Growing gov’t increases burden on Canadians’ shoulders

fbc@fbc.caThe general belief is that the public demands more services from government, which in turn leads to bigger governments that need more tax revenues to pay for the services.So it’s all our fault, right? Not so fast.While we rarely hear of governments cutting or reorganizing less needed programs to live within their means, we continually hear of governments at all levels looking for new sources of tax revenue.The fight to introduce a harmonized sales tax (HST) in British Columbia and Ontario provides an interesting case in point.In B.C., former premier Bill Vander Zalm is mobilizing forces for a referendum to strike down HST legislation and potentially recall politicians who vote for HST introduction. However, B.C. and Ontario are likely to go ahead with the HST, regardless of Vander Zalm’s efforts and the widespread public unhappiness with the new tax.The Ontario government claims the tax will allow business to be more competitive in the province. It suggests that business, in an overwhelming gesture of customer care, will pass on savings to consumers that will result when the eight percent provincial sales tax is eliminated from business purchases.However, the same government has told the provincially run Liquor Control Board of Ontario to increase its prices to recover lost revenue from the cancelled provincial sales tax. Canada’s federal debt of $526 billion is growing by $135 million per day. At that rate, the $105 billion debt reduction that occurred between 1997 and 2008 will be wiped out by next year. Our interest payments on that debt amount to $84 million per day, and every man, woman and child owns a $15,492 piece of that debt pie.Two recent reports highlight the crunch that is about to happen between the incessant demands for tax revenue and the ability of Canadians to meet those demands. The first was a TD Bank paper about health care. Although it was principally focused on the Ontario system, the report’s findings have implications for all provinces. Health care in Ontario accounts for 46 percent of all provincial program spending, but it is projected to jump to 80 percent by 2036. Other provinces are expected to see similar increases in their program spending, which leaves a scant 20 to 30 percent left over for things like education and social programs.The other study was published by Statistics Canada, which reported that senior citizens, as a segment of the Canadian population, will grow to more than 10 million by 2036 compared with 4.7 million last year. Maybe that in itself is not disturbing, but keep in mind that in 1971, there were almost eight Canadians of working age for every person older than 65. By 2008, that number had dropped to 5.1 and it will decrease to 3.8 by 2019 and 2.5 by 2033.So the question is not “where’s the beef?” but more like, “who’s going to pay for the beef?”Larry Roche is a tax analyst with Farm Business Consultants Inc. Contact: fbc@fbc.ca or 800-860-7011.