Franco Terrazzano's budget reaction.
Episode Stats
Words per Minute
182.99158
Summary
In this episode of the Taxpayers Federation's Taxation and Interpretation Podcast, we talk about the Trudeau government's 2019 budget and how it stacks up against the previous ones. We also talk about how the government is spending more than at any point in history, and why we should be worried about it.
Transcript
00:00:00.240
Love the rant on the bank tax. I think you absolutely nailed it, right? It's really going
00:00:06.300
to fall on Canadians when we go to the banks. Well, higher fees, surprise, surprise. But it's
00:00:11.820
not only that, Corey. Yesterday, we saw the government going after banks and insurance
00:00:17.760
companies. Well, what business, what sector, what industry, what type of Canadian are they
00:00:23.140
going to go after next with higher taxes, right? These taxes on certain businesses,
00:00:28.000
these taxes on the so-called wealthy, they're the Trojan horse of politics. They get the tax
00:00:34.020
through the door and then they expand it and expand it. And eventually they tax more and more
00:00:39.040
Canadians. And here's just one other point. I've heard some people say, well, how are you going
00:00:43.860
to pay down the $1 trillion debt? Well, when it comes to deficit reduction, this is little more
00:00:48.980
than silly political posturing. Corey, the way the Trudeau government is spending money left,
00:00:53.920
right and center. The government would blow through that type of cash in a day, in a day.
00:00:59.460
And one last thing to end my rant, you know, they, Trudeau talks about the banks and these
00:01:05.720
businesses doing well, you know, who's been doing really well during the pandemic, Mr. Trudeau
00:01:10.340
himself, who's pocketed not one, not two, but three pay raises during the pandemic.
00:01:16.440
Yeah, most of us haven't been enjoying such as, you know, speaking his language. I mean,
00:01:20.500
to throw his own words back when he was talking about that, he said, big banks got a windfall.
00:01:25.300
Well, what the hell did you get, Justin? If the rest of us aren't getting raises.
00:01:29.820
Yeah, no kidding. If you, if you total up the three pandemic pay raises that
00:01:33.480
MPs, our members of parliament gave to themselves, they range all the way from an extra $10,000 in
00:01:40.400
total for your backbencher, all the way up to more than $20,000 for Trudeau compared to his
00:01:47.260
pre-pandemic salary. Oh, good work. If you can get it, it's something else. So where else to go
00:01:55.180
with this budget? Maybe you got a Coles Notes version to give us here to start things off.
00:02:00.820
Oh, I absolutely do. So budget 2022, it's another credit card budget from Canada's national credit
00:02:07.880
card government. We're seeing a huge deficit, $52.8 billion, which follows the last two years
00:02:14.920
of astronomical deficits of 300 billion plus in 2020, a hundred billion plus last year. So another
00:02:21.560
big deficit. What's so frustrating though, Corey, is that this government has absolutely zero plan
00:02:28.360
on when it's going to balance the budget. The best that this government can give taxpayers is,
00:02:33.080
hey, in 2026, we'll finally bring the deficit down to a single digit billions. That's the best
00:02:39.820
they want to give us. And Corey, I don't even know if we can trust them to meet that target.
00:02:44.420
Remember back in the day, Prime Minister Trudeau said he would balance the budget in 2019,
00:02:53.020
Yeah. And I mean, I'm glad you pointed out, you can't use that excuse forever. The difference
00:02:58.540
between the pre-pandemic spending budget and our current one. So I mean, there were some exceptional
00:03:02.620
circumstances in the last couple of years, but that excuse has to go by the wayside. We've got to try and
00:03:07.660
look back to what our normal bar of spending was, and they didn't stay anywhere close to within it.
00:03:12.580
And Corey, then if you want to call it normal, if we can call it normal, it really wasn't normal.
00:03:18.140
Remember pre-pandemic, the federal government was spending all time highs. So in 2018, you had Trudeau
00:03:24.600
spending more than the federal government did during any single year during World War II. And yes,
00:03:30.160
that's even after accounting for inflation and population growth. Now this year, Trudeau wants to spend
00:03:36.220
about $452 billion. Corey, that's $90 billion more than pre-pandemic. That's $90 billion more
00:03:47.700
than what the government was spending when it was spending all time highs. So this is another
00:03:52.220
very costly budget. Of course, the pain is being felt today through inflation, and it's going to be
00:03:58.740
felt tomorrow through higher taxes. Well, so some of the spending initiatives, I mean,
00:04:04.460
they really had a housing focus. It was housing, housing, housing. I see billions of dollars
00:04:09.020
committed over the next five or six years towards affordable housing. But does it look like this will
00:04:15.940
be effective whatsoever? I started my rant off with it. People who were listening all the way through,
00:04:19.440
no, I don't believe that. But what's the Taxpayers Interpretation Federation?
