Balancing books may require some risk

Ahead of Tuesday’s federal budget, speculation is rife that Chrystia Freeland, the federal finance minister, will raise taxes on the wealthy and on corporate profits.

- DAVID OLIVE

While regarded as political poison, two reforms that would help Ottawa achieve fiscal balance are raising the age of eligibility for Old Age Security to 67 from 65 and restoring the federal portion of the GST to seven per cent from five per cent, David Olive writes.

That would have little impact in balancing the books.

Instead, we should debate two measures that have long been contemplated but not enacted because they are regarded as political poison.

If you have some cognac handy, reach for it now.

Two reforms that would help us achieve fiscal balance are raising the age of eligibility for Old Age Security to 67 from 65 and restoring the federal portion of the GST to seven per cent from five per cent.

The imperative to significantly increase government revenues is inescapable.

And restraint in government spending cannot be the sole means of returning to the budget surpluses that Canada ran for 11 consecutive years beginning in the 1990s.

There are limits on taxing the rich. Canada’s top statutory tax rate is already the third highest in the G7. At 53.5 per cent to America’s 43.7 per cent, a further increase in the top rate risks tax flight.

It’s the same story with Canadian corporate taxes. At 26.2 per cent, they are higher than the U.S. rate of 25.8 per cent and the OECD average of 23.6 per cent.

(Small business in Canada is taxed at nine per cent, recognizing its role as the country’s biggest employment provider.)