Jean Charest has said several times that tax cuts in 2008 allowed Quebec to do better than others during the financial crisis and the big recession. Is the candidate leading the Conservative Party of Canada revisiting the past?
Come back. The Liberal government led by Jean Charest in Quebec announced, in the 2008-2009 budget, a $ 950 million tax cut for Quebecers. As specified in the budget filed by the then Minister of Finance, Monique Jérôme-Forget, this tax cut would contribute 0.3 percentage points to economic growth in 2008. It is on page B.22 of budget document.
This is not negligible. But candidate Charest, today, exaggerates a bit by saying this tax cut is a determining factor in the fact that Quebec was less brutally hit than its neighbors by the massive recession in 2008-2009.
In the budget, the Ministry of Finance forecasts growth of 1.5% in 2008 and 2% in 2009. In fact, in the financial crisis that hit since the summer of 2008, growth was limited to 1% that year and The GDP the real fell by 0.3% in 2009.
It should be understood that the Charest government, when announcing its tax cuts, predicted mainly the reduction in GST (federal tax) and the Government of Canada tax cuts, which will provide the strongest impetus to Quebec’s economy, contributing 0.7 percentage points to growth in 2008.
This tax cut by Stephen Harper’s government will represent, according to provisional estimates by officials from the Quebec Department of Finance, nearly half of the economic growth forecast for that year, at 1.5%.
The financial crisis came and the economy collapsed. In the ensuing budget, the government accelerated its investments in infrastructure. And really this measure is seen as the most stimulus for Quebec’s economy.
Instead of a 1.2% decrease in GDPprovided in the 2009-2010 budget, for 2009, the decrease in GDP real is limited to 0.3%. The last two quarters of 2008 and the first of 2009 were negative, then the economy continued to grow.
That’s the complete story without any shortcuts, which I allow myself to add and remember that 1eh January 2011, the Charest government raised Quebec’s sales tax from 7.5% to 8.5%.
So, yes, Jean Charest’s government raised the sales tax. But he also lowered taxes. And he pursued a budget balancing policy, which he did not reach, however, before his defeat in 2012.
A tax allergy
Jean Charest is also accused of launching a carbon market, which aims to charge price increases on the tons of greenhouse gas emissions emitted. Jean Charest came up with this idea in 2007; this came true in 2013 in Quebec, which joined forces with California in 2014 to create a cap-and-trade system for greenhouse gas emission rights.
Today, most provinces across the country have implemented some form of carbon tax. The federal government imposes a carbon tax on provinces that refuse to implement a system. Proceeds are returned in the form of payments to taxpayers and programs to combat climate change.
This taxation is important against this. Eliminating carbon pricing today means shifting climate debt to the next generations. The actions we take today will affect the lives of our children and grandchildren.
If, in 2025, we eliminate carbon pricing, much will have to be returned in 2030, in 2035, in 2040, as the experts of IPCC warn us of the worst if the trend is not reversed now? Why are Conservatives so keen to pass on such debt, as an economic burden, to future generations?
No, cryptocurrencies do not protect against inflation
Not surprisingly, in the midst of a leadership campaign, a candidate is looking to improve their record. It is less surprising to see a candidate for the leadership of the Conservative Party who aims to show that he is the champion of lower taxes, fees and tariffs. It is in the DNA of the Conservatives to make such promises.
But it is frankly horrible and disturbing, economically, to hear a candidate like Pierre Poilievre propose to remove the Governor of the Bank of Canada because he disagrees with him or to hear him brag about cryptocurrencies as a form of inflation protection.
This positioning, if it is maintained for a long time, if Pierre Poilievre becomes the leader of the Conservative Party, could harm the Canadian economy and the finances of individuals. I spoke about this recently in a text about the Bank of Canada and the declarations of candidate Poilievre.
Regarding cryptocurrencies, in saying that these assets could allow Canadians to free themselves from inflation, Pierre Poilievre deceives the people who listen to him. There is too little use of cryptocurrencies to allow the average household to avoid inflation in the prices of fuel, poultry, beef, housing or clothing.
In a text published on April 7 at Globe and Maila former Deputy Superintendent of Financial Institutions, Mark Zelmer, now a researcher at the CD Howe Institute, argued that inflation protection is a benefit not offered by cryptoassets.
Cryptos like bitcoin and ethereum with blockchain technology have no future, far from it. Securing transactions with blockchain is more attractive than what the current financial system offers with its outdated infrastructure, according to Mark Zelmer. But the sector must be managed to better protect consumers, in this very speculative and particularly complex universe.
Canadians will be disappointedhe said, if they believe that handling and trading cryptoassets will protect them from inflation. Assets, such as bitcoin and ethereum, have no intrinsic value. Their prices, or exchange rates if you prefer, are highly volatile on a daily and weekly basis, with daily variations of up to 30%. It would be very difficult for any business to put prices on its products and services, or for Canadians to have confidence in the value of their savings.
If you’re interested in the facts, this campaign for the leadership of the Conservative Party of Canada sometimes hurts your ear.
Source: Radio-Canada
