One Comment About Taxation – The Constant “Pause” of Introduced Tax Policy

A number of years ago, a relative of mine started building a garage. The site was levelled, gravel poured, rebar laid down, and then everything stopped. The project, I was told, was “paused.” The money had run out, and frankly, so had the energy. I’ve heard the same explanation from many people over the years, and it always frustrates me a little. A pause like that usually isn’t bad luck. It’s the bill for planning that should have been done before the first shovel went into the ground.

 

That garage pad has been on my mind lately, because “pause” has become one of the favorite words in Canadian tax policy.

 

Consider the past couple of weeks. On September 18, British Columbia paused its poorly planned expansion of the provincial sales tax to accounting, engineering, architectural and other professional services, less than two weeks before it was to take effect on October 1. The reason?  Apparently, U.S. President Trump. Four days later on September 22, Premier David Eby called a snap election for October 24, two years ahead of schedule, again citing Trump.

 

The day before, the federal government introduced legislation to continue the pause of the federal fuel excise tax to January 31, 2027, with half rates in February and March and the full tax returning on April 1, 2027. The pause, in place since April, will cost about $5.3 billion this fiscal year. And Alberta announced on September 22 that it will suspend its 13-cent-per-litre fuel tax from October 1 to the end of the year.

 

Three governments. Five days. The same instinct.

 

“Pause” or “suspension” sounds prudent. It suggests a government carefully stepping back to reassess. In practice, it’s usually a tell that bad politics has trumped good policy. Either a tax was announced before it was properly thought through, or a visible tax is being cut because voters notice it. Sometimes it’s both.

 

Start with visibility. Fuel taxes are effectively posted on every pump sign. The Department of Finance has even boasted that gasoline prices fell 11 cents per litre on the first day of the federal suspension earlier this year. That’s a political win you can see from the highway.

 

Alberta’s case is more nuanced. Its fuel tax relief program uses a formula tied to oil prices, which is better design than the federal government’s ad hoc extensions. But last quarter the province opted for a rebate instead of pump relief and resisted calls to cut the tax for months, before reversing course because, as Premier Danielle Smith explained, Albertans would rather get relief directly at the pumps. Even a formula bends toward visibility.

 

We’ve seen this before. The Harper government cut the GST from seven per cent to six per cent in 2006, and to five per cent in 2008, despite widespread criticism from economists who argued that income or corporate tax cuts would do far more for growth. The GST was chosen because Canadians see it at every checkout. Nearly two decades later, no government has dared restore it.

 

The carbon tax followed the same path, only faster. In 2023, the federal government paused the carbon tax on home heating oil for three years. Less than 18 months later, the entire consumer carbon tax was gone.

 

Now look in the other direction. B.C.’s disastrous 2026 budget also paused indexation of provincial tax brackets and non-refundable credits for 2027 through 2030. That’s not a pause of anything a taxpayer will notice at the till. It’s a four-year tax increase delivered quietly through bracket creep. The same soft word is used to cut visible taxes loudly and to raise invisible ones quietly.

 

Then there are pauses that follow poorly designed measures: announced before the details, costs and consequences were worked through, then delayed or abandoned once taxpayers and advisers exposed the flaws. The 2024 increase in the capital gains inclusion rate was announced, deferred in January 2025 and then cancelled outright in March 2025. It never became law. Yet many taxpayers had already triggered gains, restructured their affairs and paid advisers based on a rule that never arrived.

 

The trust reporting rules are just as bad. Bare trusts were exempted from filing for 2023, then 2024, then 2025, and the rules now return for taxation years ending after December 30, 2026. In 2022, the federal government introduced both the underused housing tax and the luxury tax on certain autos, aircraft and vessels. Three years later, both were scrapped, apart from the luxury tax on autos, by a government that called them inefficient and costly to administer. No kidding.

 

B.C.’s PST pause now adds to the pile. Firms registered, updated their invoicing and adjusted their accounting systems, and none of that cost comes back. The province is now telling them to cancel their PST accounts.

 

Every pause leaves someone holding the cost. Taxpayers and their advisers absorb the compliance work for rules that don’t last, the planning built on dates that shift, and the uncertainty that delays real investment decisions. Don’t get me wrong – bad measures should indeed be cancelled but they shouldn’t be introduced in the first place.

 

Meanwhile, temporary measures escape the scrutiny that a permanent $5-billion decision would face in a budget. A suspension doesn’t have to be defended as permanent policy, even when it becomes one.

 

The fix isn’t complicated, but it requires repairing a broken policy process. Do the policy work before the announcement, not after. If a tax measure is meant to be permanent, say so and cost it honestly in a budget.

