Canada’s new grocery benefit nothing more than vote buying

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We agree with Prime Minister Mark Carney that Canadians need relief from the high cost of living — including grocery prices — but the best way to do that is through broad-based income tax relief.

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What Carney announced instead on Monday is that all taxpayers will pay $11.7 billion over six years in an income redistribution plan whose benefits will be restricted to 12 million Canadians.

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To do this, the government is rebranding the Goods and Services Tax Credit, aimed at low and moderate income earners, as the Canada Groceries and Essentials Benefit.

Despite the renaming, recipients can spend the money any way they like.

Taxpayers footed with the bill

The federal government (i.e. all taxpayers) will pay a one-time increase of 50% to the existing benefit this year, to be sent out no later than June, followed by a 25% increase for the next four years, providing the legislation passes Parliament and recipients submit their annual income tax forms.

According to the government’s explanation of the benefits for those who qualify, a family of four will receive up to $1,890 this year, up from the existing level of $1,086, and up to $1,400 annually for the next four years after that.

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A single person will receive a benefit of up to $946 this year, up from the existing level of $543, and up to $679 annually for the next four years after that.

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‘This is not good policy’

The issue pointed out by Marc Levesque, former chief economist at the Public Sector Pension Investment Board and former chief economics strategist at TD Securities, on X is that: “This is not good policy. It’s just blatant vote-buying. 1. The GST credit is designed as an offset to the GST for low-income families, not as a general income-transfer mechanism. 2. If you want to provide relief, cut income taxes, not consumption taxes.”

In addition, the Carney government — i.e. taxpayers — says it will spend $500 million from its “strategic response fund,” $150 million from its “food security fund” and donate $20 million to food banks to address food insecurity, support producers and strengthen supply chains.

It also says it’s implementing new initiatives to address food insecurity — including allowing food producers to immediately write off the costs of building greenhouses.

What’s missing is an income tax cut for Canadians.

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