Temporary GST Rebate Increase: Analysis

On January 26, the Liberals announced a 25% increase in the GST rebate for low income Canadians (and relabeled it the “Groceries and Essentials Benefit”).

This will amount to about $160 extra dollars per year for an individual, and $300 per year for a family of four, for those who qualify for the maximum payout (as income rises, the payment declines until it reaches zero at an income of about $56,000 for an individual; higher if you have dependents). This increase will expire after five years. The increase starts in July, but there will be a one-time top up this June of 50% of the qualifying payment.

While this will no doubt be welcomed by struggling lower income households, it amounts to less than one week’s worth of groceries PER YEAR. The average household is projected to spend $17,500 on groceries in 2026, or $336/week.

This does not address the fundamentals of why food prices are escalating so sharply. Canada has the highest rate of food inflation in the G-7, by a significant margin. Why?

Conservatives believe we must tackle the underlying causes. We proposed a motion to reduce taxes on food inputs – additional fuel taxes on transportation, the industrial carbon tax at every step in the supply chain, costly new packaging rules. We also repeatedly ask the government to help reduce overall inflation by reducing unnecessary government spending that puts too much pressure on prices. The government voted down our proposal.

While Conservatives will support measures to make life more affordable, we will also continue to press for long-term solutions to the fundamental causes of food price inflation.

I spoke with reporters on Parliament Hill before the first daily Question Period as the House of Commons returns for its winter session.

Speaking about the GST Rebate, I made the point that while it will be welcomed by those who receive it, it is itself an intrinsically inflationary measure. A payment intended to ease inflationary pressures will itself cause additional inflation.

I also noted this expenditure was not included in the government’s Budget, tabled less than three months ago, so it seems they are still operating without a plan.

In other questioning, I responded to Minister McKinnon’s remark that the Official Opposition should get out of the government’s way. And I updated the reporter on the work of the Economic Growth Council, which I chair, and which is due to release its report at the Conservative Convention on January 31.