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IMF chides Canada on cut to GST Add to ...

The International Monetary Fund issued a gentle corrective to Canada's Conservative government yesterday, saying it's better to cut personal income taxes than trim the GST. The IMF also suggested Ottawa bulk up fiscal cushions that help guard against a deficit -- the very reserves it's recently pruned back. "Cutting the consumption tax rate would also provide economic benefits, although personal income tax cuts could be a more effective use of resources," the IMF said in its latest report on Canada. The Tories are forgoing almost $5-billion in tax revenue to cut the goods and services tax to 6 per cent from 7 per cent on July 1. Most of the IMF report was completed before the May 2 federal budget. It praised the budget, but said "other tax cuts would have been preferable to a reduction in the GST rate."

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