In the past week, the federal government finally decided it was time to show some fiscal responsibility. Unfortunately, it came at the expense of seniors funding.
What was the bridge-too-far budget line that drove them to this decision? An Old Age Security (OAS) increase, which will cost an estimated $16 billion in the next five years. Not national dental or pharma care, OAS.
So, what happens when a national government runs an approximately $40 billion deficit in 2024? There are multiple ways they can raise money to cover the over-expenditures.
The government borrows money through the Bank of Canada. They sell government bonds to anyone interested in purchasing one, and sell our debt to other nations. To name a few of those national options.
In recent years, 25- 30 percent of the national debt is estimated to be owned by foreign investors, including China, although who owns what and how much is strictly guarded. We also find unique ways to raise taxes for government purposes. Remember that the federal government is allowed to run a deficit. Something our current ruling party in Ottawa does well.
On a provincial level, Alberta has a $367 million surplus, while Saskatchewan is in a deficit of $273 million. They can raise money almost in the same ways as the federal government. They are also allowed to run deficits.
Legally, municipalities in Canada cannot run a deficit and can’t declare bankruptcy. The ways they can finance plans are also limited. The internal options are taking a loan, raising taxes (and service fees), selling assets, and cutting services, none of which should be palatable to a local council.
Since arriving in early July, one big thing has stumped me. How did we commit to a project worth approximately the entire city budget? Given the above options, an even more concerning question arises: What happens if some of the planned funding doesn’t come through?
A proposed transit system has estimated annual operating costs between $1.22 million and $3.33 million. Recently, officials stated that the system would increase taxes by between $25 and $150 per household. What would a $10-20 million hole in the municipal fiscal budget mean?
I’m not sure how governments at all levels think it’s okay to plan projects without concrete ways to finance them that don’t include raising taxes. For the upcoming elections at all levels, this needs to be a platform topic answered by every party. Increasing taxes at all levels does nothing more than increase the stress and strain of every Canadian, regardless of location.
But I know what I’ll do next time I run a deficit due to poor fiscal planning. I’ll ask the bank to create bonds in my name and then sell them to other nations. Or maybe they can loan me $1 million.
Read More: People pack city hall for public hearing – Meridian Source
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