Stephen Harper's cuts help Canada buck global post-recession trend toward higher taxes

Tax cuts were the mainstay of Stephen Harper’s tenure as Canada’s prime minister before his defeat to Justin Trudeau in October, with his Conservative government brushing off the impact of the global recession to curb federal tax revenue to the lowest since before the Second World War as a share of GDP.

Had the federal government’s tax take been left at levels of 2006, the year Harper took power, federal revenue would be more than $30-billion higher today.

Data released by the Paris-based Organization for Economic Cooperation and Development Thursday show just how much Canada has been bucking a global trend.

Tax levels in Canada for all levels of government were 30.8 per cent of GDP in 2014, compared with an OECD average of 34.4 per cent. The 3.6 percentage point gap — which is unchanged from 2013 — is at the widest since at least 1965.

Tax levels in Canada have actually declined since 2009, even as they’ve risen in most other OECD countries, including a sharp increase in the U.S. That puts the country into a select group of seven nations that have chosen not to restore recession-battered government finances with higher tax levels.

Since 1998, when Canadian taxes peaked, the country is among an even more select group. With levels down 5.4 percentage points, only the Slovak Republic and Sweden have seen bigger declines among the 34 countries in the OECD.

 

Related Articles