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It’s time for an honest conversation about the costs of new federal programs

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From the Fraser Institute

By Jake Fuss and Grady Munro

The Trudeau government will table its next budget on April 16, and with the government’s push on the initial steps of national pharmacare, it’s important to remember there’s a cost Canadians must pay for new and expanded government services.

In March, the Trudeau government and the NDP reached an agreement to introduce the first steps of a national pharmacare program that will initially cover diabetes drugs and contraceptives, but may eventually grow to cover far more. This marks the third major national social program introduced by the Trudeau government in recent years, accompanying the $10-a-day daycare and national dental care programs promised in Budget 2022.

These policies represent an approach by the federal government to expand its role in the funding and provision of social services—an approach which has support among Canadians. Polling data from 2022, which sought to understand Canadian views on new spending programs, revealed the majority of respondents supported $10-a-day daycare (69 per cent), pharmacare (79 per cent) and dental care (72 per cent)—when there were no costs attached.

The Trudeau government has chosen to fund these new programs primarily using debt. Through planned deficits and rising debt interest costs for the foreseeable future, Ottawa is shifting much of the burden of paying for today’s services onto future generations of Canadians. Put differently, the new services are not free, and must ultimately be paid for through higher taxes in the future because debt comes with costs.

It’s therefore informative to look at what happens to the popularity of these programs when the true costs are communicated to Canadians. Polling data clearly shows these new programs lose considerable support when linked to a direct cost in the form of an increase in the federal goods and services tax (GST). Indeed, support for government-funded pharmacare, dental care and daycare plummeted to well below 50 per cent of respondents if the services are paid for by increased taxes.

This is the key difference between Canada and countries such as Sweden or Denmark, which are often used as examples of countries that maintain expansive social services and income supports. These countries have gone much further than Canada regarding government provision of services, but have paid for it through corresponding tax increases applied to individuals and families today rather than through borrowed money. Moreover, the tax burden falls primarily on the middle class, which utilizes these services the most, as opposed to concentrating tax hikes on top income earners.

For example, Swedes earning more than US$62,000 per year face the country’s top marginal personal income tax rate of 52.3 per cent. In comparison, although Canada’s top marginal rate (53.5 per cent) is roughly the same level as Sweden’s, it doesn’t kick in until earnings of nearly US$177,000. Moreover, both Sweden and Denmark maintain a national sales tax rate of 25 per cent, while Canadians face sales taxes ranging from 5 per cent to 15 per cent (depending on the province). Simply put, the Nordic countries fund expansive government through high taxes on their citizens.

To put the cost of national dental care, day care and the first steps of pharmacare in context, an increase in the GST to 6 per cent from its current 5 per cent would be insufficient to pay for an estimated annual cost of at least $13 billion on these programs.

In recent years, the Trudeau government has introduced substantial social services without the corresponding tax increases required to pay for them. But increased federal spending will require higher taxes for families either today or in the future, and Canadians must remember this when deciding if they truly want these new programs.

Business

90% of Ukraine news outlets get funding from USAID: new report

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From LifeSiteNews

By Matt Lamb

USAID, targeted by Elon Musk and Donald Trump for cuts, is a heavy funder of news outlets in Ukraine, according to a new report. The agency has come under scrutiny for wasteful and ideological projects.

The United States Aid for International Development (USAID) provides funds to 90 percent of Ukrainian news outlets, according to a new report from the Columbia Journalism Review and Reporters Without Borders.

While much focus has been on USAID and other federal entities subscribing to news outlets such as Politico, a broader issue may be taxpayers paying for news coverage in foreign countries.

Working off data from Reporters Without Borders, the Columbia Journalism Review reported that “USAID had boasted of supporting more than six thousand journalists, around seven hundred independent newsrooms, and nearly three hundred media-focused civil society groups in thirty or so countries.”

The Trump administration reportedly froze $268 million for these endeavors.

“RSF also noted the harsh effect on journalism in Ukraine, where 90 percent of news organizations rely on USAID funding, some very heavily,” the Journalism Review reported.

The United States has spent nearly $66 billion on direct military assistance to Ukraine in its ongoing war against Russia. Taxpayers have sent another $120 billion or so to the country in other foreign aid, according to an inspector general report current as of September 30, 2024.

The journalism groups released the reports ostensibly to defend U.S. funding of outlets.

On a related issue, the Trump administration is also cutting off taxpayer-funded subscriptions that government employees set up with news outlets.

