By recommending the federal Conservatives campaign to eliminate the GST (Harper Should Hit The Grits Where It Hurts -- In The GST -- Sept. 8), Lawrence Martin is bluntly stating that vote-getting should trump good economic policy and leadership.
A consumption tax such as the GST is a more efficient way to raise revenue for the government than are income taxes, corporate taxes, or fees and premiums. The term "efficient" in economist jargon means that it creates the least amount of distortion of how Canadians would normally behave. And with rebates and exemptions for food, the regressive features of the GST are mitigated.
With the federal government running huge surpluses, Ottawa should certainly reduce its revenue intake, but there are far better taxes to cut than the GST. If you want to leave more money in the hands of consumers, cut personal income taxes. Better yet, if you want to stimulate the economy, cut capital taxes or increase the capital-cost allowances on new investments in machinery and equipment. It would not be as politically popular, but it's far wiser policy.
Canadians see right through the political game of leaders promising only what will get them elected. As a result, apathy and distrust has set in.
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Todd Hirsch