Should Ottawa raise the GST to pay down debt or fund more spending?
Global News
A group of Canadian business leaders agree with the idea of increasing the GST if the government needs to generate revenue quickly.
Should the federal government raise the goods and services tax (GST) as a means of paying down the deficit and funding more spending in the upcoming budget?
A group of Canadian financial and business leaders is urging Ottawa to consider it in the event officials need to find a way to offset expected increases in spending.
This comes ahead of the anticipated federal budget, which Prime Minister Carney’s Liberal government says will be tabled on Nov. 4, and which is expected to include multiple spending commitments amid the trade war aimed at bolstering the Canadian economy — while also increasing the deficit.
The Business Council of Canada released its 2025 budget consultations report on Wednesday, which summarizes the country’s fiscal policy position via the input of 50 chief executives, as well as 20 economists, investors and former senior officials between Aug. 4 and Sept. 24.
While the group was “divided” about whether or not there is an immediate need to increase revenue for the government, there was a “consensus” that raising the GST would be the best way to do so.
“While divided on the ‘if,’ the experts were remarkably aligned on the ‘how.’ If the government must raise revenue, there is an overwhelming consensus that it should use the Goods and Services Tax (GST), because it is the least distortionary option,” the report said.
However, that may also mean more pressure on household budgets already struggling with affordability, and as small and medium-sized businesses face having to shut down due to tariff costs.
“The impact on small businesses would be hard and quick if there were a GST increase. It would result in consumers having fewer dollars to spend — fewer dollars that they would then be able to allocate to the purchase of goods or services in Canadian small businesses,” said Dan Kelly, president of the Canadian Federation of Independent Business.
