The most important fiscal action the Conservative government took after being elected in 2006 was to cut the GST by two points. At the time — and ever since — every credible economist in Canada said it was a bad, bad idea. With a general election less than a year away, now seems like a good time to run a ‘what-if’ scenario.
The Conservatives for years vowed that they would eliminate the deficit of $55.6 billion recorded in 2009-10 by 2015-16. And the government has been aggressively cutting government spending on programs and services since 2010. Despite recent declines in oil prices, the federal deficit will be eliminated in 2015-16 — possibly even a year earlier.
On the surface it looks like good fiscal stewardship, but the surface hides a few unsettling facts: Those program cuts weren’t necessary and the deficit could have been eliminated earlier. And it all comes back to that bad, bad idea.
READ MORE: http://www.ipolitics.ca/2014/12/08/how-to-cook-up-a-fiscal-crisis-for-political-gain/
In fact, from a fiscal perspective there was nothing the Conservative government really had to do. Public sector employment had been cut. The size of the government had been reduced dramatically. Program spending was at an all-time low. Canada’s largest income tax cut ever had been introduced in 2000 and the tax burden on Canadians had fallen by 1.5 per cent of GDP. The debt burden was at a post-war low and was expected to decline further."
"The Liberal government had turned out to be the best ‘fiscal conservative government’ in Canadian federal history. And that was a problem for Stephen Harper."
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