Balancing the budget in a first mandate then cutting taxes
Canada’s public finances are in a disastrous state. Under the Trudeau Liberals, spending, deficits, and the national debt are exploding. Justin Trudeau exploited the covid crisis to create a whole series of expensive new programs, and permanently increase the size of government. The Conservatives, NDP, Bloc and Greens all supported the Liberals’ massive covid spending and none of them is committed to reducing the size of government.
This is utterly irresponsible. When another recession hits, or interest rates start to rise, the federal government will be in a precarious fiscal situation and could lose control of its finances. Moreover, no broad-based reduction in the tax burden will ever be possible with a government that keeps growing and paying for new programs with borrowed money.
In 2020-2021, the Liberals recorded a $354 billion deficit, and Canada’s net debt surpassed $1 trillion (or $1000 billion) for the first time. The debt will keep climbing with deficits of nearly $155 billion in 2021-2022, and $60 billion in 2022-23. The past year’s deficit was entirely funded by money printed by the Bank of Canada, which is fueling inflation. Instead of paying for the deficit directly with taxes, Canadians are paying it indirectly with higher prices on all goods and services.
In order to buy votes, Erin O’Toole is promising more billions in new spending and targeted tax measures funded by borrowed money, just like the Liberals. He has said it would take a decade for a Conservative government to balance the budget, which means at least three mandates. Since anything can happen in that period, that’s as good as not making any commitment at all. His platform is the same as the Liberals.
According to data published by the Parliamentary Budget Officer, if current policies are not adjusted, the federal government will only balance its budget again in the year 2070. A baby born this year owes more than $26,000 in federal government debt. By the time the budget is balanced a half-century from now, newborns will be on the hook for about $67,000.
Debts and deficits are nothing more than deferred taxes on our children and grandchildren. Instead of buying votes with borrowed money, a responsible government should aggressively cut spending, balance the budget as quickly as possible, and then lower taxes in a prudent manner to put money back into Canadians’ pockets.
A People’s Party government will:
Phase out all covid spending programs and reverse new spending programs announced by the Trudeau government.
Get rid of the deficit by the end of a first mandate through fiscal prudence and spending cuts, including corporate welfare ($5B-$10B), foreign development aid ($5B), CBC ($1B), equalization payments, and funding for programs which are provincial or municipal responsibilities.
Stop using our tax system for political ends and make it simpler and fairer. In particular, it will eliminate targeted tax measures that are inefficient and serve no compelling public policy purpose.
Cut personal income taxes, corporate taxes, and the personal capital gains tax after the deficit has been eliminated, over the course of several budgets, as the fiscal room is found to allow it.