually needs dramatic changes on the eve of the next budget. Is important.

Jason Clemens and Jakefuss are economists at the Fraser Institute.

The views expressed in this article are those of the author and do not necessarily reflect the views of The Epoch Times.

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