00:04:23.940
Yeah, the government wants to tackle affordability with more debt. But trying to fight inflation
00:04:29.880
with more government debt is like trying to put out the fire with a can of gasoline.
00:04:35.520
It's just going to make things worse. Look, this government tries to talk about affordability,
00:04:40.660
and it should care about affordability because Canadians are struggling.
00:04:44.560
Many Canadians can't afford to fuel the car up with gasoline or to put ground beef in the grocery
00:04:49.340
cart. And that's because you have this government that's been spending like crazy for years
00:04:53.640
and raising taxes. But the answer to this inflation problem is not more spending. It's less spending.
00:05:01.380
It's less government deficits. And it's less tax hikes. So we're seeing the government pull us in the
00:05:06.960
wrong direction. We're seeing the government double down on what is really driving this inflation.
00:05:13.020
So let's get to some of the positive areas. I guess not positive in reality, but what would we like
00:05:19.400
to see? How could the budget be balanced? And of course, there's the thing with the people who are
00:05:23.380
fearful and dependent on government largesse all the time. What would be cut?
00:05:28.400
Corey, the government could balance its budget within a few years by 2024, just by bringing spending
00:05:36.400
back to pre-pandemic levels, which were already all time highs. That's how the government could
00:05:42.760
balance the budget. And with overspending that we've seen from this Trudeau government for years
00:05:48.400
and years and years, finding savings in every single area of the budget should be like finding
00:05:53.160
water in the ocean, right? So we should be seeing across the board savings. But let's even set those
00:05:58.580
aside for now. Here's a few other ones. Of course, leadership has to start at the top.
00:06:03.000
MPs got to stop giving themselves pay raises while the people that they're supposed to represent
00:06:08.040
continue to struggle with revolving government lockdowns, restrictions, higher taxes, you name
00:06:13.920
it. But also you can't keep giving bureaucrats bigger pay raises. 312,000 federal government
00:06:20.480
bureaucrats got a pay raise during the pandemic. Let's look at equalization. This is a slush fund
00:06:25.520
for some provincial premiers. It continues to go up by a billion dollars every single year. Well,
00:06:31.540
of course the Canadian Taxpayers Federation presented to the Finance Committee a way to phase out
00:06:37.520
equalization in a fair manner over 20 years. Something like that needs to happen. And Corey,
00:06:42.920
just before our segment, I heard you talking about the gun grab and buyback. Now this is going to be
00:06:49.160
a taxpayer boondoggle. It has every makings of one. This is likely going to cost billions of dollars,
00:06:55.420
but it won't even make Canada safe. And that's because it's going after law abiding citizens.
00:07:00.800
Corey, I don't know about you, but I can't imagine too many gang members showing up at government
00:07:05.160
offices and their guns. No, this is targeting Canadian citizens, law abiding citizens. It's
00:07:11.580
really not going to do much to address the real threat, which is criminal activity and the illegal
00:07:18.160
Yeah. And I mean, this is, it's like the liberals can't learn from their own actions. I mean,
00:07:22.820
it was kind of before your time there, but with Alan Rock and the big gun registry of the nineties
00:07:28.540
and the, and they assured us this is going to cost 20, 30, $40 million. It ended up costing,
00:07:33.880
I believe $10 billion by the time they scrapped it. And again, it wasn't effective. It didn't reduce
00:07:38.360
crime. It didn't take illegal guns off the street. They're just doing the same thing from a different
00:07:42.660
angle and it'll be just as effective and just as expensive, I'm afraid.
00:07:45.540
And Corey, let me talk about two big spending items that really caught my eye in the budget.
00:07:51.900
So even just setting aside all the spending reductions I just named number one, $15 billion
00:07:58.440
on what they're calling some type of growth fund. Now the details aren't really in the budget,
00:08:04.320
but essentially what it smells like is just some corporate welfare slush fund to the tune of $15
00:08:10.160
billion. But look, this government could even balance the budget of a lemonade stand.
00:08:15.540
I don't trust it to be running around playing investment banker with $15 billion worth of
00:08:20.560
taxpayers' money. If they want to grow the economy, cut out the middleman, just keep that $15 billion
00:08:27.240
in taxpayers' pockets and families' pockets and businesses' budgets and let businesses and families
00:08:33.200
do the rest. The next thing that caught my eye, Corey, is a billion dollars to create some type of
00:08:38.440
government agency to be promoting investment and innovation. But Corey, I don't know about you,
00:08:43.620
but doesn't that sound like a bit of an oxymoron? Government agency on innovation?
