The COVID crisis combined with the oil-price war will reduce revenue and trigger spending increases.
Government Spending & Taxes
Whereas the Chrétien government used balanced budgets as a guiding fiscal anchor, the Trudeau government has not had an effective fiscal rule imposing discipline on its spending, taxing, and borrowing decisions, resulting in the federal government being less prepared to respond to the current recession.
The auditor general noted there were 3.8 million more social insurance numbers for Canadians 20 years and older than actual people in that age group.
Governments can find themselves at a new baseline spending level far in excess of revenues.
For now, the new wage subsidy program will cost $71 billion.
Default risk and exchange-rate risk increase for foreign lenders as they increase their holdings of any government’s debt.
Provincial government debt-service costs are set to reach $13.2 billion this year.
Effectively, the CERB will now cost $40 billion, up from $15 billion.
The principle of no taxation without representation is central to the concept of democracy.
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