TERRAZZANO: Another credit card budget from the Trudeau government

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Taxpayers receive another credit card budget from the Canadian government of credit cards. And like every big credit card tab, paying the bill will sting.

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Chrystia Freeland, Minister of Finance Budget 2022 offers no plan for how Canada will pay its bills on time or reduce the $1 trillion debt. This year’s deficit is expected to reach $52.8 billion.

The 300-page budget is full of additional borrowings, but you won’t find any plan to balance the books. The best the government is prepared to do is reduce its deficit to billions in single digits by 2026.

Taxpayers have every right to question whether the government can even achieve this goal. After all, Prime Minister Justin Trudeau promised to balance the budget by 2019then passed by $20 billion.

Rampant spending is the culprit of exorbitant deficits.

Ottawa plans to spend $452 billion this year. That’s nearly $90 billion more than pre-pandemic spending in 2019. For context, the Trudeau government was spending all-time highs before the pandemic.

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That means Trudeau spent more money before the pandemic than the government made in any World War II year. And now he wants to spend $90 billion more.

The 2022 budget adds nearly $150 billion to the debt. The debt-to-GDP ratio is set at 45%. That’s 15 percentage points above pre-pandemic levels. And once you add Canada’s total public debt, the ratio exceeds 100 per cent of the national GDP.

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Canadians are already feeling the pain of years of excessive borrowing, and more and more taxes are piling up. Budget 2022 raises taxes on banks and insurance companies, which could mean higher fees for ordinary Canadians. Federal carbon, alcohol and payroll taxes have also increased this year.

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Direct taxation is only the tip of the iceberg.

During the pandemic, the federal government’s central bank printed about 370 billion dollars by buying financial assets like federal government debt. About 85% of what the central bank buys are Ottawa IOUs. So it sure looks like the federal government is funding some of its deficits by reducing the value of your money. This is the inflation tax.

If Freeland does not find savings, taxpayers’ wallets will continue to be depleted.

Right now every Canadian has to pay over $30,000 in federal debt. This debt per person is expected to climb to $67,000 by 2070. Is this the kind of tax bill you want to leave for your children and grandchildren?

Government credit card interest charges are also costing taxpayers more than $2 billion a month. This means that taxpayers are paying more interest on the federal debt than the Alberta government expenditure on health care.

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There’s no way to avoid paying the piper. Just ask the finance ministers of the 1990s what happens when politicians cut the deficit for too long.

“The debt and the deficit are not inventions of ideology” mentioned Paul Martin, then Minister of Finance, during his budget speech in 1995. “These are arithmetic facts. The quicksand of compound interest is real.

Saskatchewan has had to deal with its addiction to the deficit through “a lot of pain”, according to former finance minister Janice MacKinnon who closed 52 hospitals throughout the Prairie Province.

“We left a fiscal situation in Saskatchewan until it was a crisis and so we had to make dramatic cuts to fundamental programs and raise taxes to get out of the situation,” reminded MacKinnon.

Taxpayers will have to pay government credit card fees. And the longer the government waits, the higher the tax burden and the higher the cost of living, the more money will be wasted on interest charges and, inevitably, the more severe the cuts will be.

It’s time for Ottawa to ditch its credit card, grab the scissors and get the government books back to financial health.

Franco Terrazzano is the Federal Director of the Canadian Taxpayers Federation

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