Friday, September 29, 2023
No Result
View All Result
  • Media
Support Us
Macdonald-Laurier Institute
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Energy Policy
      • Energy
      • Environment
    • Foreign Policy
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs
  • Projects
    • The Great Energy Crisis
    • Centre for Advancing Canada’s Interests Abroad
    • Dragon at the Door
    • Canada and the Indo-Pacific Initiative
    • The Transatlantic Program
    • DisInfoWatch.org
    • Competition Policy in Canada
    • Speak for Ourselves
    • Justice Report Card
    • COVID Misery Index
      • Provincial COVID Misery Index
      • Beyond Lockdown
      • COVID and after: A mandate for recovery
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Past Projects
      • The Eavesdropping Dragon: Huawei
      • Talkin’ in the Free World with Mariam Memarsadeghi
      • An Intellectual Property Strategy for Canada
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
      • Straight Talk
      • Labour Market Report
      • Leading Economic Indicator
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy
    • Papers
    • Commentary
    • Columns
    • Books
    • Video
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Energy Policy
      • Energy
      • Environment
    • Foreign Policy
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs
  • Projects
    • The Great Energy Crisis
    • Centre for Advancing Canada’s Interests Abroad
    • Dragon at the Door
    • Canada and the Indo-Pacific Initiative
    • The Transatlantic Program
    • DisInfoWatch.org
    • Competition Policy in Canada
    • Speak for Ourselves
    • Justice Report Card
    • COVID Misery Index
      • Provincial COVID Misery Index
      • Beyond Lockdown
      • COVID and after: A mandate for recovery
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Past Projects
      • The Eavesdropping Dragon: Huawei
      • Talkin’ in the Free World with Mariam Memarsadeghi
      • An Intellectual Property Strategy for Canada
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
      • Straight Talk
      • Labour Market Report
      • Leading Economic Indicator
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy
    • Papers
    • Commentary
    • Columns
    • Books
    • Video
No Result
View All Result
Macdonald-Laurier Institute

Ignore the scaremongers, cutting spending is Canada’s best way out of deficit: Philip Cross in the Financial Post

August 20, 2021
in Columns, Domestic Policy Program, Economic policy, In the Media, Latest News, Philip Cross
Reading Time: 2 mins read
A A

The political appeal of tax hikes rather than spending cuts during an election is clear. Even still, the best way to get out of Canada’s deficit situation is to cut spending, writes Philip Cross in the Financial Post. Below is an excerpt from the article, which can be read in full here. 

By Philip Cross, August 20, 2021

No party is irresponsible enough to pretend that the record $354 billion deficit run up in the past year is sustainable. So it is easy to formulate the key economic question of the federal election campaign: how will the main parties distribute lowering the federal deficit between less spending and higher taxes? While popular discussion associates austerity exclusively with spending cuts, tax hikes equally represent fiscal tightening.

Economists know the best way to reduce deficits is to rely primarily on spending cuts and not tax increases. An IMF study in 2018 by Alberto Alesina, Carlo Favero and Francesco Giavazzi followed these two main policy regimes in OECD countries between 1981 and 2014. Their conclusion is that “expenditure-based plans generally were less harmful to growth than tax-based plans.” This clearly contradicts the message permeating retail politics that spending cuts are harsher than tax increases.

Furthermore, during a period when the economy is growing as Canada’s currently is, relying primarily on spending cuts meant “output costs were zero, on average.” In other words, spending restraint did not have the “slash and burn” effect on overall GDP that scare-mongering critics claim when denouncing austerity. Canada’s experience in the 1990s was cited by the IMF as a prime example of what it called “expansionary austerity.” The federal government relied on spending reductions to accomplish over 80 per cent of its deficit reduction in the mid-1990s, very much in line with the IMF’s recommendations.

Conversely, the IMF concluded that “tax-based fiscal corrections were associated with large and long-lasting recessions.” Far from cushioning the effects of austerity, proponents of tax hikes rather than spending cuts are advocating a policy that lowers incomes and raises unemployment. Apparently such a point is too subtle for policy debates during an election.

***TO READ THE FULL ARTICLE, VISIT THE FINANCIAL POST HERE***

Share this:
Tags: economic policyeconomyPhilip Crosstaxtax policyWealth Tax
Previous Post

Canada leads all peer countries in vaccinations, trails all in reducing pandemic restrictions: MLI’s COVID Misery Index

Next Post

It’s time to learn to live with COVID: Golden, Grant, Srigley and Whatley in the National Post

Related Posts

Kishida’s mixed bag of successes and shortcomings: Stephen Nagy in the Japan Times
Columns

Kishida’s mixed bag of successes and shortcomings: Stephen Nagy in the Japan Times

September 28, 2023
MLI in Parliament: Richard Shimooka on defence procurement
Video

MLI in Parliament: Richard Shimooka on defence procurement

September 28, 2023
Conservative populism can break elitism and fix institutions: Jamil Jivani in the National Post
Columns

The dark reality of foreign transnational repression in Canada: Marcus Kolga in iPolitics

September 28, 2023
Next Post
What if COVID doesn’t end? Philip Cross in the Financial Post

It's time to learn to live with COVID: Golden, Grant, Srigley and Whatley in the National Post

Newsletter Signup

Follow us on

Macdonald-Laurier Institute

323 Chapel Street, Suite #300
Ottawa, Ontario, K1N 7Z2 Canada

613.482.8327

info@macdonaldlaurier.ca
MLI directory

Support Us

Support the Macdonald-Laurier Institute to help ensure that Canada is one of the best governed countries in the world. Click below to learn more or become a sponsor.

Support Us

  • Inside Policy Magazine
  • Annual Reports
  • Jobs
  • Privacy Policy

© 2021 Macdonald-Laurier Institute. All Rights reserved.

No Result
View All Result
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Energy Policy
      • Energy
      • Environment
    • Foreign Policy
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs
  • Projects
    • The Great Energy Crisis
    • Centre for Advancing Canada’s Interests Abroad
    • Dragon at the Door
    • Canada and the Indo-Pacific Initiative
    • The Transatlantic Program
    • DisInfoWatch.org
    • Competition Policy in Canada
    • Speak for Ourselves
    • Justice Report Card
    • COVID Misery Index
      • Provincial COVID Misery Index
      • Beyond Lockdown
      • COVID and after: A mandate for recovery
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Past Projects
      • The Eavesdropping Dragon: Huawei
      • Talkin’ in the Free World with Mariam Memarsadeghi
      • An Intellectual Property Strategy for Canada
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
      • Straight Talk
      • Labour Market Report
      • Leading Economic Indicator
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy
    • Papers
    • Commentary
    • Columns
    • Books
    • Video

© 2021 Macdonald-Laurier Institute. All Rights reserved.

IDEAS CHANGE THE WORLD!Have the latest Canadian thought leadership delivered straight to your inbox.
First Name
Last Name
Email address

No thanks, I’m not interested.