Budget update proves Trudeau isn’t serious about federal finances

From the Canadian Taxpayers Federation

“when you pay the GST on a hockey stick, a tank of gas or bar of soap, every penny will go to interest charges on the federal debt. In fact, interest charges will surpass federal health-care transfers next year”

Taxpayers should brace for impact based on the finance minister’s latest projections.

Interest charges on the federal debt will go from $47 billion this year to $61 billion in 2028-29, according to the budget update.

But what does $61 billion mean to you?

Sixty-one billion is the same amount the government plans to collect with the GST in 2028-29.

So, in a few short years, when you pay the GST on a hockey stick, a tank of gas or bar of soap, every penny will go to interest charges on the federal debt.

In fact, interest charges will surpass federal health-care transfers next year.

Let the shock sink in just a little deeper: what could we do if it weren’t for the federal debt?

We could virtually double federal health spending.

Or we could completely eliminate the GST in a couple years.

Somehow the government is communicating these perplexing projections with considerable calmness.

Finance Minister Chrystia Freeland claims “the foundation of our Fall Economic Statement is our responsible fiscal plan.”

But last year the government spent $474 billion. And this year the feds plan on spending $489 billion. By 2029, the government will be spending $595 billion a year.

Pro-tip for Freeland: when you spend billions of dollars more every year, you’re saving money wrong.

And all that spending comes on top of an already ballooned base line. Even before the pandemic, the Trudeau government was spending all-time highs. And that’s after accounting for inflation and population differences.

Last year’s $35-billion deficit will increase to $40 billion this year. The feds have no plan to balance the budget. And that’s pushing up interest charges.

Again, brace yourself, because in 2028, federal debt interest charges will cost taxpayers $61 billion. For context, pre-pandemic interest charges were around $20 billion a year.

Meanwhile, if you’re hoping for meaningful tax relief from this government, you shouldn’t hold your breath.

“I absolutely understand that after three difficult years – with a global pandemic, global inflation, and global interest rate hikes – Canadians are worn out, frustrated, and feeling the squeeze,” Freeland said. “What Canadians deserve today is for us to address the very real pain that so many are feeling.”

The easiest and simplest way for Freeland to help Canadians is to stop taking so much money from taxpayers’ wallets in the first place.

But Freeland and Prime Minister Justin Trudeau aren’t even willing to provide the simplest forms of tax relief like ending the sales tax-on-tax at the gas pumps. The GST on the carbon tax alone will cost taxpayers $429 million this year.

The government isn’t willing to end the anti-democratic escalator that increases alcohol taxes every year without a single vote in Parliament. Next year’s hike will cost taxpayers about $100 million.

The government isn’t even willing to extend the same relief to all Canadians that it gave Atlantic Canadian families and remove the carbon tax from everyone’s home heating bills. The carbon tax on natural gas will cost the average family $300 this year.

The budget update is an admission that the government has a spending problem, but it still isn’t serious about managing our finances or providing real tax relief.

The solution for Trudeau and Freeland should be simple: put down the credit card and pick up some scissors.

This column was originally published in the Toronto Sun on Nov. 24, 2023.

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New Analysis Shows Just How Bad Electric Trucks Are For Business

Published on May 12, 2024

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From the Daily Caller News Foundation

By WILL KESSLER

Converting America’s medium- and heavy-duty trucks to electric vehicles (EV) in accordance with goals from the Biden administration would add massive costs to commercial trucking, according to a new analysis released Wednesday.

The cost to switch over to light-duty EVs like a transit van would equate to a 5% increase in costs per year while switching over medium- and heavy-duty trucks would add up to 114% in costs per year to already struggling businesses, according to a report from transportation and logistics company Ryder Systems. The Biden administration, in an effort to facilitate a transition to EVs, finalized new emission standards in March that would require a huge number of heavy-duty vehicles to be electric or zero-emission by 2032 and has created a plan to roll out charging infrastructure across the country.

“There are specific applications where EV adoption makes sense today, but the use cases are still limited,” Karen Jones, executive vice president at Ryder, said in an accompanying press release. “Yet we’re facing regulations aimed at accelerating broader EV adoption when the technology and infrastructure are still developing. Until the gap in TCT for heavier-duty vehicles is narrowed or closed, we cannot expect many companies to make the transition, and, if required to convert in today’s market, we face more supply chain disruptions, transportation cost increases, and additional inflationary pressure.”

Due to the increase in costs for businesses, the potential inflationary impact on the entire economy per year is between 0.5% and 1%, according to the report. Inflation is already elevated, measuring 3.5% year-over-year in March, far from the Federal Reserve’s 2% target.

