OTTAWA, ON: The Canadian Taxpayers Federation told the Senate finance committee that instead of spending $20 billion over budget through the fiscal update, the federal government could cut the sales tax and still reduce the deficit. 

“Canadians are paying too much tax because the government wastes too much money,” said Franco Terrazzano, Federal Director of the CTF. “If Finance Minister Chrystia Freeland’s spending wasn’t way over budget, she could provide meaningful tax relief and still lower the deficit.”

The fiscal update shows the federal government’s spending is $20.2 billion over budget. Budget 2022 released in April projected spending to be $452.3 billion this year. The fiscal update projects spending to be $472.5 billion. 

Reducing the GST by one percentage point would reduce the government’s revenue by about $9 billion, according to the Parliamentary Budget Officer’s revenue calculator. That means Freeland could cut the sales from five to three per cent and still lower the deficit by keeping spending at April’s budgeted levels.

“Instead of giving some Canadians some money back through rebates, Freeland could provide meaningful relief to all Canadians by cutting the GST,” said Terrazzano. “The government could make life more affordable by cutting the sales tax if it stopped wasting so much money.”

You can find the CTF’s presentation to the Senate’s finance committee here. 

You can find the CTF’s backgrounder on tax relief options here.