Paul Martin Commentary
The federal government’s decision to remove sales taxes on gasoline and aviation fuel is no doubt a welcome relief for the average citizen but it is also part of a broader conversation on the overall state of the economy.
CIBC Capital Markets, for example, reminded us this week that oil price hikes preceded four recessions in this country. While we are not in a recession, the numbers suggest we can see it from here. Then you can add one additional wild card: higher oil prices trigger more inflation which is often followed by higher interest rates.
And the Fraser Institute has also reflected on Canada’s government budget cycle we’ve just completed where every province and the feds see their books in the red. The organization says it is reminiscent of the early 1990s, just before we hit a fiscal reckoning in Canada.
If you were living in Saskatchewan back then you’ll recall Roy Romanow having closed more than 50 hospitals with one stroke of the pen simply because we had run out of fiscal capacity to keep them open.
