Harper says he won't hike taxes to slay deficit

Opposition finance critics wonder who is benefitting from stimulus money and where and what kind of jobs are being created. Conservatives say the numbers are encouraging but there is still a lot of work to be done with the economy.

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The Canadian Press

Date: Fri. Oct. 9 2009 1:26 PM ET

WELLAND, Ont. — Prime Minister Stephen Harper says he won't hike taxes or cut spending to deal with the country's ballooning debt.

But critics say he can't be trusted to keep his word, and the NDP says he's already broken it.

Harper told a news conference in Welland, Ont., on Friday that the Conservative government remains on track to balance the federal budget by 2016 by controlling spending.

"Our spending for this recession, our stimulus spending, is temporary. It will end when the recession ends and we will return gradually to budget as our revenue recovers from the recession. So absolutely we do not require tax increases," Harper said.

"We do require spending discipline over the long term. We have to make sure that when the recession ends we end the temporary spending and other spending grows at a modest rate."

But the opposition questions both Harper's math and sincerity. They note that just a year ago, as the country was spiralling into recession, Harper said he would not run a deficit at all.

The government now expects a massive $56-billion shortfall this fiscal year alone, with multibillion-dollar deficits continuing until 2015-16.

The NDP said Harper is already raising taxes through the back door with planned increases to EI premiums and the introduction of the HST -- both of which will give Ottawa billions of extra dollars.

Many experts say there are only two options to eliminate the deficit: raise taxes or cut spending. But Harper and Finance Minister Jim Flaherty insist they can do it by limiting spending increases as the economy grows.

Economist Dale Orr released a report Friday calling the government's plan "unrealistic."

He said the Conservatives simply can't responsibly meet their 2015-16 target without raising taxes.

Orr proposes temporarily restoring the GST -- which the Tories cut by two percentage points -- to seven per cent until the budget is balanced again.

Parliament's independent budget officer, Kevin Page, has also suggested the government estimates are far too rosy.

But Harper defended the estimates.

"First of all, the scenario the government put out last month was the average of private-sector forecasters. Mr. Page may be more pessimistic than most. Our forecasts are actually right along the middle and that is absolutely our plan."

Harper also took a poke at Liberal Leader Michael Ignatieff, who once mused that tax hikes may be necessary to fight the deficit.

"Obviously the opposition has other plans," Harper said. "They want to make our stimulus programs permanent, they want to create a lot of other programs and, for them, they'll have to increase taxes. But, for us, it's something that we will not consider."

Comments are now closed for this story

Wade Ens
said
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Harper is a Rock Star as people are requesting his song be played at local Radio stations. He is our Elvis. The finances he has them undercontrol

Peter in MB
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The government could probably cut their costs and save 10%-15% in all departments if they did an audit and eliminated patronage and wasteful spending like funding small special interest groups.

geo
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Harper's plan sounds very plausible.As long as the economy keeps recovering and revenues for the government recover along with it,there is no reason to increase taxes except if you want to spend beyond what is necessary. I fear that if Ignatieff or Layton had their way they would increase taxes mostly for their pet projects that gets them votes and the tax would stay.With a majority government for Harper,the $1.95 a vote to the parties I'm sure would be gone and with it the free ride the parties are getting.Throw in getting rid of some government deadwood and waste and the taxpayer would benefit greatly. As long as the minority govrnment is in place we won't see any of these necessary reductions happen.Next election needs to be a majority government.

Canadian
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I really don't understand you Liberal and NDP supporters. 10 Months ago the Liberals and NDP kept threatening to take down the government if hey didn't spend spend spend. We do that and you play the old show on the other foot routine.

Riley robertson
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Well, as conservative advisor and Tom Flanagan said ... what the Conservatives say doesn't have to be true, it just has to sound plausable. People so desperately want to believe their will not be any consequences to their actions that they come under the spell of voodoo economics. One day we'll have to pay the piper. it won't be pretty. Harper may fool us for a few more years but once the awful consequences of pat conservative policy kick in the cons will be kicked out for another generation. Always seems to work that way in this country ... the Liberals run things for 15 years or so ... get fat lazy and corrupt, then a group of naive cons comes to power to "clean things up" but we discover they're just incompetent and corrupt ... in the meantime a new generation of Liberals takes over the party and they get back in for another 15 or 20 years.

Don
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I will not support any party that will support the new HST . That is raising taxes. I am a senior on fixed income . The tax will put me at the food bank.

Beady Eye
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Uncle Jack and his Cousin Iggy sound like Trudeau back when Joe Clark was PM!! Remember when Clark wanted to raise the fuel tax by something like 4 cents? Trudeau jumped up and said "I'd never do that". And he didn't,! He raised them something like 15 or 18 cents. I smell the same skunk coming from the NDP and Liberals.. (Don't quote me on the exact numbers)

Prof. Pye Chartt
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It truly amuses me how the staunchest supporters of the massive federal economic stimulus program, liberals and socialists, are now the very ones whining most about our deficit...as if they knew of a magical alternative way to spend countless billions of taxpayer dollars. You folks crack me up. We'd be further in debt if you had the government purse strings. And you'd be raising taxes. It just irks you now that the federal government will have to "shrink" spending to bring things back under control. Too bad; so sad.

