Politicians need to look in the mirror
By Franco Terrazzano and Jay Goldberg on August 26, 2021.
Political parties are trying their best to convince Canadians they can make life more affordable. But if politicians want us to believe them, they need to look in the mirror. That’s because really making life more affordable means tackling the damage government does through regulation, high taxes, and runaway spending.Â
Even during the pandemic, the average Canadian family saw 36 per cent of its budget go to taxes, according to the Fraser Institute. That’s more than the typical family spends on food, housing, and clothing combined.Â
The tax burden facing families today has more than doubled since 1961, even after accounting for inflation. Bringing tax levels down to 1961 levels, adjusted for inflation, would save an average family over $20,000 per year.Â
All aspects of life, including daycare and groceries, would be much more affordable if families had an extra $20,000 to spend.
That’s the big picture. Here’s how much governments are driving up costs on the specifics.
Consider gasoline prices. Gas prices are nearing all-time highs, but a huge portion of the price drivers pay at the pump is due to taxes.
In Montreal, 42 per cent of the cost of gas comes from taxes. With an average price of $1.40 per litre last week, a single mom filling up a minivan would have spent about $41 in taxes on just one fill-up. That’s a huge bite out of a driver’s pocket.
While today’s numbers seem bad, they’re set to get much worse. The Trudeau government is planning to raise the federal carbon tax from $40 per tonne this year to $170 per tonne in 2030. That will cause gas prices to skyrocket. Erin O’Toole’s Conservatives have decided to embrace carbon taxes too, so don’t look to them to lower gas prices.
Next, let’s look at housing. Government rules and regulations continue to box thousands of Canadians out of the housing market. While politicians have been trying to tackle demand-side problems through policies like taxing foreign home buyers, governments are standing in the way of supply-side solutions, such as changing zoning rules, lessening restrictions on agricultural land, and lowering development charges.Â
With housing prices already sky-high, hardworking taxpayers could be hit even harder if the federal government introduces a tax on home equity, which the Canadian Mortgage and Housing Corporation has studied. Such a tax would pummel Canadians hoping to use the equity in their homes to finance their next home or retirement.
Inflation needs to be part of the conversation. With government printing and spending more money, it drives up the cost of goods by flooding the marketplace, causing prices to climb. It also erodes the value of every saver’s nest egg. Unfortunately, the prime minister claims he doesn’t need to think about monetary policy.
Perhaps the biggest threat to cost of living going forward will be the massive debt the federal government continues to rack up. According to the Parliamentary Budget Officer’s projections, if the government doesn’t change course, Canada won’t see a balanced federal budget until 2070. That would add trillions of dollars to the national debt. At that point, every Canadian will owe more than $67,000 in federal debt. That’s a massive cost-of-living bill for future generations.
There’s one more thing: alcohol. If taxpayers want to de-stress with a pint of beer or a glass of wine after reading about the high cost of living, governments will hit them there too. Automatically increasing escalator taxes are driving up alcohol taxes that now account for half the price of beer, 65 per cent of the cost of wine, and more than 75 per cent of the cost of spirits.
The bottom line is that a huge portion of the high cost of living is being driven by government policy. In this election, parties that want to run on an affordability agenda should look to lessening the government burden on taxpayers as the way to deliver.
 Franco Terrazzano is the Federal Director and Jay Goldberg is the Interim Ontario Director of the Canadian Taxpayers Federation.
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Thank you Mr. Terrazzano and Mr. Goldberg for your excellent and informative article and for the day to day advocacy done on behalf of the average Canadian Citizen today. I could not agree more, politician do need to look into the mirror and on a daily basis reflect upon whether decisions made and taxpayer money spent is in the best interest and is done in a fiduciary and responsible cost/benefit manner.
Politician today to easily and quickly identify how many millions or billions are spent on various programs. What they always neglect to say is the end result of these expenditures, how effective these expenditures were. In other words, there is never an official , public audit done identifying the benefit of these expenditures. It’s almost like they are saying “Look at me, look at how important and capable I am and how much good I am doing by spending all this money, I am a hero”
What I don’t understand is; often all this money gets spent, but very little if anything seems to improve. So then more money is necessary to address the shortfall ,and things just snowball out of control.
How is it that politicians are unable to identify how much money they saved?If employees/managers continuously went over budget, they may find themselves doing something else some day.
How does a average politician get to be paid one third to approximately one half of what an average doctor earns? The politician has no out if pocket expenses, while the medical professional has many. Yet there is a significant difference in the value they bring to the table.
“The tax burden facing families today has more than doubled since 1961, even after accounting for inflation. Bringing tax levels down to 1961 levels, adjusted for inflation, would save an average family over $20,000 per year”
Think of what an extra $20,000 per year could do for the average Canadian and the spin off/ multiplier effect and consequent benefit it could have on our economy?
“Inflation needs to be part of the conversation. With government printing and spending more money, it drives up the cost of goods by flooding the marketplace, causing prices to climb. It also erodes the value of every saver’s nest egg. Unfortunately, the prime minister claims he doesn’t need to think about monetary policy.” Of course he doesn’t he was lucky enough to be born with a silver spoon and currently lives a very lavish lifestyle which we are paying for. He does mot have to spend a dime of his own money.
I worry about future; “The bottom line is that a huge portion of the high cost of living is being driven by government policy. In this election, parties that want to run on an affordability agenda should look to lessening the government burden on taxpayers as the way to deliver.”
Respectfully;
This:
“The Facts Behind Canada’s Unequal Tax System”
http://www.taxfairness.ca/en/news/facts-behind-canadas-unequal-tax-system/
We’ve had years, and years, of successive, back and forth Liberal and Conservative governments who have not “modernized” our tax system. The opinion here is that Canada spends a lot of its “tax money shifting wealth to those who are already well-off.”
I don’t believe that either the Libs or the Cons will get this fixed. Perhaps we need the kind of politics/politicians who would have the courage to beget fair taxation in Canada. Other countries who do this, have more equal, happy societies while still, having opportunities for individual wealth.
Rising income inequality in Canada means our standard of living is jeopardized. “Wealth inequality can be a substantial barrier to economic growth.”