Fifty-six thousand dollars. That’s the average amount each Canadian will owe in provincial and federal government debt by the end of the year.
Much of this debt will likely be shovelled onto the backs of Canadians’ kids and grandkids. As columnist Chris Nelson warns, “we are no longer being bribed with our own money. We’re being bribed with our great-grandchildren’s money.”
But the debt isn’t just a problem for tomorrow; it’s impacting Canadians right now.
First, politicians are already hiking taxes to pay for their deficit spending.
Despite promising not to tax his way out of his deficits, the Trudeau government recently increased the carbon tax, booze and payroll taxes. If you’re making more than $40,000 then your federal tax bill will increase this year.
Trudeau’s two pandemic budgets also contain a raft of new taxes such as luxury goods taxes, a tax on foreigners that own vacant homes, an anti-flipping tax and higher taxes on banks and insurance companies that push up fees. If the Trudeau government wasn’t borrowing so much money, it would have more room to lower taxes to ease the rising cost of living.
Then there are the new taxes politicians and bureaucrats are musing about.
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A report from the Ministry of the Environment includes a recommendation for a new tax on trucks that could cost between $1,000 and $4,000 per vehicle. Trudeau requested an analysis of a potential wealth tax to explore the “merit of the policy.” The government spent hundreds of thousands on a study that recommends a new home equity tax, while Trudeau’s staff met twice with the group that received federal funding to study the tax.
Taxpayers also need to worry about the agreement between the federal Liberals and the New Democrats. The NDP promised to raise nearly every tax under the sun during the last election, including hiking income taxes, business taxes, and capital gains taxes, along with imposing a wealth tax, excess profits tax, luxury tax and a tax on foreign home buyers.
Government debt also directly fuels inflation when the feds use the printing press to finance deficits. That’s because the more dollars the central bank prints, the less your dollars buy. During the pandemic, the central bank printed more the $300 billion out of thin air largely by purchasing federal government debt.
More borrowing also means more money wasted on interest charges. This year, interest charges on federal and provincial government debt will cost each Canadian more than $1,000. That’s money that can’t stay in Canadians’ pockets to ease the pain of inflation because that money is being paid to the bond fund managers on Bay Street.
When politicians aren’t forced to balance the budget, they are less likely to put every penny of spending under the microscope. From $11 million spent renovating the prime minister’s country retreat to spending $8,800 on a sex toy show in Germany, $80,000 on airplane food during a week-long trip and giving $295 million to the Ford Motor Company, the feds are wasting a lot of money that would be better spent by the Canadians who are being overtaxed.
The first step to shrinking the government debt bill is balancing the budget, as the governments in New Brunswick and Alberta have done. Trudeau could balance the federal budget by 2024 by bringing spending down to pre-pandemic levels, adjusted upward for inflation and population growth. And Trudeau was already spending all-time highs before the pandemic.
Canadians don’t have tens of thousands of dollars lying around to pay their politicians’ credit card bills. Politicians need to find savings before taxpayers get clobbered.
Franco Terrazzano is the Federal Director of the Canadian Taxpayers Federation.
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