When you are poor or in debt – some ‘expert’ will say you should have made better decisions! I wonder why that ‘expert’ never visits Ottawa with the same advice.
Early in 2020 when Canadians were gripped by fear and forced to ‘hunker down’, and stop going to school, restaurants, movie theatres, gyms, coffee shops and bars. All sports were cancelled, travel was down 96 per cent and the stock market fell. All the while, government did what they do best – spend money.
In 2020 the Federal Budget Deficit was estimated to reach $350 billion. While this should have been a hint for prudence, fiscal discipline was instead discarded and led to rushed and poorly targeted programs adding to a larger deficit. The COVID CERB program was quickly introduced leading to a taxable $2,000 money benefit. That cost grew from $35.5B to $53B in a few months. An extension to the program took the cost to $73B. Young adults aged 15 to 24 living at home going to school or not going to school were better off on CERB than working. Income loss went to $118B in short order.
While income stability can be a sound policy in a recession the federal government threw caution to the wind resulting in unprecedented large transfers of money to groups whose needs were questionable. Billions of dollars went to small and large businesses and the GDP shrank.
The result of unqualified government spending and individual savings led to a near economic depression. When we all cut back on spending the economy ground to a halt. All the while, government was spending and wasting more.
Already before COVID, Canada’s growth rate for business investment lagged other OECD countries for a 50-year low. Ottawa’s talk of adding an NDP inspired wealth tax and higher capital gains taxes will only damage an already dismal investment climate. It is a fact that big spending reduces economic freedom. It appears the government prefers to increase taxes rather than reduce spending. Needless to say, our net government debt will increase.
Questions around “how will you pay for that?” are considered an old way of thinking. The pandemic created great cover for a lack of accountability with face-to-face meetings not considered ‘safe’ and no opportunity for tough question periods.
While government needs to prioritize economic growth with a plan on how to balance the budget, their ‘go to’ formula is to just increase taxes and continue to spend. The facts are, despite promises not to, Ottawa raised taxes and increased spending and borrowing over the prior years. Tax increases financed new spending and borrowing. And Canadians continue to pay a myriad of progressive taxes in addition to personal and payroll taxes, sales taxes property taxes, fuel taxes and others. Already, the top per cent of Canadian income earners pay more than half of all taxes before the proposed NDP/liberal wealth and enhanced capital gains taxes.
Ottawa’s plan for a $170 per ton Carbon tax by 2030 will undoubtedly result in the economy shrinking more and hundreds of thousands lost jobs.
There really is no plan other than through taxes on how to pay off this debt.
So, the Cole’s Notes answer to the question is: “you are going to be paying for that.”