Saturday, December 5, 2009

Jim Flaherty Says "Damn I'm Stupid" But I Refuse to Smarten Up

Despite repeated warnings and advice from this country's top economists, our finance minister, who used to be a personal injuries lawyer; thinks he has a better idea.

Bankrupt the country.

Of course, what many of this country's top economists may not realize, is that neo-conservatives have no desire to fix the economy. They just want to reduce our revenue, to justify slashing social programs.

It's an ideology based on social Darwinism, so nothing they say will sink in.

The stage has been set. Canada is toast.

Raise GST, rating service says
The Canadian Press
December 3, 2009

MONTREAL — Canada should tackle its growing debt and the threat of chronic structural deficits by increasing the GST, perhaps to nine per cent, and cutting program spending, the co-president of the DBRS rating service said Wednesday.

While politicians are loathe to raise taxes, dramatic action is required to prevent the country’s debt from spiralling out of control, Peter Bethlenfalvy said in an interview.

"It’s not whether they (taxes) will go up, it’s 100 per cent certain that they will go up."

The Conservative government reduced the Goods and Services Tax to five per cent from seven per cent a few years ago. But a reversal is now required to help improve the country’s fiscal health, he said.

Bethlenfalvy said raising the consumption task is probably the "smartest" tax to increase. He praised moves to harmonize the GST in Ontario and British Columbia.

"It shouldn’t have gone down two per cent, it should go back up, and maybe two percentage points higher," he said after presenting DBRS’ views on Canada’s economic position following the global financial crisis.

The country will hit a "brick wall" that will require major spending cuts unless expenditures are reduced and revenues increased without choking off the economic recovery.

Failure to act will see interest costs increasingly become a more significant part of the deficit, said Bethlenfalvy, who hopes to spur popular support for tough measures.

"We can’t, as citizens, keep demanding a pension plan, health-care services, education and, at the same time, not pay for them."

Several other voices have also recently called for drastic spending cuts and higher taxes to slay the debt elephant that stalked Canada in the 1970s, 1980s and 1990s.

TD Bank economist Derek Burleton and Bank of Montreal economist Douglas Porter said governments will have to shift their attention from stimulating the economy to how to kill the monster they created.

Government officials couldn’t be immediately reached for comment. But Finance Minister Jim Flaherty recently dashed talk of tax hikes, saying the federal government won’t raise taxes or cut transfers to provinces or individuals in order to pay off Ottawa’s deficit.

He also insisted that government stimulus spending was a temporary measure and that it doesn’t plan to undertake major new initiatives in next year’s budget.

Flaherty said the Conservative government will only move to balance the budget when a "firm" economic recovery has taken hold. He has previously said that stimulus spending and lower tax revenues will result in five years of budget deficits.

Faced with a deep recession, the government initiated stimulus spending packages totalling $61 billion.

Canada’s current account deficit, a broad measure of the country’s economic dealings with the rest of the world, widened to a record $13.1 billion in the third quarter.

The federal debt recently passed the $500-billion mark and is rising at $1,772.58 a second.

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