{"id":51749,"date":"2025-10-02T18:04:10","date_gmt":"2025-10-02T18:04:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/51749\/"},"modified":"2025-10-02T18:04:10","modified_gmt":"2025-10-02T18:04:10","slug":"should-ottawa-raise-the-gst-to-pay-down-debt-or-fund-more-spending-national","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/51749\/","title":{"rendered":"Should Ottawa raise the GST to pay down debt or fund more spending? – National"},"content":{"rendered":"

Should the federal government raise the goods and services tax (GST<\/a>) as a means of paying down the deficit<\/a> and funding more spending in the upcoming budget?<\/p>\n

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A group of Canadian financial and business leaders is urging Ottawa to consider it in the event officials need to find a way\u00a0to offset expected increases in spending.<\/a><\/p>\n

This comes ahead of the anticipated federal budget, which Prime Minister Carney\u2019s Liberal government says will be tabled on Nov. 4<\/a>, and which is expected to include multiple spending commitments<\/a> amid the trade war aimed at bolstering the Canadian economy \u2014 while also increasing the deficit.<\/p>\n

The Business Council of Canada released its 2025 budget consultations report<\/a> on Wednesday, which summarizes the country\u2019s fiscal policy position via the input of 50 chief executives, as well as 20 economists, investors and former senior officials between Aug. 4 and Sept. 24.<\/p>\n

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While the group was \u201cdivided\u201d about whether or not there is an immediate need to increase revenue for the government, there was a \u201cconsensus\u201d that raising the GST would be the best way to do so.<\/p>\n

\u201cWhile divided on the \u2018if,\u2019 the experts were remarkably aligned on the \u2018how.\u2019 If the government must raise revenue, there is an overwhelming consensus that it should use the Goods and Services Tax (GST), because it is the least distortionary option,\u201d the report said.<\/p>\n

However, that may also mean more pressure on\u00a0household budgets already struggling with affordability<\/a>, and as small and medium-sized businesses face having to shut down due to tariff costs.<\/a><\/p>\n

\u201cThe impact on small businesses would be hard and quick if there were a GST increase. It would result in consumers having fewer dollars to spend \u2014 fewer dollars that they would then be able to allocate to the purchase of goods or services in Canadian small businesses,\u201d said Dan Kelly, president of the Canadian Federation of Independent Business.<\/p>\n

\u201cConsumer income is already under great fire. We\u2019ve just come through years and years of heavy inflationary pressure and this would effectively add to that if the tax increase came into effect \u2014 it would be a bitter pill to swallow.\u201d<\/p>\n

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The GST is how the federal government generates tax revenue from most items and services that are purchased in Canada.<\/p>\n

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The GST stands at five per cent, meaning that if an item has a sticker price of $100, it will cost the customer an additional $5 in federal sales tax.<\/p>\n

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In provinces like Alberta, there is no provincial sales tax added onto the GST.<\/p>\n

For goods and services purchased in other provinces and territories, the provincial sales tax is added to the GST.<\/p>\n

For example, in British Columbia, a seven per cent provincial sales tax means purchases made in the province will usually be subject to a total of 12 per cent sales tax, which includes the five per cent GST.<\/p>\n

Former prime minister Stephen Harper last changed the GST, with a drop from seven per cent to six in 2006, followed by a drop from six to the current five per cent in 2008 \u2014 where it has stayed since.<\/p>\n

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Raising the GST would effectively make the costs for most items and services higher immediately, which means consumers may struggle even more with affordability.<\/p>\n

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Last month, the parliamentary budget officer said he expects the federal government to post an annual deficit of $68.5 billion this year<\/a>, which is up from $51.7 billion last year.<\/p>\n

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However, the officer\u2019s projections did not take into account plans to increase defence spending to meet the updated NATO targets<\/a>.<\/p>\n

In responding to a Global News question, Finance Minister Fran\u00e7ois-Philippe Champagne\u2019s office would not say whether such a plan is being considered for the budget.<\/p>\n

\u201cWe will be ambitious in our investments, rigorous in our savings and unrelenting in pursuing a long term and sustainable fiscal outlook,\u201d John Fragos, press secretary for Champagne, said in an emailed statement.<\/p>\n

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\u201cWe look forward to spelling out our plan to do exactly that on November 4 when we table our new government\u2019s first budget.\u201d<\/p>\n

Kelly noted that a GST increase could be \u201ca big revenue generator for the federal government.\u201d<\/p>\n

\u201cIt\u2019s not inconceivable that they would consider a hike,\u201d Kelly said.<\/p>\n

\u201cAt the same time, I think before the federal government would turn its key on any kind of tax increase it would have to be reasonably confident that the public could stand it, and it\u2019s not like we\u2019ve been knocking it out of the park with consumer income.\u201d<\/p>\n

Although it may be useful as a revenue tool, Kelly says it may act as \u201ckryptonite\u201d for political leaders \u2014 meaning they could struggle to win over voters at the next election.<\/p>\n

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\u201cCanadians are particularly sensitive to sales tax increases because they are so visible, and the backlash that would be felt would be pretty swift,\u201d Kelly said.<\/p>\n

\u201cThey would potentially do that at their peril at the polls.\u201d<\/p>\n

\n\t\t&copy 2025 Global News, a division of Corus Entertainment Inc.\t<\/p>\n","protected":false},"excerpt":{"rendered":"Should the federal government raise the goods and services tax (GST) as a means of paying down the…\n","protected":false},"author":2,"featured_media":51750,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,245,2096,184,39654,1300,85,46,2101,39653,1584],"class_list":{"0":"post-51749","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-canada","10":"tag-consumer","11":"tag-economy","12":"tag-fall-budget","13":"tag-gst","14":"tag-il","15":"tag-israel","16":"tag-money","17":"tag-sales-tax","18":"tag-taxes"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/51749","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=51749"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/51749\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/51750"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=51749"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=51749"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=51749"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}