Ottawa unveils smallest spending increase in a decade

Ottawa unveils smallest spending increase in a decade – The Globe and Mail.

The article isn’t the good part of this – the flash widget on the right hand side which shows you a high level breakdown of where the money comes from and where the money is spent is terrific though. It shows things over the past 10 years and there’s some interesting things to see in there.

• Corporate tax revenue peaked at $40 billion in 07-08 and then dropped to a low of $22 billion. Corporate tax revenues now account for about 10% of federal revenue, 10 years ago it was about 15% – in other words corporate tax rates have been cut by about 33%.
• The growth in revenue has been 42% in the last 10 years – I couldn’t dig up economic growth figures but we definitely were closer to 2.5% annually this past decade meaning the government hasn’t actually been cutting taxes, just re-indexing to make it sound like they’re cutting taxes.
• Personal tax revenue increased by 52% during that same time. Corporate taxes were up about 6% in that same period.
• On the expenses side debt charges are down 25% in the past 10 years and this is absolutely huge – revenue up 42% and interest down 25% meant a HUGE increase in social spending. Enough to deal with the aging of our population and the resultant increase in health care costs.
• Transfers to persons (pensions, EI, child benefits) and federal programs doubled in the last 10 years. Social transfers (health care) more than doubled in the last 10 years while federal program spending.

Deficit spending in tough times is the right thing to do but the deficit matters because Canada is only able to pay for health care and federal programs because we’ve been paying off our debt over the past 15 years. The money freed up by paying down our debt has made it possible for taxes to be nominally lowered (they aren’t really lower) and allow us to not make tough decisions when it comes to managing how our social programs should be run.

At a glance it’s pretty easy to say that we have been deferring the hard reality that we can’t actually afford our programs the way they are unless we raise taxes and I would say that’s closer to the truth than we realize.

And the government gridlock caused by a minority government and an Prime Minister acting as Dictator is the wrong medicine for our country.