Federal Liberal finance critic John McCallum recently wrote a spirited column in the National Post outlining why his party is against reducing the GST. The former bank economist called on the Conservative government to renege on its GST pledge and break faith with voters, just like the Liberals did after promising to scrap the tax altogether to win power in 1993. His argument cries out for debunking.

Mr. McCallum writes that cutting the GST is "anti-growth." This is absurd, as is his professed belief that "Canada's economists" all agree with him. Very few economists share the opinion that reducing a consumption tax is anti-growth. Broadly-based tax reductions - of any kind - leave more money in the pockets of consumers. As such, a cut to the GST would act as an economic stimulant, not a depressant.

Instead of cutting the GST, Mr. McCallum prefers the previous Liberal government's tax proposal to cut the lowest personal income tax rate from 16 per cent to 15 per cent. This tax rate applies only to the first $36,400 of income. The other rates of 22 per cent, 26 per cent and 29 per cent remain unchanged. In addition, there is a small increase to the basic personal exemption, which is the amount an individual earns before paying federal income tax. But these changes translate into savings of no more than $360 for Canadian taxpayers in 2006. Moreover, because this relief is aimed at low-income earners, it will not significantly boost Canada's productivity by generating more investment.

It would be an altogether different story if Mr. McCallum had championed a cut to marginal income tax rates - the high taxes on middle and top income earners. Those are the pro-growth tax cuts necessary to improve productivity and economic performance.

Mr. McCallum is hoping to convince Canadians his party's tax plan would induce the same economic benefits that result from lowering top marginal taxes. It would not. The Liberal income tax cuts are no more - or less - productivity-enhancing than the Conservative GST cut. In truth, neither of the tax proposals coming from the two major parties would do much to improve Canada's global competitive position. Yet cutting the GST is still a welcome measure, for it will leave approximately $4.5-billion a year in taxpayer's pockets and help drive growth. That doesn't mean more cannot be done.

Finance Minister Jim Flaherty understands this well. So should federal Liberals, who implemented a five-year tax reduction plan that began in 2000 and reduced income taxes on low-, middle- and upper-income Canadians. The result was stronger growth and lower unemployment.

When Mr. Flaherty delivers the Conservative government's first budget, he must include the promised GST reduction. He should also bring down marginal income taxes. Both measures will ultimately improve the living standards of Canadian families.