“I can confirm that the more than $8 million taxpayer dollars that have gone to essentially subsidizing subscriptions to Politico on the American taxpayers’ dime will no longer be happening,” White House Press Secretary Karoline Leavitt said during a press conference yesterday.

“The DOGE team is working on canceling those payments now,” she said.

She stated further:

Again, this is a whole-of-government effort to ensure that we are going line by line when it comes to the federal government’s books. And this president and his team are making decisions across the board on ‘Do these receipts serve the interests of the American people? Is this a good use of the American taxpayers’ money? If it is not, that funding will no longer be sent abroad and American taxpayers will be seeing significant savings because of that effort.

Conservatives celebrated the news.

“The Federal Government is not a good steward of your tax dollars,” Josh Tanner, an Idaho state representative, wrote on X. “They spent $8 Million on propaganda media. This is even more of a reason for Idaho tax dollars to be accounted for, applied appropriately, and reduced where necessary. The Fed has failed, our state must succeed.”

“Even if the govt money to Politico wasn’t an outright grant, providing $8 Million in taxpayers funds for ‘subscriptions’ to a super Lefty publication is just absurd and abusive to hard-working Americans!” conservative commentator Steve Cortes wrote.

payroll issue with Politico‘s payroll was initially blamed on the funding freeze, though the company said it was a “technical error” that created the problem.

USAID under scrutiny, uses tax dollars to promote DEI around the world

The Trump administration has closed, at least temporarily, USAID. Secretary of State Marco Rubio is now the administrator of the agency, which has funded a variety of ideological projects across the globe.

“USAID has a history of ignoring [the national interest of the United States] and deciding that they’re a global charity. These are not donor dollars, these are taxpayer dollars,” Secretary Rubio said recently.

Leavitt highlighted some of the ideological and wasteful projects funded through this agency, including “$1.5 million to advance DEI in Serbia’s workforce.”

The agency has also been used to pressure conservative, poorer countries into adopting pro-abortion policies, as LifeSiteNews previously reported.

State Department spokeswoman Tammy Bruce highlighted other wasteful projects in a post on X.

She listed projects the freeze had stopped, including “$16 million in unjustified funding for institutional contractors in the gender development offices,” “$4 million to unjustified funding for the Center for Climate-Positive Development,” and “$600,000 to fund technical assistance for family planning in Latin America.”

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Business

Improve competitiveness, end capital gains tax hike immediately

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By Franco Terrazzano 

The Canadian Taxpayers Federation is calling on Finance Minister Dominic LeBlanc to end the capital gains tax hike following Liberal leadership front-runner Mark Carney’s commitment to reverse the tax increase.

“The government’s capital gains tax hike is a big sign telling entrepreneurs to set up shop in other countries before next year,” said Franco Terrazzano, CTF Federal Director. “Every candidate with a shot at becoming prime minister says they will scrap the capital gains tax hike, so LeBlanc needs to end it now.

“Especially with a looming trade war, the easiest way for the government to make Canada’s economy more competitive is by immediately ending the capital gains tax hike.”

LeBlanc announced that the government is postponing enforcement of the capital gains tax increase from June 25, 2024, to Jan. 1, 2026.

Today, Carney announced he would reverse the capital gains tax increase if he becomes prime minister. The other Liberal leadership front-runner, Chrystia Freeland, also promises to reverse the tax increase. Conservative Party Leader Pierre Poilievre says he would reverse the capital gains tax increase.

A recent report from the C.D. Howe Institute shows the capital gains tax hike will result in more than 400,000 fewer jobs and shrink Canada’s GDP by nearly $90 billion.

The Tax Foundation’s 2024 International Tax Competitiveness Index ranked Canada 31st out 38 Organisation for Economic Co-operation and Development countries on individual tax competitiveness, and 26th on business tax competitiveness. Weaknesses of Canada’s tax system include taxing capital gains “well above” the OECD average.

“Canada couldn’t afford the capital gains tax hike before and we definitely can’t afford the $90-billion hole it will blow through Canada’s economy now,” Terrazzano said. “LeBlanc must improve Canada’s competitiveness by ending the capital gains tax hike now.”

The CTF launched a legal challenge to stop the Canada Revenue Agency from enforcing the tax hike without parliamentary approval. The CTF’s legal application argues that enforcing the tax increase violates the rule of law and is unconstitutional.

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