Economists say inflation relief through the GST rebate stacks up as a better policy than some of the cash payments provinces have given out.
After months of mounting political pressure from the NDP to help lower-income Canadians facing a higher cost of living, the federal government announced on Tuesday it will double the GST rebate for six months.
Michael Smart, an economics professor at the University of Toronto and the co-director of the Finances of the Nation project, says the change makes sense.
The federal government indexes benefits to inflation, but because of a lag in how that is calculated, benefits this year will rise by 2.4 per cent _ well below the current inflation rate.
In contrast, Smart says some of the measures introduced by provinces, including handing out cash payments, seem politically rather than economically driven.
Smart says giving people money and raising the deficit will be counterproductive as the Bank of Canada works on reducing inflation through higher interest rates.