Federal government’s redistribution economics doesn’t work

From the Fraser Institute

By Jason Clemens, Jake Fuss, and Milagros Palacios

Prime Minister Trudeau’s vision for a more prosperous Canada relies on a much larger role for the federal government, with more spending, regulation, borrowing and higher taxes. By moving existing money around—both from higher-income workers to average Canadians and from the future to the present through borrowing—he believes the Canadian economy will be stronger and living standards will rise. But after nine years of governing, the evidence is clear—the prime minister’s redistribution economics doesn’t work and has actually reduced living standards in Canada.

Let’s first understand the magnitude of the changes made by the Trudeau government. Federal spending (excluding interest costs on debt) has risen from $256.2 billion in the last year of the Harper government to an estimated $483.6 billion this year, an increase of 88.7 per cent.

Even excluding COVID-related spending, the Trudeau government has recorded the five highest years of federal spending (on a per-person basis, after adjusting for inflation) in the history of the country, far surpassing spending during both world wars and the Great Recession.

Under Trudeau, the federal government has introduced several new programs (including dental care, daycare and pharmacare), and expanded several existing programs such as the cash transfer to families with children under 18 and corporate welfare.

Redistributing existing income has been a clear policy goal of the Trudeau government. From 2015 to 2022, average government transfers to families with children have increased from $12,685 to $15,750 (inflation-adjusted), an increase of 24.2 per cent. Yet among these same families, employment income only increased 8.0 per cent during the same period, meaning government transfers grew more than three times faster than their employment income. And as a share of household income, government transfers have increased from an average of 8.0 per cent between 1995 and 2007, when employment income was growing much faster, to 10.3 per cent in 2022.

The Trudeau government has financed this explosion in federal spending by borrowing, which is simply taxation deferred to the future, and tax increases.

Specifically, the government increased personal income taxes on professionals, entrepreneurs and successful business owners. It also increased taxes on businesses, which is an indirect and less transparent way of increasing taxes on average people since businesses don’t actually pay taxes, only people pay taxes. Higher business taxes mean less investment and thus lower wage growth for workers, lower payments to the business owners, and/or higher prices for consumers buying goods and services.

The Trudeau government also opaquely increased taxes on average Canadians. While it lowered the second personal income tax rate, it simultaneously eliminated several tax credits. As a result, 86 per cent of middle-income families experienced an increase in their personal income taxes as did 75 per cent of families with children in the bottom 20 per cent of income-earners.

But again, the government financed much of its new spending by borrowing, which means future tax increases. Consider that total federal debt stood at a little over $1.0 trillion when the Trudeau government took office in late-2015. By the government’s own estimates, total federal debt will reach almost $2.1 trillion next year.

Higher debt means higher interest costs, which divert money away from programs such as health care or badly needed tax relief. From 2015-16 (when Trudeau was first elected) to this year, federal debt interest costs have increased from $21.8 billion to an expected $54.1 billion. For context, this year the federal government expects to raise $54.1 billion from the GST, which means that every cent raised from the national sales tax will go to pay interest costs on the federal debt.

By focusing on moving around existing income (i.e. redistribution) rather than promoting income growth through investment and entrepreneurship, the Trudeau government has helped produce an outright economic growth crisis. Canada’s current decline in per-person GDP, a broad measure of living standards, is one of the longest and deepest declines of the last 40 years. Moreover, as of the end of 2023, the latest year of available data, the decline in living standards had not stopped so there’s a chance this could be the worst fall in living standards since at least the early-1980s.

According to a 2023 study, growth in per-person GDP from 2013 to 2022 was at its lowest rate since the Great Depression. Indeed, Canada’s post-COVID recovery was the 5th-weakest in the industrialized world. And prospects for the future are no better. A recent study by the OECD estimated that Canada would have the slowest growth in living standards among 32 high-income countries for the foreseeable future.

Simply put, the Trudeau government’s policies, which focused on government-led prosperity and moving income around instead of growing incomes, have led to a decline in living standards and economic malaise. Canadians are struggling when we should be leading the world in growth and prosperity. The only way to reverse our economic decline is to embrace a markedly different approach to policy focused on economic growth through entrepreneurship, investment and innovation.

Authors:

Jason Clemens

Executive Vice President, Fraser Institute

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Milagros Palacios

Director, Addington Centre for Measurement, Fraser Institute

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Premiers fight to lower gas taxes as Trudeau hikes pump costs

Published on November 1, 2024

Todayville

From the Canadian Taxpayers Federation

By Jay Goldberg

Thirty-nine hundred dollars – that’s how much the typical two-car Ontario family is spending on gas taxes at the pump this year.

You read that right. That’s not the overall fuel bill. That’s just taxes.

Prime Minister Justin Trudeau keeps increasing your gas bill, while Premier Doug Ford is lowering it.

Ford’s latest gas tax cut extension is music to taxpayers’ ears. Ford’s 6.4 cent per litre gas tax cut, temporarily introduced in July 2022, is here to stay until at least next June.

Because of the cut, a two-car family has saved more than $1,000 so far. And that’s welcome news for Ontario taxpayers, because Trudeau is planning yet another carbon tax hike next April.

Trudeau has raised the overall tax burden at the pumps every April for the past five years. Next spring, he plans to raise gas taxes by another three cents per litre, bringing the overall gas tax burden for Ontarians to almost 60 cents per litre.

While Trudeau keeps hiking costs for taxpayers at the pumps, premiers of all stripes have been stepping up to the plate to blunt the impact of his punitive carbon tax.

Obviously, Ford has stepped up to the plate and has lowered gas taxes. But he’s not alone.

