As has been rumoured for awhile, the Conservatives came out today with their big ticket item – a reduction of the GST to 5%.

The recent Liberal spending spree when they gave out 5 billion dollars a day is going to make it very difficult for them to attack the loss of 4.5 billion in revenue the first 1% drop will bring. As a result, Martin will paint it as income tax cuts versus consumption tax cuts. Given that people are Christmas shopping, rather than doing their taxes, I suspect this will work in Harper’s favour.

For what it’s worth, I think this is a bad policy. You keep the administrative costs and cut revenue. But this gives Harper something he can point to as constructive policy. And it’s going to be very difficult to argue against (although both sides will trot out hundreds of economists to defend their position).