00:08:49.540
Yeah, no, that's never been an area of skill. And no government's immune from that. I mean,
00:08:54.080
in Alberta, look at our investment in the Keystone. That didn't pay off well. Or
00:08:58.480
going farther back, we went into MagCan. We went into Gainers. We went into Novotel. All these things
00:09:04.740
people don't remember. But the Alberta government got into business all over the place and all of them
00:09:09.080
failed. All of them. Their record was abysmal. And this was an ostensibly conservative government.
00:09:15.780
Now we've got the Liberals running around picking winners and losers. I think the only winners are
00:09:19.820
going to be, of course, those guys who accept the subsidies and the losers will be Canadians as
00:09:24.080
And the bond fund managers. Don't forget about the bond fund managers because all the interest
00:09:28.820
charges that taxpayers have to pay. Look, it's a crazy amount of money that is being wasted on
00:09:36.400
interest charges on the government credit card. Every single month, taxpayers have to pay more
00:09:41.620
than $2 billion just on interest charges on the government's credit card. Now to put that in
00:09:48.000
perspective, that means taxpayers are paying more this year on federal debt interest charges than the
00:09:55.220
Alberta government will spend on health care. Yeah. And that's just money essentially flushed
00:10:00.900
down the toilet and they're borrowing more. So not only will they add to what we have to pay interest
00:10:06.180
on, but the government, the Bank of Canada has already been signaling they're going to be raising
00:10:09.240
those interest rates in the years to come too. I know it's, it's, it seems like a lot of pain for
00:10:15.680
Canadians. And the reason is, is because you have this government that put itself between a rock and a
00:10:20.660
hard place, years of easy money policy, massive printing of money on display during the pandemic.
00:10:28.600
And of course, overspending for years from the federal government. So, um, look, there's just
00:10:34.240
no way to, um, skip out on paying the piper. Eventually you have to pay the piper. And if you
00:10:40.380
don't believe so, well then just ask the finance ministers from the 1990s, what happens when politicians
00:10:46.480
kick the deficit can down the road for far too long? Remember in the nineties, Corey, you'll remember
00:10:51.900
this. Maybe I won't, but you had these finance ministers, um, from all levels of government from
00:10:58.460
different political parties who had to make some very, very, very tough decisions. And what we
00:11:03.860
continue to say now is either this government makes some tough decisions like bringing spending
00:11:09.140
back to pre pandemic levels, which were already all time highs or tougher decisions are going to be
00:11:15.340
forced on us. Just like what happened in Saskatchewan, when you had an NDP government that was forced
00:11:20.740
to close more than 50 hospitals across that Prairie province.
00:11:24.520
Well, that's it. I mean, fiscal reality does come home to roost. There's a lot of parts of
00:11:29.640
the nineties. I don't remember really well, but I, I've, uh, I, I indulged a lot in those days,
00:11:34.460
but I do remember the politics a lot of the time and, and, uh, yeah, politicians of every stripe had to do
00:11:40.580
it. The Romano NDP government had to balance their budget. Jean Chrétien, a liberal government
00:11:45.800
had to balance their budget. And this will eventually come to us. And I mean, it doesn't
00:11:51.300
matter how much the union scream and how much the left screams, because that's what happens when the
00:11:54.960
cuts come, when the, when the cupboard truly becomes bare, it doesn't matter if it's an NDP
00:12:00.060
government, a liberal government, they have to cut. And if we'd cut modestly now, it'll save from the
00:12:05.340
drastic cuts later, but not enough people seem to realize that yet. And I also want to just make it
00:12:10.260
clear. This isn't just consequences for years down the road, right? A lot of people, when they think
00:12:14.940
about government debt, they think of, yeah, there's, there's money being wasted on interest payments
00:12:18.960
and it's too much money. We need that to be going and used to build more hospitals, roads, lower taxes,
00:12:24.300
things of that nature. But we're also seeing real life consequences today. The inflation tax is showing
00:12:32.220
Canadians firsthand that you can't just have government debt running wild. You can't have
00:12:37.620
the government's printing press on overdrive and think that nothing's going to happen during the
00:12:42.440
pandemic. We saw the federal government central bank, the bank of Canada print $370 billion right
00:12:49.660
out of thin air, buying financial assets like government of Canada debt. And the problem there
00:12:55.600
is the more dollars that this bank of Canada prints, the less that your dollars in your bank account
00:13:00.940
or in your savings account will buy. So it sure has seemed that Ottawa has been financing a good
00:13:07.440
chunk of its deficits with the printing press, which means that Ottawa has been financing and
00:13:13.940
getting some of its money by devaluing your money. That's the inflation tax and the debt is
00:13:20.340
having a real world consequence by driving up the cost of living here in Canada.
