It may seem counter intuitive, but the Canadian Taxpayers Federation suggests that the best way for the federal government to help the economy bounce back and to deal with the deficit is to lower taxes.
Federal Director Aaron Wudrick says even before COVID-19 the CTF was advocating for cuts to government salaries and to corporate tax breaks to add more money to the coffers.
He understands that with COVID-19, a lot of the spending announcements have been necessary.
The Prime Minister has said in the past that raising taxes is not an option for Canadians who are already dealing with financial issues from the pandemic, which Wudrick agrees with, but says that doing the opposite and lowering taxes means more money in people’s pockets, meaning more money to invest back into the economy.
In the past, stimulus spending has been used to boost the economy, but Wudrick says the government then has to pick and choose who gets that funding, unlike if taxes are lowered, which works for everyone.
He understands there would be less money for the federal government in the short term, but in the long haul he believes it could work.
His numbers indicate that if every income tax bracket was lowered by 1 per cent, it would put up to $8-billion back into the pockets of Canadians to spend at local businesses and rebuild their finances.