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Canada issues welfare GST credits to combat inflation

Canada issues latest round of Goods and Services Tax refunds of over $220 each to 11 million citizens

Canada’s Revenue Agency has confirmed a GST credit refund to over 11 million citizens to help support the less wealthy during the period of heightened prices.

Canada is one of the countries which has opted not to introduce blunt VAT rate cuts to help with the cost of living crisis; instead it offers targeted GST ‘groceries refund’ to those in most need. Couples with two children can expect to receive up to an extra $467, single Canadians without children can expect up to an additional $234 and seniors can receive an extra $225 on average.

Whilst headline inflation has dropped to 3.4% in May 2023, food inflation is at 9%. The federal government also provided a similar payment last fall in what it said was an effort to blunt the effect of high inflation on low and modest-income families.

In Europe, many countries have cut VAT to fight inflation effects. This comes despite IMF criticising inflation VAT cuts in a recent report, and has been joined by the OECD review of VAT reductions and other policy remedies.

Uzbekistan operates a simile VAT credit scheme.


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