From the viewpoint of monetary policy management, that is, the viewpoint of ensuring stable economic development through price stability, the issue of concern is whether the rise in the tax rate will trigger price hikes that take advantage of the increase or will lead to inflationary expectations, which in turn might bring about price rises beyond the immediate effects of the tax rate increase.
Related to this, it is becoming increasingly evident that Canada’s international competitiveness challenges are hampering our export performance. Many firms are operating at or above their capacity, but are hesitating to invest in new capacity given the uncertain future of the North American Free Trade Agreement, transportation bottlenecks and a shortage of skilled workers, to name a few issues.