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Federal debt interest will consume nearly one quarter of income tax revenue in 2024

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5 minute read

From the Fraser Institute

By Grady Munro and Jake Fuss

The Trudeau government will table its next budget on April 16. In recent years, the government has overseen a substantial rise in the amount of interest it must pay to service federal debt, reversing a long-standing trend of interest costs declining relative to personal income tax revenues. By 2024/25, according to projections, nearly one in four dollars of personal income tax revenue will go towards debt interest.

Just like how individuals must pay interest when they take out a mortgage, the government must also pay interest when it borrows money. These interest payments represent taxpayer dollars that don’t go towards programs or services for Canadians.

When interest costs rise faster than the government’s ability to pay—i.e. the revenues it brings in—the government will face pressure to take on more debt to maintain funding for programs and services. And by taking on more debt, this places additional upward pressure on interest costs (all else equal) and the cycle repeats.

A useful way to track this is to measure debt interest costs as a share of federal personal income tax (PIT) revenues, which represent Ottawa’s single-most important revenue source. In 2024/25, they’re expected to comprise just under half (46.4 per cent) of total revenues and therefore provide a useful gauge of the government’s ability to pay interest on its debt. As such, the chart below includes projections for federal debt interest costs as a share of PIT revenues for the two decades from 2004/05 to 2024/25.

Chart

As we can see from the chart, for many years federal debt interest costs had been declining as a share of Personal Income Tax revenues. In 2004/05, 34.6 per cent of PIT revenues went towards servicing federal debt, but by 2015/16 that share had fallen to 15.1 per cent. In other words, during the Trudeau government’s first year in office, federal interest costs consumed less than one in six dollars of personal income tax revenue paid by Canadians. Interest costs as a share of PIT revenues continued to fall for the next several years, down to a low of 11.7 per cent in 2020/21. However, this marked the end of the decline, and the years since have seen rapid growth in debt interest costs that far exceeds growth in PIT revenues.

In the two years from 2020/21 to 2022/23, federal interest payments rose from 11.7 per cent of PIT revenues to 16.8 per cent. And by the end of the upcoming fiscal year in 2024/25, debt interest payments will reach a projected 23.4 per cent of PIT revenues. In four years, debt interest payments are expected to have gone from consuming about one in nine dollars of PIT revenue to nearly one in four dollars. Put differently, nearly one quarter of the money taxpayers send to Ottawa in the form of personal income taxes will not go towards any programs or services in 2024/25.

The causes of this sudden rise in interest costs as a share of PIT revenues are the combined effects of a substantial accumulation of debt under the Trudeau government, and a recent rise in interest rates. From 2015/16 to 2022/23, the Trudeau government added $820.7 billion in gross federal debt, and by 2024/25 total debt will reach a projected $2.1 trillion—roughly double the amount inherited by the current government. Meanwhile, from 2022 to 2023, the Bank of Canada increased its policy interest rate from a low of 0.25 per cent to the current rate of 5.00 per cent.

Simply put, federal debt interest costs have risen and are expected to eat up almost one quarter of federal PIT revenues by 2024/25. To help prevent taxpayers from devoting an even larger share of their tax dollars towards debt interest, the Trudeau government should cease its heavy reliance on borrowing in this year’s federal budget.

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Addictions

Ontario to restrict Canadian government’s supervised drug sites, shift focus to helping addicts

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From LifeSiteNews

By Anthony Murdoch

Doug Ford’s Progressive Conservative government tabled the Safer Streets, Stronger Communities Act that will place into law specific bans on where such drug consumption sites are located.

Ontario Premier Doug Ford is making good on a promise to close so-called drug “supervision” sites in his province and says his government will focus on helping addicts get better instead of giving them free drugs.

Ford’s Progressive Conservative government on Monday tabled the Safer Streets, Stronger Communities Act that will place into law specific bans on where such drug consumption sites are located.

Specifically, the new bill will ban “supervised” drug consumption sites from being close to schools or childcare centers. Ten sites will close for now, including five in Toronto.

The new law would prohibit the “establishment and operation of a supervised consumption site at a location that is less than 200 meters from certain types of schools, private schools, childcare centers, Early child and family centers and such other premises as may be prescribed by the regulations.”

It would also in effect ban municipalities and local boards from applying for an “exemption from the Controlled Drugs and Substances Act (Canada) for the purpose of decriminalizing the personal possession of a controlled substance or precursor.”

Lastly, the new law would put strict “limits” on the power municipalities and local boards have concerning “applications respecting supervised consumption sites and safer supply services.”

“Municipalities and local boards may only make such applications or support such applications if they have obtained the approval of the provincial Minister of Health,” the bill reads.

The new bill is part of a larger omnibus bill that makes changes relating to sex offenders as well as auto theft, which has exploded in the province in recent months.

