OTTAWA: The Canadian Taxpayers Federation (CTF) reacts to the 2009-10 federal budget, which was tabled in the House of Commons by Finance Minister Jim Flaherty this afternoon.
“Eleven years of surpluses and debt reduction were wiped out today in one big budget deficit binge” said CTF Acting Federal Director Kevin Gaudet.
For the first time budgeted program spending is projected to break the $200 billion barrier, ballooning to $229 billion in 2009-2010 and $237 in 2010-2011 before it is projected to decline again. When the Liberals left office, total program spending stood at $175-billion (2005/06 fiscal year.) “Deficit financing is a lot like being drunk, the buzz for government happens immediately, and may give them a lift. However, the hangover comes after, especially for taxpayers”, continued Gaudet.
The federal debt stood at $457.6 billion at the end of 2007–08 down from its peak of $563 billion in 1996-97, according to the annual fiscal reference tables. It is projected to return to $542 billion, the same level it was in 1999-2000. This amount to $16,119 for every man, woman and child in Canada.
Debt interest peaked in 1990-91 at 38% of government revenue. With government revenues having climbed and debt having been reduced, debt interest charges have dropped to 14% of revenues in 2007-08. “Adding 85 billion more to the debt reverses the important trend of debt reduction. It will drive interest charges back up and will burden future taxpayers, leaving them to pay off the poor spending decisions of today”, said Gaudet.
At $39 billion in 2012-13, debt interest will continue to be the single largest line item in the budget and . Canadian taxpayers will pay $4.45 million per hour just in interest payments just to service this debt. It will have grown from $30 in 2008-09.
Once deficits get started they are tough to stop. From 1961-62 to 96-97 the federal government ran surpluses in only two years – 1965-66 and 69-70. The largest deficit was $39 billion in 1992-1993. The last federal deficit was $8.7 billion in 1996-97. The budget projects a return to surpluses in 2013-14. This projection relies importantly on rising government revenues and modest spending growth. “Believing government promises to restrain spending in the future is like believing a junkie’s promise to quit after the next fix”, said Gaudet.
The government is increasing the basic personal exemption from $10,100 to $10,320. The first two tax brackets are also having their upper limits increased; to $40,726 at 15% and to $81,452 for 22%. Gaudet concluded, “this is a small amount of broad-based tax relief like the CTF has been calling for.”
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For further information please contact Kevin Gaudet 1-877-267-3218 or 613-234-6554
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