Increased expense projections differ by state, with class 8 heavy-duty trucks costing 94% more per year in California compared to traditional trucks, due largely to a 501% increase in equipment costs, while cost savings on fuel only amounted to 52%. In Georgia, costs would be 114% higher due to higher equipment costs, labor costs, a smaller payload capacity and more.

The EPA also recently finalized rules mandating that 67% of all light-duty vehicles sold after 2032 be electric or hybrid. Around $1 billion from the Inflation Reduction Act has already been designated to be used by subnational governments in the U.S. to replace some heavy-duty vehicles with EVs, like delivery trucks or school buses.

The Biden administration has also had trouble expanding EV charging infrastructure across the country, despite allotting $7.5 billion for chargers in 2021. Current charging infrastructure frequently has issues operating properly, adding to fears of “range anxiety,” where EV owners worry they will become stranded without a charger.

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Economic progress stalling for Canada and other G7 countries

Published on May 10, 2024

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From the Fraser Institute

By Jake Fuss

For decades, Canada and other countries in the G7 have been known as the economic powerhouses of the world. They generally have had the biggest economies and the most prosperous countries. But in recent years, poor government policy across the G7 has contributed to slowing economic growth and near-stagnant living standards.

Simply put, the Group of Seven countries—Canada, France, Germany, Italy, Japan, the United Kingdom and the United States—have become complacent. Rather than build off past economic success by employing small governments that are limited and efficient, these countries have largely pursued policies that increase or maintain high taxes on families and businesses, increase regulation and grow government spending.

Canada is a prime example. As multiple levels of government have turned on the spending taps to expand programs or implement new ones, the size of total government has surged ever higher. Unsurprisingly, Canada’s general government spending as a share of GDP has risen from 39.3 per cent in 2007 to 42.2 per cent in 2022.

At the same time, federal and provincial governments have increased taxes on professionals, businessowners and entrepreneurs to the point where the country’s top combined marginal tax rate is now the fifth-highest among OECD countries. New regulations such as Bill C-69, which instituted a complex and burdensome assessment process for major infrastructure projects and Bill C-48, which prohibits producers from shipping oil or natural gas from British Columbia’s northern coast, have also made it difficult to conduct business.

The results of poor government policy in Canada and other G7 countries have not been pretty.

Productivity, which is typically defined as economic output per hour of work, is a crucial determinant of overall economic growth and living standards in a country. Over the most recent 10-year period of available data (2013 to 2022), productivity growth has been meagre at best. Annual productivity growth equaled 0.9 per cent for the G7 on average over this period, which means the average rate of growth during the two previous decades (1.6 per cent) has essentially been chopped in half. For some countries such as Canada, productivity has grown even slower than the paltry G7 average.

Since productivity has grown at a snail’s pace, citizens are now experiencing stalled improvement in living standards. Gross domestic product (GDP) per person, a common indicator of living standards, grew annually (inflation-adjusted) by an anemic 0.7 per cent in Canada from 2013 to 2022 and only slightly better across the G7 at 1.3 per cent. This should raise alarm bells for policymakers.

A skeptic might suggest this is merely a global phenomenon. But other countries have fared much better. Two European countries, Ireland and Estonia, have seen a far more significant improvement than G7 countries in both productivity and per-person GDP.

From 2013 to 2022, Estonia’s annual productivity has grown more than twice as fast (1.9 per cent) as the G7 countries (0.9 per cent). Productivity in Ireland has grown at a rapid annual pace of 5.9 per cent, more than six times faster than the G7.

A similar story occurs when examining improvements in living standards. Estonians enjoyed average per-person GDP growth of 2.8 per cent from 2013 to 2022—more than double the G7. Meanwhile, Ireland’s per-person GDP has surged by 7.9 per cent annually over the 10-year period. To put this in perspective, living standards for the Irish grew 10 times faster than for Canadians.

But this should come as no surprise. Governments in Ireland and Estonia are smaller than the G7 average and impose lower taxes on individuals and businesses. In 2019, general government spending as a percentage of GDP averaged 44.0 per cent for G7 countries. Spending for governments in both Estonia and Ireland were well below this benchmark.

Moreover, the business tax rate averaged 27.2 per cent for G7 countries in 2023 compared to lower rates in Ireland (12.5 per cent) and Estonia (20.0 per cent). For personal income taxes, Estonia’s top marginal tax rate (20.0 per cent) is significantly below the G7 average of 49.7 per cent. Ireland’s top marginal tax rate is below the G7 average as well.

Economic progress has largely stalled for Canada and other G7 countries. The status quo of government policy is simply untenable.