Fiend, AB
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The only question I have is what will happen if and when interest rates spike to the levels we seen in the '80's? Certainly the cost of merely servicing the debt will go through the roof and necessitate massive government cuts, running deficits for a much longer period of time, tax increases or a combination of all three. Low interest rates are not here to stay folks. Get ready for that shoe to drop!

The Other Lowell in BC
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Why do people keep saying great job Harper when he has run up the biggest deficit in Canadian history. His comments on not raising taxes is nothing but words with no substantiatve proof that he can reduce the deficit by other means. By my way of thinking, the economy is going to have grow a great deal and generate lots of new revenue in order to offset the enormous deficit burden. So far from his actions I have not seen any concrete evidence of how that is to happen. The proof is in the pudding as it goes.

Tim from Calgary
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The Conservatives are 100% correct! By keeping taxes lower, it just us consumers more money to spend purchasing goods and services and thus helping the economy. The more consumers spend on the economy, the more the governments rake in through sales taxes and so on. The worst thing to do when a country is just coming out of a recession is to increase the taxes the people you are counting to spend the way out of the recession. And to those who blame the Conservatives for the large decifit, remember their hands were forced by the Liberals and the NDP with their coalition threats. Funny how Liberal supporters wanted the government to spend like crazy and now they criticize the government for doing what the Liberals pushed for.

Jay, Ottawa
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This seems a bit ridiculous. Taxes are paid to fund government programs. We don't have enough money to pay for those programs - and Harper is fine with that.A more practical Progressive Conservative government would have done both - cut programs and increased taxes to a happy medium.Unfortunately this Endlessly Campaigning Conservative government wouldn't do anything that might require an explanation to the public. We need a government that is willing to take action and is not happy to simply sit on their brains and hope that it all works out at some magical point in the future.

charlie
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Well, now - Iggy promised that he wouldn't raise taxes to reduce the deficit were he elected (fat chance of that eventuality, thank heaven, and no master plan revealed, however). Now Harper says the same thing. We are expected to believe this when Iggy says it, but not when Harper says it? If Iggy can do it, (let laughter subside) why can't Harper? I would much rather have Harper at the helm than Mr. Flip and Flop. Harper at least has shown a steady hand and some economic accomplishments to date (banks etc) while Iggy has little more than rhetoric and platitudes - but many months in, and counting, no PLAN. As to a temporary raise in the GST - wasn't Income Tax temporary - when introduced in 1917? If the economy slowly get back on track the way it looks like it will, Harper may well be right that little or no tax tinkering is needed - as long as he resists the Liberal/NDP wails to throw money around everywhere willy-nilly as each new "crisis" arises - only to be criticized next day for "spending too much". So far, Iggy's mantra of "Me good, Harper bad" - doesn't give me a lot of confidence that he has any clue as to how to do things in any more constructive way, or that he can be counted on not to raise taxes substantially if elected (the ghosts of Dalton McGuinty and John Cretien please take a bow). The mind boggles.

Wayne (Waterloo)
said
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He's selling you a story - don't buy it!Yes, Bill, as the economy improves, so will the government revenue and eventually it should turn to surplus if spending is carefully controlled. It will be very challenging since costs go up every year, people want/need better health care, etc., and the interest payments on the new debt will go up as the debt increases and the interest rates go back up.But somewhere along the line, we have to generate sufficient surplus to pay down the debt the goverment creates over this period. When times are good, we should be saving (ie. running surpluses to pay down the debt.) so that we have room to borrow when things turn tough again. So taxes should be increased in the good times to pay down the debt.And I disagree with any statements made here that the deficit is the Opposition's fault. You may be able to argue that they are only responsible for the first $30 billion since that was what was in the budget they voted on. The rest of the $55 billion deficit is purely the Governments responsibility. If the Conservatives can't do the math to get their numbers right, that is their fault - not the Opposition's.

Ryan
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It was the opposition that forced Harper into running a deficit. When Harper was toeing the balanced budget line the opposition threatened to bring him down unless there was stimulus spending. Now that he listened to the opposition and provided stimulus spending (the opposition could have voted against it) they say he broke a promise to not run a deficit. Can't have it both ways.

Patrick
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QUOTE: "But the opposition questions both Harper's math and sincerity. They note that just a year ago, as the country was spiralling into recession, Harper said he would not run a deficit at all." And who forced that deficit? Yes, that would be the Liberals and the NDP threatening an election NO ONE wanted. Great job Conservatives.

Red X
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Dearest Fred; the Deficit is caused by the Conservatives budgeting it at $33.7 billion & the Liberals voting with them. Harper promised Balanced Budgets in the early election that resulted in another Minority thus wasting $320 million.The Harper Gov't had 2 balanced budgets & from 08/09 to 15/16 will run 8 years of Deficits...

