If the political and public policy challenges posed by inflation were easy to overcome, more governments would be doing so by now.
Rather, recent elections show that we are in a situation where: Words by John Byrne-Murdoch of the Financial Times“This is probably the most hostile environment for incumbent political parties and politicians across the developed world in history.”
To be fair, inflation alone doesn’t explain all of the losses incumbents have suffered over the past year. But one major commonality seems to be the frustration and anxiety caused by soaring prices. Abacus Data pollster David Collette recently named this factor “.Inflationitis. ”
Collett said political leaders needed to “recognize the real difficulties people are facing and respond with empathy and transparency.”
“Their actions are feel “It’s like helping,” he wrote earlier this month. “They are immediate, practical, universal Relief — Measures such as tax breaks, direct payments, and rebates. Price controls and reductions in fees and tolls for essential services require governments and leaders to get it. ”
Prime Minister Justin Trudeau announced that the federal government will suspend GST on a wide range of products from December 14 to February 15 as part of a series of new measures to ease pressure on the cost of living. The government also plans to send $250 checks to 18.7 million Canadians working in Canada in 2023 and earning less than $150,000.
On Thursday, Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland appeared at a grocery store in Sharon, Ont. Announces a two-month suspension of federal sales tax on many household items and plans to send $250 checks to 18.7 million Canadians in the spring.
“These are things that recognize that people are being squeezed, and we’re here to help,” Trudeau said.
Whether or not this helps solve the problems plaguing the Liberal government, or whether it was the ideal policy response, what Prime Minister Trudeau and Prime Minister Freeland announced on Thursday is at least an immediate It also had the advantage of being widely practical.
Parliamentary paralysis paused
Naturally, the opposition parties did not respond.
Conservative Leader Pierre Poièvre has once again shown his flair and penchant for alliteration, calling Trudeau’s announcement motivated solely by Liberal (and likely New Democratic Party) political self-interest. He dismissed it as a “temporary tax trick for two months”. support the government on these measures). To be clear, Poièvre also did not say he would vote against the bill to implement this change.
Poilievre’s argument is that Canadians would be better off if the Liberals instead abolished the federal carbon tax. The Conservative Party leader’s long-standing position still fails to take into account the greenhouse gas emissions that a consumer carbon tax is expected to reduce. However, Poilievre also completely denies that the revenue generated by the carbon tax will be rebated to households.
Conservative Leader Pierre Poièvre said his party supports Prime Minister Justin Trudeau’s proposed two-month GST holiday on some items over the holiday period and a plan to send $250 checks to some Canadians in the spring. He declined to say whether he would vote against the bill.
If (as a series of reports by Congressional budget officials have revealed) many households, especially low-income households, actually receive more in rebates than they pay for the additional costs incurred by taxes; Many Canadians will actually find themselves in a worse situation. The policy has been abolished.
NDP Leader Jagmeet Singh has touted the government’s move on GST as an achievement, even claiming the Liberals had “caved in” to demands outlined last week, but said the sales tax exemption was temporary. He said Thursday’s announcement was “disappointing” because that’s not actually the case. Does not cover monthly bills. This will likely lead to further negotiations between the Liberals and the NDP over the budget next spring (assuming this Congress gets that far).
But for now, Tuesday’s move appears to have paved the way for a temporary hiatus in economic conditions. The Conservative filibuster has tied up the House of Commons for nearly two months.. Although the New Democratic Party does not yet intend to completely break the impasse, it is willing to at least support a move to suspend the government’s efforts to allow the House of Commons to pass the legislation needed to implement GST repeal.
For governments whose time is increasingly at a premium, it’s a rare opportunity to actually get something done. And perhaps it will pave the way for a larger effort to get Congress moving again.
Immediate help is only part of treatment
The cost of any federal action to address inflation is not small. Suspension of GST on certain items would reduce federal government revenue by $1.7 billion. Providing approximately 19 million Canadians with $250 per person would cost approximately $4.7 billion.
There’s no doubt that many Canadians are under stress, but is that the best use of these resources? Directing these $250 checks to those who need it most? Is it better? (Anyone earning up to $150,000 is eligible.)
These are legitimate questions that are open to debate. The Liberals have taken other steps to address affordability issues, perhaps noting that they are dedicating significant resources to reducing child care costs and providing dental care to people without insurance. You will. They are taking steps to increase housing construction, and efforts to support pharmacies and school lunch programs are ongoing.
Whatever the practical or political merits of these efforts, the Liberal Party is now on track to be the next incumbent government to lose an election.
Not all of that can be blamed on inflation. In his nine years in office, Prime Minister Trudeau has amassed far more baggage than expensive or affordable housing. But inflation appears to be a major drag on any government’s chances of re-election.
In Collett’s estimation, inflation doesn’t just need immediate help. He argued that governments also needed to counter what he called a “scarcity mentality” with a “clear and sustained message that we can work together to rebuild a stable and just economy.” did.
“Leaders must communicate a long-term plan to restore economic stability and address what people feel they lack: housing, affordable necessities, and health care. “It reassures the nation that they are being listened to and that there is a path forward where everyone can thrive,” he wrote.
Suspending GST and $250 checks will not restore economic stability. But perhaps it will give the Liberals a little more room to listen when they try to talk about the future.
