The Financial Post reports in its Saturday, Sept. 10, edition that economists are warning Prime Minister Justin Trudeau's government against using windfall revenue to add to spending amid concerns about inflation. A Bloomberg dispatch to the Post reports that the calls come as the government prepares to double federal goods-and-services tax rebates for six months and support Canadian households struggling to pay rent. The plan, meant to be announced Thursday but temporarily delayed by the death of Queen Elizabeth II, is in addition to refunds and cash handouts already distributed by provincial governments. Canada benefited from surging energy prices, which helped generate large revenues for governments. "While there are times where fiscal largesse is just what the economy needs, these aren't such times," said Canadian Imperial Bank of Commerce chief economist Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce in a report on Friday. He added, "In a period of high inflation and excess demand, cutting taxes or handing out cheques can add fuel to the inflationary fire, and make the job of a central bank that's raising rates to cool demand all that more troublesome."
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