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The assumption that government is best placed to care for us also overlooks a fundamental truth. Most people already care about people beyond their immediate circle. They express that care through kindness, volunteering, support for charities and in a thousand other ways. That's a more accurate and holistic understanding of compassion.
The Ontario government claims that it's shortchanged because Ontarians send more federal tax dollars to Ottawa than what the federal government directly spends in Ontario. But does this prove that Ontario's government deserves more money from the federal government?
Indeed, further restraint on compensation spending would help ease the pressure on Ontario's finances. Ensuring that the wages and benefits of provincial government workers are in line with private sector norms for similar positions would be a good first step towards getting things right.
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Over the past decade, the province of Alberta treated boom-time resource revenues like a permanent state of affairs. That set the province up for fiscal failure, for multiple lost opportunities. One high-profile example is the Alberta Heritage Savings Trust Fund.
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Taxes are indeed needed to fund important government services, critical both to a well-functioning economy and more generally, civilization. But there is a point when a larger, more interventionist government, combined with a heavier tax burden, can stunt economic growth and social outcomes, or achieve those outcomes only at great additional cost.
Earn $17,787 in Alberta and you'll pay nothing in provincial income tax. Earn $50,000 and 6.4 per cent of your income is tax ($50,000 minus the $17,787 exemption; the 10 per cent tax is paid on the remaining $32,213). Earn $100,000 and 8.2 per cent of your income is tax. There's a word for such sliding proportions of tax paid: progressive.
The key question for the new premier is: will he follow the lead of former Premier Don Getty--and raise taxes as both the premier and finance minister are hinting--or Ralph Klein, who controlled spending and reduced taxes? The answer will affect the fortunes of all Albertans.
"B.C. is currently on target to balance the 2014/15 budget," declared B.C. Finance Minister Mike de Jong while unveiling the government's latest financial update. In reality, however, B.C.'s government debt will grow again this year.
Governments, like families, have choices. And governments, as with families, sometimes make picks that close off other options. Spend a lot of money on having dinner out every night and that might foreclose the purchase of a nicer automobile.
Ontario Finance Minister Charles Sousa complained on Thursday that the federal government underfunds Ontario. The complaint is part of a political effort by some Ontario politicians and others to distract Ontarians from the real issue: made-in-Ontario policy that is killing investment and jobs in that province and creating massive provincial deficits.
The government already spends 9.2 per cent of its revenues to service its debt and, according to its own estimates, this will rise to nearly 11 per cent in the next four years. Put plainly, Ontario spends $1 out of every $10 sent to Queen's Park to pay for past debt. This is money not spent on health care, education, transportation, or other public priorities. The increase in rates and the expectation for further hikes means even more tax revenues will go to paying interest instead of key government services.
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As the saying goes, the first step is overcoming denial and the premier's recent comments suggest he understands the magnitude of Quebec's fiscal problems. The next step requires a bold plan to rein in government debt and improve tax competitiveness. The upcoming budget is a chance to move the province forward.
With Ontario lagging behind other provinces on a wide range of economic indicators and recently becoming a "have-not" province, it desperately needed a bold plan to improve competitiveness and foster economic growth. Unfortunately, Thursday's budget failed to deliver and will only exacerbate Ontario's fiscal and economic challenges.
For a real-life example of how scaling back government has led to positive and practical economic benefits, Americans should look north. In Canada the conventional wisdom for much of the second half of the 20th century favored increasing the size of government. This led to significant growth in government as a share of the economy.
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Every politician wants to leave a positive legacy, so here are some possibilities for the new federal Conservative finance minister, Joe Oliver. First, do no harm. This is not as easy as it sounds...
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Put simply, the aging of Canada's population has resulted in large and growing unfunded liabilities. The funding shortfall is estimated at $792.3 billion for the CPP, $494.4 billion for OAS, and $894.7 billion for medicare. Together the unfunded liabilities in Canada's public pensions and health care programs total $2.2 trillion or $134,841 for each income taxpayer. These unfunded program obligations make up more than half of total government liabilities. And their sheer size calls into question the structure of taxing current workers to provide benefits for retirees. Ultimately, to maintain current levels of spending in the future, taxes will have to increase or benefits for other programs will have to be cut -- or both.
One issue that has been largely absent from the campaign is the province's high levels of government debt. This omission is curious given that the Quebec government's debt is the largest in the country when presented as a share of the economy and is now consuming a significant share of tax dollars in the form of interest payments. If Quebec voters are concerned about their government's level of indebtedness, they should insist that the political parties set out clear plans to get it under control. The problem can no longer be ignored.
How can regular Albertans hold their government to account and have a debate about priorities and trade-offs when the province's Auditor General can't even determine the true state of the government's finances?
Beyond higher taxes or more debt, there has always been another option: prudent spending. However, that is something the Alberta government has been less than adept at in some years. For instance, had the province increased program spending after 2005/06 and to 2012/2013 but only in line with inflation and population growth, it would have spent $22 billion less compared to what it actually sent out the door.
As Albertans approach another provincial budget, the usual fables about Alberta's finances often crop up. To inoculate ourselves in advance, let's ponder two myths. Myth number one: "Alberta's wealth is a result of luck." This tall tale assumes that the existence of natural resources automatically results in wealth creation, jobs, and a higher standard of living. That's hardly the case. Plenty of jurisdictions have little in the way of natural resources but prosper, while others have plentiful natural resources yet flounder. Let's investigate myth number two: "Alberta is undertaxed."
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The policy direction of the Liberal Party of Canada and its leader Justin Trudeau seem to indicate that the party is rejecting the successful pragmatism of the 1990s. Instead, the federal Liberals favour a more interventionist and activist government, much like that of the current Ontario Liberal government. If such policies are enacted, the results would be ruinous for Canada.
Corporate welfare is the ultimate evasion of responsibility. It helps companies avoid the consequences that consumers would otherwise assign to them, the evasion demonstrated rather clearly by Chrysler's two government bailouts in a generation.
After running six consecutive deficits totaling $156.5 billion, Flaherty has been clear that balancing the budget in 2015-16 is his top priority. Budget 2014 reaffirms that commitment. Despite risks in Flaherty's plan, his budget signals that a return to surplus may soon be upon us. The next step for the federal government is to enact an ambitious personal tax reform plan.
Allegations of expense scandals in the Senate have shocked many Canadians and rightfully so. Although unsettling, such antics are not an isolated case; they are part of a larger institutional problem with government.