00:13:24.940
Yeah. And it's just brutal on people with fixed incomes and such. I mean, you can't flex and
00:13:30.280
move to go with that. I mean, some people can float a bit with inflation, their salaries will increase
00:13:34.780
a bit, but not everybody's in that position and it's going to be very harmful. There was also some
00:13:40.360
payroll taxes that rose. Yep. Payroll taxes are up again in 2022. Expect to pay about $400 extra if
00:13:50.740
you're making about $65,000 or more just through payroll taxes. So what really caught the eye in
00:13:56.740
the budget, I think of, of the media is the, um, is the bank and insurance tax. But we also have to
00:14:02.360
remember that taxes are going up this year, even outside of what was really in that budget. And I'm
00:14:07.660
talking about the carbon tax, right? That's got, that just went up April one, alcohol taxes just went up
00:14:13.300
April one. And payroll taxes are, are, are also going up in 2022.
00:14:19.040
So was there a couple of taxes they reduced somewhere just to throw a little credit where due?
00:14:24.040
Well, yeah. Um, there was, I guess, two types of tax reductions. There was a tax on low alcoholic beer and
00:14:32.300
excise tax on that. And there should have never been an excise tax on lower non-alcoholic beverages, right? So it's good to
00:14:39.260
see the government, um, scrap that that's, that's good policy credit where credit's due. And there was
00:14:43.900
some other tax relief for small businesses. Oh, I mean, everyone knows that small businesses need tax
00:14:50.040
relief, especially right now after the last two years that governments have put them through and the
00:14:54.680
government is, um, allowing more businesses. So medium sized businesses to be eligible for the small
00:15:00.680
business tax rate, which is lower than the general business tax rate. So those are both, you know, good moves
00:15:06.540
for sure. Um, but not even close to what we, what we need to be seeing from this government on tax
00:15:12.640
relief. Yeah, no, they, they are drops in the bucket and, uh, you know, but I guess it's just,
00:15:17.800
it's worth mentioning. We're here to cover the whole budget. I mean, what it gets me is any kind
00:15:22.100
of increase to payroll taxes. I mean, government talks about taxes as being something to stop the
00:15:26.200
activity of something. Well, when you're going to tax people on their employment, you're going to reduce
00:15:30.480
their employment. They don't seem to understand that when it comes. Yeah. And that's money that they
00:15:35.200
should be leaving in Canadians pockets. Families are having such a difficult time. Canadians are
00:15:39.460
having such a difficult time, but also that's a, that impacts businesses as well. And obviously
00:15:44.340
businesses need liquidity. They need to have money to reinvest in their opposite operations, get more
00:15:50.640
people back to work. So it should be a no brainer that right now is the worst possible time to raise
00:15:56.200
taxes. So very unfortunate that Ottawa continues to raise taxes. And Corey, I think it's important to talk
00:16:02.140
about international comparisons here because we're seeing other countries do the exact opposite.
00:16:07.280
We saw South Korea reduce gas taxes by 20%. We saw both, uh, France and Spain reduce electricity
00:16:13.800
taxes, Italy reducing taxes as well. You have India that cut fuel taxes, Poland cut fuel taxes,
00:16:20.240
Sri Lanka cutting taxes. The United Kingdom just announced fuel tax relief. Corey, you even have
00:16:26.520
President Joe Biden down South saying that he is considering big time gas tax relief. So you have
00:16:32.480
these other countries that are reducing taxes while Ottawa continues to make our lives harder with higher
00:16:38.560
tax bills. Yeah, we're certainly, uh, not going to remain competitive for, uh, for much longer at that
00:16:44.060
rate. Well, uh, thanks for the update today, Franco. I knew it wasn't going to be all, uh, sunshine and
00:16:49.120
lollipops, but we need that, you know, realistic breakdown of what we're facing year by year on these
00:16:54.080
things. And hopefully enough people will eventually, uh, turn that tide at some point. So where can we
00:17:00.300
find more information on what you do and, uh, where people can push back a bit against, uh, this ever
00:17:06.000
increasing tax burden? Head over to taxpayer.com, check out our newsroom, check out the petitions on
00:17:11.940
there, follow us on Facebook, just type in Canadian Taxpayers Federation, and you can follow us on Twitter
00:17:16.640
as well. And Corey, thank you so much for having me on today.