In Manitoba, NDP Premier Wab Kinew fully suspended the province’s 14 cent per litre gas tax for a year. And in Newfoundland, Liberal Premier Andrew Furey cut the gas tax by 8.05 cents per litre for nearly two-and-a-half years.

It’s a tale of two approaches: the Trudeau government keeps making life more expensive at the pumps, while premiers of all stripes are fighting to get costs down.

Families still have to get to work, get the kids to school and make it to hockey practice. And they can’t afford increasingly high gas taxes. Common sense premiers seem to get it, while Ottawa has its head in the clouds.

When Ford announced his gas tax cut extension, he took aim at the Liberal carbon tax mandated by the Trudeau government in Ottawa.

Ford noted the carbon tax is set to rise to 20.9 cents per litre next April, “bumping up the cost of everything once again and it’s absolutely ridiculous.”

“Our government will always fight against it,” Ford said.

But there’s some good news for taxpayers: reprieve may be on the horizon.

Federal Conservative leader Pierre Poilievre’s promises to axe the carbon tax as soon as he takes office.

With a federal election scheduled for next fall, the federal carbon tax’s days may very well be numbered.

Scrapping the carbon tax would make a huge difference in the lives of everyday Canadians.

Right now, the carbon tax costs 17.6 cents per litre. For a family filling up two cars once a week, that’s nearly $24 a week in carbon taxes at the pump.

Scrapping the carbon tax could save families more than $1,200 a year at the pumps. Plus, there would be savings on the cost of home heating, food, and virtually everything else.

While the Trudeau government likes to argue that the carbon tax rebates make up for all these additional costs, the Parliamentary Budget Officer says it’s not so.

The PBO has shown that the typical Ontario family will lose nearly $400 this year due to the carbon tax, even after the rebates.

That’s why premiers like Ford, Kinew and Furey have stepped up to the plate.

Canadians pay far too much at the pumps in taxes. While Trudeau hikes the carbon tax year after year, provincial leaders like Ford are keeping costs down and delivering meaningful relief for struggling families.

Agriculture

Sweeping ‘pandemic prevention’ bill would give Trudeau government ability to regulate meat production

Published on November 1, 2024

Todayville

From LifeSiteNews

By Anthony Murdoch

Bill C-293, ‘An Act respecting pandemic prevention and preparedness,’ gives sweeping powers to the federal government in the event of a crisis, including the ability to regulate meat production.

The Trudeau Liberals’ “pandemic prevention and preparedness” bill is set to become law despite concerns raised by Conservative senators that the sweeping powers it gives government, particularly over agriculture, have many concerned.

Bill C-293, or “An Act respecting pandemic prevention and preparedness,” is soon to pass its second reading in the Senate, which all but guarantees it will become law. Last Tuesday in the Senate, Conservative senators’ calls for caution on the bill seemed to fall on deaf ears.

“Being from Saskatchewan I have heard from many farmers who are very concerned about this bill. Now we hear quite a short second reading speech that doesn’t really address some of those major concerns they have about the promotion of alternative proteins and about the phase-out, as Senator Plett was saying, of some of their very livelihoods,” said Conservative Senator Denise Batters during debate of the bill.

Batters asked one of the bill’s proponents, Senator Marie-Françoise Mégie, how they will “alleviate those concerns for them other than telling them that they can come to committee, perhaps — if the committee invites them — and have their say there so that they don’t have to worry about their livelihoods being threatened?”

In response, Mégie replied, “We have to invite the right witnesses and those who will speak about their industry, what they are doing and their concerns. Then we can find solutions with them, and we will do a thorough analysis of the issue. This was done intentionally, and I can provide all these details later. If I shared these details now, I would have to propose solutions myself and I do not have those solutions. I purposely did not present them.”

Bill C-293 was introduced to the House of Commons in the summer of 2022 by Liberal MP Nathaniel Erskine-Smith. The House later passed the bill in June of 2024 with support from the Liberals and NDP (New Democratic Party), with the Conservatives and Bloc Quebecois opposing it.  

Bill C-293 would amend the Department of Health Act to allow the minister of health to appoint a “National pandemic prevention and preparedness coordinator from among the officials of the Public Health Agency of Canada to coordinate the activities under the Pandemic Prevention and Preparedness Act.” 

It would also, as reported by LifeSiteNews, allow the government to mandate industry help it in procuring products relevant to “pandemic preparedness, including vaccines, testing equipment and personal protective equipment, and the measures that the Minister of Industry intends to take to address any supply chain gaps identified.”

A close look at this bill shows that, if it becomes law, it would allow the government via officials of the Public Health Agency of Canada, after consulting the Minister of Agriculture and Agri-Food and of Industry and provincial governments, to “regulate commercial activities that can contribute to pandemic risk, including industrial animal agriculture.” 

The bill has been blasted by the Alberta government, who warned that it could “mandate the consumption of vegetable proteins by Canadians” as well as allow the “the federal government to tell Canadians what they can eat.”

As reported by LifeSiteNews, the Trudeau government has funded companies that produce food made from bugs. The World Economic Forum, a globalist group with links to the Trudeau government, has as part of its Great Reset agenda the promotion of “alternative” proteins such as insects to replace or minimize the consumption of beef, pork, and other meats that they say have high “carbon” footprints. 

Trudeau’s current environmental goals are in lockstep with the United Nations’ “2030 Agenda for Sustainable Development” and include phasing out coal-fired power plants, reducing fertilizer usage, and curbing natural gas use over the coming decades, as well as curbing red meat and dairy consumption.