Tag Archives: federal deficit

Ready to Start Paying Back $300 Billion Or So?

Our Federal deficit will be between $280 and $300 billion this year! The deficit is just what we’re short in spending versus income. No, it’s not like a credit card. That’s a cute political shot that’s just not close to being true but sounds nice and simple. But think of it as you spending more than your income. If it was $500 a month that’s a problem – but that can be solved. Then, overnight, it turns to being short $15,000 a month! When it’s 30x you’re no longer going to find some savings or being able to count on a cost of living raise. You’re starting to wonder if your 14-year old can hold a full-time job or whether you could live in your car…

And this isn’t an abstract problem that’s happening to a neighbour or friend. This is happening to you and me – we’re not just cosigners of this shortfall (and the debt that’ll hit a trillion dollars by the end of the years.) There’s only one group that owes it: You and me.

As a result, the government (this one or the next one) will need some huge extra income. Cutting a bit here and there will help but won’t get one-one hundredth of the money.

It’s a pretty safe bet that the GST will go up. That’s a big pot of money, but won’t make much of a dent. Tax increases? Maybe – but forget the political like that “we can just tax the rich.” It’s bullcrap. There are only 270,000 Canadians earning over a quarter million a year and their marginal tax rate is already over 50%.

Could it be that they’ll start taxing the sale of your home? Your principal residence sale profits aren’t taxed. But it’s a good bet the government will look at it and maybe float that as a “trial idea” within the next few years. Whether it may come to pass or not, start keeping all your receipts for home improvements. If you made $300,000 selling your home it’ll be a big help to have $60,000 in receipts to deduct from that profit before it’s taxed. If it doesn’t come to pass, you can throw the envelope out – but you can’t recreate the receipts a few years from now.

If you have any other ideas of where the government can find a huge untapped pot of funds, I’m sure the finance minister would love to hear from you. Every level of government has their hands so deeply in our pockets already, there just aren’t many places left…

I doubt there are many people who question the wisdom or necessity of the Federal Government help because of the Corona virus. However, a rainy day fund of savings when the economy was humming along would have been great. But just breaking even hasn’t been a priority for years. The next five years will be a huge rude awakening for taxpayers that didn’t care much over the past decade…

The Federal Deficit Keeps Growing

Yesterday was the federal government budget.  I didn’t bother going through most of it because it’s an election year, so it includes a little something for everybody. Bloomberg called it ‘a laundry list for voters.’ Nothing like getting a little kickback or bribe with our own borrowed money that someday we’ll have to pay back. All that borrowed money being sprinkled around on this International Happiness Day…

What I did notice was the deficit for the coming year. That’s not the debt – it’s just the overspending for the year. Prime Minister Trudeau promised in 2015 that there would be a small deficit of $10 billion for two years and that the budget would be balanced by 2019. It’s now year five and it’s still double that – each year.

The 2016 deficit was 19.7 billion, 2017 19 billion, 2018 14.9 billion and this year it’ll be 19.8 billion and the governments’ own estimates are for 56 billion in the next four years.

The two biggest political financial lies I’ve ever heard were from the former Mayor of Montreal stating that the Olympics (there in 1976) could no more have a deficit than a man could have a baby. It turned out that the cost overruns were 720% and the debt took 30 years to pay off.

The second big lie was from Prime Minister Trudeau in 2015 when he stated that ‘budgets balance themselves.’ Five year later – still waiting for that magic self-correction to happen.

George Boelcke – Money Tools & Rules book – yourmoneybook.com

The Government Financial Resolutions You Didn’t Get

Prime Minister Trudeau just gave his New Year’s message that us Canadians should focus on “key values” for the New Year. OK, that’s nice and vanilla, but there was nothing on maybe some government resolutions on financial issues. Since it was missing, here’s what I’d want the PM, and probably all governments, to commit to:

If you’re one of the many people who are waiting for the government to fix your life – sorry – we can’t and we won’t. You need to get off the sofa and start fixing your own economy – the government makes a lot of feel-good promises, but we can’t fix it for you.

We’re going to commit to using the rule of doctors: First, do no harm. That means we’re going to fix the punishing new mortgage rules that will make it really hard for the average Canadian to sell their home or to buy one – even with 20% or more down-payments.

From now on, the government will become better stewards of your tax money. You send us a lot of it. Not just off your pay, but in GST, gas taxes, EI, CPP, and places you don’t even know about. We’re going to start treating it as if it were our personal money. No more throwing cheques at small but vocal special interest groups that yell a lot, or who we want to bribe to get their votes again.

We’re also not going to just hand out money as if it were candy anymore. Sorry about giving $10.5 million to a terrorist – tax free. If we need to settle claims, we’ll do it after a court orders us to.

Lastly, we’re going to stop lying or fudging the numbers. Sure we promised we’d “only” be overspending $10 billion and it became $40 billion.

Yes, I promised we’d have a balanced budget before the next election in 2019. Yes, two days before Christmas when nobody noticed, my finance department released a report showing we would be in deficit spending until at least 2055. Yes, the damage we’ve done will last an extra 36 years just to not overspend each year. We’ve seen the light, and our New Year’s resolution is to tell you the truth, and to actually start making the hard choices – just like each and every family has to make, and to live within a budget.

When pigs fly…..