In September, Ford had called the federal government’s lax drug policies tantamount to being the “biggest drug dealer in the entire country” and had vowed to act.

In speaking about the new bill, Ontario Minister of Health Sylvia Jones said the Ford government does not plan to allow municipal requests to the government regarding supervised consumption sites.

“Municipalities and organizations like public health units have to first come to the province because we don’t want them bypassing and getting any federal approval for something that we vehemently disagree with,” Jones told the media on Monday.

She also clarified that “there will be no further safe injection sites in the province of Ontario under our government.”

Ontario will instead create 19 new intensive addiction recovery to help those addicted to deadly drugs.

Alberta and other provinces have had success helping addicts instead of giving them free drugs.

As reported by LifeSiteNews, deaths related to opioid and other drug overdoses in Alberta fell to their lowest levels in years after the Conservative government began to focus on helping addicts via a recovery-based approach instead of the Liberal-minded, so-called “safe-supply” method.

Despite public backlash with respect to supervised drug consumption sites, Health Canada recently approved 16 more drug consumption sites in Ontario. Ford mentioned in the press conference that each day he gets “endless phone calls about needles being in the parks, needles being by the schools and the daycares,” calling the situation “unacceptable.”

The Liberals claim their “safer supply” program is good because it is “providing prescribed medications as a safer alternative to the toxic illegal drug supply to people who are at high risk of overdose.”

However, studies have shown that these programs often lead an excess of deaths from overdose in areas where they are allowed.

While many of the government’s lax drug policies continue, they have been forced to backpedal on some of their most extreme actions.

After the federal government allowed British Columbia to decriminalize the possession of hard drugs including heroin, cocaine, fentanyl, meth and MDMA beginning January 1, 2023, reports of overdoses and chaos began skyrocketing, leading the province to request that Trudeau re-criminalize drugs in public spaces.

A week later, the federal government relented and accepted British Columbia’s request.

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Alberta

Alberta government announces review of Trudeau’s euthanasia regime

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From LifeSiteNews

By Anthony Murdoch

The Conservative provincial government of Alberta is pushing back against the Canadian federal government’s continued desire to expand euthanasia in the nation, saying it will launch a review of the legislation and policies surrounding the grim practice, including a period of public engagement. 

The United Conservative Party (UCP) government under Premier Danielle Smith in a press release said the province needs to make sure that robust safeguards and procedures are in place to protect vulnerable people from being coerced into getting euthanatized under the MAiD (Medical Assistance in Dying) program.

“Alberta’s government is reviewing how MAID is regulated to ensure there is a consistent process as well as oversight that protects vulnerable Albertans, specifically those living with disabilities or suffering from mental health challenges,” said the government Monday.  

The government said a online survey regarding MAiD open to all Albertans who have opinions about the deadly practice will be available until December 20.  

“We recognize that medical assistance in dying is a very complex and often personal issue and is an important, sensitive and emotional matter for patients and their families,” said Alberta’s Minister of Justice and Attorney General Mickey Amery. 

Amery said it is important to ensure this process has the “necessary supports to protect the most vulnerable.” 

The government said that it will also be engaging with academics, medical associations, public bodies, as well as religious organizations and “regulatory bodies, advocacy groups” regarding MAiD  

The government said all information gathered through this consultation will “help inform the Alberta government’s planning and policy decision making, including potential legislative changes regarding MAID in Alberta.” 

When it comes to MAiD, Prime Minister Justin Trudeau’s Liberal government sought to expand it from the chronically and terminally ill to those suffering solely from mental illness. 

Alberta’s Minister of Mental Health and Addiction Dan Williams said that the UCP government has been “clear” that it does not “support the provision of medically assisted suicide for vulnerable Albertans facing mental illness as their primary purpose for seeking their own death.” 

“Instead, our goal is to build a continuum of care where vulnerable Albertans can live in long-term health and fulfilment. We look forward to the feedback of Albertans as we proceed with this important issue,” he noted.  

The Alberta government said that as MAiD is “federally legislated and regulated” it is main job will be to try and make sure that it protects “vulnerable individuals” as much as possible. 

Alberta’s Minister of Health Adriana LaGrange reaffirmed that the Alberta government “does not support expanding MAID eligibility to include those facing depression or mental illness and continues to call on the federal government to end this policy altogether.” 

The number of Canadians killed by lethal injection under the nation’s MAiD program since 2016 stands at close to 65,000, with an estimated 16,000 deaths in 2023 alone. Many fear that because the official statistics are manipulated the number may be even higher.

To combat Canadians being coerced into MAiD, which LifeSiteNews has covered, the combat pro-life Delta Hospice Society (DHS) is offering a free “Do Not Euthanize Defense Kit” to help vulnerable people “protect themselves” from any healthcare workers who might push euthanasia on the defenseless. 

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