Will
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Harper also said last year that he would never run a deficit so you can't actually trust anything this man says.

JERRY
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What they're going to do is to sell off Canadian assets. There aren't two options, there are three, the conservatives are corporatists and believe the government should be privateered, ransacked by crown charter corporations. Flaherty bungled Ontario's economy and he's been bungling Canada's since he was given the Portofolio, and it doesn't matter whether Harper even denies he's going to sell off our assets, he lies with impunity and the press never does anything about it.

Red X
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Dearest Bill; interesting analysis. So Harper won't raise taxes. Will Flaherty raise EI premiums on all the workers and their respective Employers?...but ofcourse!

Steph
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I totally agree with Bill from Winnipeg, it is a very reasonable explanation, well done! Let's not forget that our PM Mr. Harper is also an economist. Dale Orr look at temporarily restoring the GST...... Sounds like a Liberal proposition!Keep up the good work Mr. Harper!Steph

Jay in Stoon
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Cut taxes, cut government, cut cut cut. I guess Harper hasn't learned anything from the years of Reaganomics - a lesson the Americans are learning very well right now.

Fred - Brandon MB
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The deficit is caused by a world wide recession, not by the PM renegging on a promise. A tax increase during a recession would only deepen the recession, and not produce any more govt revenue. To cut govt spending $56 billion would have created massive unemployment.The govt has managed a crisis created primarily by the USA, very well and Canada is recovering ahead of most other countries.

Ontario Jim
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Good.

Jay-TO
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He should say he won't hike taxes any more than he did in the last budget. The Tories have increased EI contributions on part of the employer which will make the cost of hiring an employee more expensive in a RECESSION of all times. He lowers GST and shifts that loss over to employers. You get a tax cut and maybe a little later a pink slip because they can't afford you anymore. Wake up people, when this government isn't lying, itsprobably still lying.

Wayne
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Way to go Harper as PM you have done an outstanding job so far and hopefully will continue - as to the oppostion critics = why of course they are going to say what they are and have been all along and turns out they have been the ones that are wrong - especially goodale you can't believe a word that guy says.

The key to future growth will indeed be to limit the curve of growth in the transfers to the provinces - people keep forgetting that all it takes is the price of oil to be 1 dollar more than the projection and presto like magic we start having surpluses all over the place - Canada is becoming a true energy super power and with the new pipeline just signed for by the yanks we are going to be selling more than projected so far therefore in 3 - 4 years there are going to be more than projected surpluses - stands for reason .. simple really our national debt is so low right now that we are lucky and won't have to deficit fight like we used to.

George in Calgary
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This I admit is hard to believe. Perhaps he intends to leave this to Ignatieff since he may (hope not!) form the next government. There are some programs that could be slimmed or even canceled altogether which would help. How about cutting back the number of MP's we have and letting their staffs go? How about re-jigging those very nice pensions for MP's such that they would have to put in 40 years work to get their full pensions? Small potatoes I suppose but it is a start (I won't even hint at what should be done with the senate?).

bill from winnipeg
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For those that look a little deeper into financial reports etc, this comment is not a surprise.Considering they are projecting based upon current circumstances, there is great potential that as the situation imporves, there are plenty if opportunities for current incomestreams to improve significantly. Or put another way, as the economy improves, the Amount of current tax will also increase.Anyone saying that taxes MUST increase is simply planning on using the increased tax for programs other than those currently on the books - read pet projects.As ppeople get back to work and todays stats are proving that is happening, EI costs will decrease, income tax will increase, sales tax will increase and government revenues will increase, as Government expenses decrease.No new taxes, no increase in taxes, and most likely further decreases and debt payment once the money required to clear up the deficit is no longer needed..Don't be fooled by terrible warnings of debt.As long as our government continues to focus on fixing the economy and getting people back to work, the rest will take care of itself, so long at the opposition parties don't FORCE our government into more spending and increasing the expense side of their ledger.......

Michael Harkov
said
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Well, I guess this means we can kiss the $1.95 vote subsidy goodbye. The NDP has indicated in the past that they can live without it, but they may vote to support such a policy to avoid an election, knowing that the Liberals will be desperate without it and they'll vote against it. But they vote against everything these days, so who really cares what the Liberals do? The Bloc gets the majority of their financing from the vote subsidy, so they'll vote against it, too.So either the NDP supports such a motion which, with the Tories, will pass, and thus will cripple the Liberals financially........or they get together with the Bloc who also need this subsidy and the Liberals, who say they are going to vote against everything the government proposes..........then Harper will have the perfect reason to trigger an election. In tough economic times, there is no way the people are going to support the continued existance of political welfare for politicians.

hatrock
said
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Good. Why should we tighten our belts if the gov't can't tighten theirs?

Red X
said
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So does that mean he will cut Services to slay the deficit OR simply allow it to run up to $164 billion plus? Ladies & Gentlemen; Harper took a $14 billion Surplus and turned it into a $56 billion Deficit. That is a $70 billion Shift for all you Fiscal Conservatives...

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