 

That rebar is still rusting on the gravel, a monument to money, time and effort spent on something that should have been properly planned before it began. Canada’s tax system is increasingly dotted with its own garage pads. Governments will sometimes need to change course. But taxpayers shouldn’t routinely be handed the bill because governments announce first and think later.

 

One Comment About Leadership – Pause With a Deadline

 

In the tax section above, I wrote about governments that announce first and think later, then “pause” when the flaws surface. That is one kind of leadership failure. The opposite failure is just as common and, in my experience, just as costly: the leader who pauses and never stops pausing.

 

We’ve all worked with one. Every decision needs one more meeting, one more report, one more round of input. The team waits. Opportunities pass. Eventually people stop waiting and start working around the leader, which is its own quiet verdict.

 

A good pause before a decision is one of the most valuable things a leader can do. The skill is knowing how long to pause, and for what.

 

Jeff Bezos put this well in his 2015 letter to Amazon shareholders. He described some decisions as one-way doors, “consequential and irreversible or nearly irreversible,” which “must be made methodically, carefully, slowly, with great deliberation and consultation.” But, he wrote, “most decisions aren’t like that – they are changeable, reversible – they’re two-way doors.” His warning was that as organizations grow, they tend to apply the heavy one-way process to nearly everything. “The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.”

 

That is over-analysis in a sentence. Most of it comes from treating two-way doors as if they were one-way.

 

So what does a good pause look like?

 

It has a question. You’re pausing to learn something specific: what this will cost the people who act on it, what could go wrong, what you would regret. If you can’t name the question, you’re stalling.

 

It has an end date. Decide when you’ll decide. A pause without a deadline is simply a decision not to decide.

 

It fits the door. A reversible decision deserves hours or days, not months. Save the long pause for the decisions you can’t walk back.

 

It ends cleanly. Once the call is made, commit to it, communicate it plainly and stop reopening it.

 

Which brings me back to the governments in the tax section above. They got the doors backwards. An announcement that others will act on is a one-way door, even if the policy is later reversed. The firms that registered for B.C. PST and rebuilt their invoicing won’t get that time and money back. Yet those announcements came without the deliberation a one-way door deserves. Then, on measures like bare trust reporting, the hesitation came afterwards, with the rules deferred three years running while taxpayers and advisers waited to learn what they’d be required to do. Call it caution if you like. To everyone downstream, it looks like indecision.

 

Pause before you decide, give the pause a deadline, and match its length to the door you’re walking through.

 

Think long enough to be right, but not so long that being right no longer matters.

 

One Comment About Economics / Politics  – The Operating Budget Victory Lap That Isn’t

 

On September 15, 2026 at the Canada Investment Summit in Toronto, Prime Minister Carney announced to a room full of global investors: “I can announce today that we are on track to balance the operating budget next year, one year ahead of schedule, while maintaining the lowest overall deficit in the G7.”

 

Nine days later, the Parliamentary Budget Office (PBO) released a report on that very fiscal anchor. [To remind readers, the “balancing of the operating budget within three years” became a key fiscal anchor as outlined in the November 4, 2025 federal budget.] The PBO’s conclusion: the so-called operating budget won’t balance until 2029-30 – a year after the 2028-29 target set in the 2025 budget and two years later than the Prime Minister’s claim.

 

But the headline isn’t the most important part of the report. This is: on the PBO’s numbers, the government misses its 2028-29 target by only about $500 million – a rounding error on more than $500 billion of annual operating spending. The government could close that gap by actually cutting $500 million of day-to-day spending. Or it could simply relabel $500 million of existing spending as “capital” and declare victory. The PBO says, in plain words:

 

“Classifying even a modest amount of spending as capital rather than operating, without any actual change in fiscal policy, may have been relevant to balance the initial operating budget fiscal track.”

 

In other words, the fiscal anchor can be met without spending a dollar less. Just move some items from one column to the other.

 

This isn’t a new criticism from me. I’ve been blasting this deceptive trick since Mr. Carney first floated it during the 2025 Liberal leadership race – or, more accurately, the Carney coronation. In February 2025, before he was even Prime Minister, I called his proposal “simply nutty with the potential to be outright deceptive.” In March 2025, I wrote in the Financial Post that separating budgets doesn’t balance finances – it hides spending in plain sight. When the Department of Finance released its breathtakingly broad definition of “capital” in October 2025, I called it accounting sleight of hand. And when the budget adopted the operating budget fiscal anchor in November 2025, I wrote:

 

“With such a malleable definition of ‘capital’, that fiscal anchor is a joke. Why wait three years? Just move enough day-to-day expenditures to the ‘capital budget’ to have the ‘operating budget’ balanced and, voila! Fiscal anchor achieved!”

