Small tax cut better than nothing, provided we can afford it
Editorial

It's been wisely said by many over time that when it comes to something positive, "every little bit helps."

Assuming for the moment that a tax cut is something positive, then the cut to the GST, which the government of Prime Minister Stephen Harper gave us last week to ring in the New Year, should be viewed as good news.

Granted, the feds have only knocked one percentage point off the federal sales tax. For most purchases, we will now be taxed a whole penny less for each dollar we spend.

In the great scheme of things, that doesn't sound like a great deal of money. But like we observed before, "every little bit helps," and over a year, savings lie that can amount to some dollars, which a family might want to apply to other items, like more outings, contributing to a new car, maybe paying off a mortgage faster.

Yes, this cut can probably be viewed as positive, provided the government can afford it.

Harper and his people seem to believe they can, and local Conservative MPs, like Dufferin - Caledon's David Tilson, concur. But can we know for sure?

While Canada's economy seems to be buzzing right along, the same cannot be said for all the other countries in the world, and the example of the United States springs readily to mind. Our American neighbours are experiencing economic difficulties and its unrealistic to assume, or even hope, that Canada can escape all of the impacts from that. Harper knows that too, and he stated as much in the recent speech from the throne.

"This is a time of economic uncertainty and volatility in the wider world. While the economic fundamentals of our country are strong, Canada is not immune from this turbulence," the speech stated. "Canadians understand these challenges and want a government that is a competent and effective manager of the economy."

The reality is we might be looking at a recession in Canada in the not-too-distant future. We hope that with Canada's economic house being in order (as our governors assure us is the case), the impacts will not be as severe as they were in the early '90s. But there will be impacts, with greater demands being placed on the government's piggy bank.

There are two basic things the federal government can tax the average person for; income and consumption (GST being a tax on consumption). The problem is during a recession, incomes tend to decline, as does consumption, thus reducing the amount of money the government can collect.

So there's our concern. And that's why we feel obligated to ask if the government can really afford to part with this money at this time. According to statements from the Prime Minister's Office, the cuts to GST since Harper and company took over amounts to about $12 billion in savings for consumers per year, meaning a lot of money that's not going into the government's coffers.

And we do grant there is another arguments, stating that cutting sales taxes might be a bit of a spur applied to the economy, maybe generating more consumer spending that could help lessen the effects of a recession, if and when one does come.

In that event, this latest GST cut will amount to very good news.

It all comes down to simply whether or not the government can afford this. We have asked the question. We hope Harper and his people have considered it.