Merry Christmas and Happy New Year ! Let’s be thankful for what we have, but also vigilant about our true financial situation.
The total tax bill for the average Canadian family will exceed $35,000 in 2017, or 42.5 percent of their income—more than what the average family spends on housing, food and clothing combined.
While the federal government has claimed it “cut taxes for middle-class Canadians everywhere,” the reality is that 81 percent of middle-class families in Canada are paying higher federal income taxes under the government’s personal income tax changes—on average, $840 more a year.
Canada’s high and increasing personal income tax rates on its best and brightest workers have made the country uncompetitive compared to other developed countries. The federal government increased the top federal tax rate to 33 percent from 29 percent, and increases to top provincial rates have been made in Ontario, Alberta, British Columbia and other provinces. Seven of our 10 provinces now have a top combined federal-provincial rate above 50 percent.
The top 20 percent of income-earners in Canada—families with an annual income greater than $186,875— will pay 64 percent of all personal income taxes and 56 percent of all taxes (i.e. income, payroll taxes, sales taxes and property taxes, etc.).
The federal government has failed to achieve its election promise to run $10 billion deficits in its first two years and thereafter balance the budget. Instead, since coming into office, it has run deficits of $18 billion in 2016 and $20 billion this year, additional deficits of almost $80 billion are forecast over the next five years. There’s no immediate plan to balance the budget.
Large annual deficits mean government debt in Canada is ballooning. Federal net debt increased to $727 billion in 2016-17 with provincial net debt collectively at $633 billion. All told, federal and provincial debt currently stands at $1.4 trillion and has increased by more than 60 percent in the past decade.
Prime Minister Trudeau is on track to increase per-person federal debt more than any other prime minister in Canadian history who didn’t face a world war or economic recession.
The federal government has claimed deficit spending will help grow the economy through expenditures such as the promised $100 billion in infrastructure investment over the next 10 years. But only $6.6 billion of that will be spent in 2017 (only about a third of the $20 billion deficit), and less than 11 percent of the $100 billion will be spent on projects that have the potential to strengthen the economy.
As we close off 2017 and look forward to 2018, let’s hope we see a refocus on policies that will actually improve the economy and lives of Canadians. (Fraser Institute)