Murphy's Logic: Lower taxes may be costly

Murphy’s Logic: Tax cut promises Steve Murphy discusses if it’s good politics to promise tax cuts on the campaign trail.

Election campaigns – declared and undeclared – have brought promises to cut the HST to 13 per cent.

In New Brunswick, where the election is just 18 days away, it’s the PCs who say they’ll do it. In Nova Scotia, with an election no more than nine months away, and maybe sooner, it’s the Liberals.

It’s good politics to promise lower taxes; who wants to campaign against it? But any promise to reduce government revenue is also an implicit promise to not spend that money in areas where it might well be used.

Based on figures in the current provincial budgets, a lower HST would bring in hundreds of millions of dollars less in revenue. That’s money that would stay in people’s pockets at a time when many people could really use it.

But the money could also be spent on health care or housing or to pay down the debt. Governments are also under pressure to do all those things.

So, in weighing tax-cut promises, voters should consider both the potential costs and the very attractive personal benefit.