The GST was sold to Canadians as a way to balance the budget, but today it mostly pays the interest on Ottawa’s debt

Canada’s Goods and Services Tax now effectively serves one purpose: helping to pay interest on the federal debt. And, thanks to continued deficit spending, these revenues aren’t quite enough to cover the entire cost. This should be a fiscal wake-up call for the federal government and all Canadians.

The 2025 budget revealed the problem. GST revenues and interest payments on the debt were both about $61 billion. By 2029-30, the GST will take in $64 billion, but interest payments on the debt will reach $76 billion. Without a slash in spending or an increase in the GST rate to six or seven per cent, this gap will remain indefinitely.

This milestone, perhaps better called a millstone, is even more significant when we look back on the last few decades of political history. After all, the GST was sold to Canadians as a way to balance the budget.

Persistent budget deficits and rising debt are turning GST into a debt-servicing tax.

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Under Pierre Trudeau, the Liberals ran many deficit budgets, causing a snowball of increasing interest payments. By the time the Brian Mulroney Progressive Conservatives came along in 1984, a return to balance was a favourite political topic.........

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