 

In April 2026, I said the government might as well have declared victory on budget day. And in May 2026, I pointed out that the Spring Economic Update leaned heavily on the same trick.

 

I’d much rather have been wrong. But the government’s own announcement – one year early! – rather proves the point. When you control the definition, you control the date.

 

Some other highlights from the PBO report:

• No formal methodology has been published for deciding what is “capital” and what is “operating”. The PBO says it is “not possible to independently replicate the classification or anticipate how future spending might be attributed.”
• The classifications are inconsistent. Film tax credits are capital; the ridiculous journalism tax credits are not. The Agricultural Clean Technology program is capital; the Agricultural Climate Solutions program is operating – even though both support farm-level investment.
• Corporate tax expenditures, investment tax credits and production subsidies are all counted as “capital” even though they wouldn’t be under international standards or in the United Kingdom – the government’s favourite comparison.
• The U.K. pairs its operating/capital split with a debt rule. Canada retired its declining debt-to-GDP anchor in Budget 2025. As the PBO dryly puts it, “there is not a similar constraint on total debt accumulation.”
• Since Budget 2025, the government announced $173.3 billion in new measures – $126.8 billion of it day-to-day operating spending. The PBO concludes that the deterioration in the fiscal track “reflects the government’s own policy choices, concentrated in operating rather than capital spending.” So much for “spend less to invest more”.

 

None of this is new to the PBO. In August 2025, before the government even published its definition, it reminded everyone that capital spending “is a well-defined accounting concept regulated by independent arm’s-length experts”. In November 2025, it calculated that capital investment was overstated by about $94 billion compared to international practice, that the operating budget would remain in deficit every year through 2029-30 on that basis, and it recommended an independent expert body to decide what counts as capital. Two different Parliamentary Budget Officers, a year apart, same conclusion.

 

Even the CBC – the Liberal Party’s mouthpiece – ran the story – and its chief political correspondent, Rosemary Barton, shared it on X. When the government’s most reliable amplifiers start passing along the watchdog’s criticism, you know the trick has worn thin.

 

The government’s response? A spokesperson for Finance Minister Champagne said the fall budget will show the operating budget balanced a year early, and that focusing on operating spending is a “stricter guardrail” than debt ratios. Hogwash. A guardrail the driver can move isn’t a guardrail.

 

So here’s my test for the upcoming “Fall budget”. When it lands, ask one simple question: how much of the “improvement” in the operating balance comes from actual spending restraint – and how much from programs migrating from the operating column to the capital column, or a definition that quietly got wider? If the government can’t show that reconciliation, you have your answer.

 

This deceptive framework only works because it plays on the financial illiteracy of most Canadians – people who hear “balanced” and assume it means balanced. It doesn’t. And that’s why, in my opinion, this trick is quasi-evil. Its deception plays on the naivety of Canadians to suggest that the government is being fiscally prudent. The reality, however, is that bondholders and credit rating agencies aren’t fooled; they look at the total deficit, which the budget projected to average $64.3 billion a year through 2029-30, and the debt it piles up.

 

Canadians shouldn’t be fooled either. Relabelling spending doesn’t change a single dollar that has to be borrowed – and eventually repaid by our kids and grandkids.

 

Bonus Comment – From Jeff Bezos – Amazon Founder – About Leadership Decisions

 

Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.

 

Agree. Good leaders seek good facts but can make decisions quickly. Leaders who consistently “pause” their decisions – either upfront or after-the fact – should reconsider their leadership style.

 

I hope today’s newsletter has been thought-provoking for you.

 

As many of you know, I’m passionate about helping people make better decisions – whether in tax, leadership, or business. If you’d like to go deeper on those topics, my recently released book, Making Life Less Taxing Version Two is now available and expands on many of the practical ideas I’ve written about over the years.

 

I’m also putting the finishing touches on my next book, Leadership Compounds: How Small Decisions Build Culture, Credibility, and Legacy. It explores a simple but powerful idea: leadership isn’t about grand gestures – it’s about the small, consistent decisions that compound over time.

 

For those interested in a more hands-on approach, I’ll soon be announcing a bespoke consulting initiative – The Acorn Growth Program – designed to help leaders and organizations grow intentionally, one small (but important) decision at a time. Feel free to reach out to me directly for more information.

 

And if you’re not already on my mailing list, feel free to sign up for my In the Mood Network newsletters to receive more content. No fluff – just practical insights on tax, leadership, and economic policy.

 

Thanks for reading. As always, I welcome your thoughts and feedback.

 

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