“We’ll start paying it down once we’re back in surplus,” Flaherty said.
There is a pool of money untapped by government: the practice of undeclared barter. When an individual says to you “That will cost so much if you pay by cheque but 20% less if you pay cash you know that the cash payment will never show up on any income statement, and no tax will be paid, and the people doing the work will be paid cash so they won’t pay individual income tax either. No only that; the individual will declare a loss on materials that just somehow disappeared and receive a tax rebate.
People who participate in undeclared barter by not paying taxes, or by their action allowing other to avoid taxes, are stealing from you and every other taxpaying citizen.
The combined debt of all levels of government is staggering. And there are only two ways out: Increase Taxes or Reduce Spending.
Canada need to do both. More taxes means that people will have less to spend. Reduced spending means fewer services paid by governments.
- No more funding of new sports facilities
- No more grants to arts organizations.
- No more new libraries and fewer books for existing libraries.
- Fewer Day-Cares.
- No new public transportation programs (e.g. Ottawa’s light rail)
- No more new bells and whistles on public transit.
If we want the debt to be reduced it will be painful for everyone. Well, not everyone — not executives of financial companies; not government employees; not consultants who get onto a program like Ontario’s e-Health. Each level of government needs to look at every one of their expenditures and ask “What can we do without? and what can we delay?
So Shall We Reap
Market Depth by Geoff Castle
An eerie calm fell over Canada’s financial markets one year ago. Battered by collapsing equity markets worldwide, and further hampered by falling commodity prices, the Canadian economy ground to a screeching halt. A decade of growth fueled by expanding debt was about to be unwound. Or so it seemed. However, into the breach stepped the Canadian government with a stimulus program of mammoth proportion. Though dormant in the spring, by the summer we saw a few green shoots emerge. And by the autumn of 2009 we began to harvest debt-fueled growth in this country once again.
This post does not quibble with the growth we see. It is there for all to observe. If we dare to ask a question it is only regarding the less studied subject of the durability of a rebound built on government largesse. Simply put, does the Canadian government have the borrowing capacity to keep on priming the pump?
I ask the question because the consensus opinion appears to be that government policies that add heavily to the long-term debt burden in Canada do not impact in the least our nation’s future borrowing ability. But will the bond market always be so accommodating in funding deficits?
To reach an answer, I believe it is important to get a full view of the facts. Of particular interest to me is the question of exactly how big is the consolidated debt burden that weighs upon the backs of Canadian taxpayers. If you go by the headline numbers, Canada’s $519 billion debt forecast for the end of the March 2010 fiscal year is relatively small by international standards, a mere 34% of GDP. That compares US debt-to-GDP of 74% and over 100% in Japan.
However, if we were a lender conducting an analysis on a corporate debt issuer, we would not be content with a number that accounts for only some of the total debt, we would want to know the fully consolidated number. And, in my view, the headline debt number in Canada is very far from being the whole picture.
You can read more by Geoff at his website.
The Canoe Dossier
According to the Canadian Taxpayers Federation, Canada’s debt now stands at $5 billion. [Editor’s note: it should read $500 billion for the Federal debt].
However, Sun Media reports that Finance Minister Jim Flaherty says there are no immediate plans for any spending cuts to reduce our national debt.
The CTF’s federal director says continued government spending will ‘actually create more problems for future taxpayers,’ but Flaherty feels it just isn’t the right time to reduce spending.
“We’ll start paying it down once we’re back in surplus,” Flaherty said. “We know how to balance budgets. We know how to run surpluses and we will. We have to get Canada through this recession and protect Canadians. We can’t pretend that Canada’s an island in the world because we’re not.”