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

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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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2025 Federal Election

WATCH: Massive Crowd for Historic Edmonton Poilievre Rally

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From Pierre Poilievre on YouTube

Canadians are ready for CHANGE and a new Conservative government that will build pipelines, mines, LNG plants, data centres and lower costs for families—For a Change

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2025 Federal Election

Harper Endorses Poilievre at Historic Edmonton Rally: “This Crisis Was Made in Canada”

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The Opposition with Dan Knight

Harper Endorses Poilievre, Slams the Liberals and Mark Carneys Record, and Exposes the Truth Behind Canada’s Decline.

Last night, in a massive warehouse just outside Edmonton, something extraordinary happened. Fifteen thousand Canadians showed up—not for a concert, not for a protest, but for a political rally. For one reason: to hear Pierre Poilievre speak. But the real shock? The man who introduced him.

Stephen Harper—the most successful Conservative prime minister in a generation—took the stage to deliver a blistering endorsement of Poilievre, and a scathing indictment of the Liberal regime.

He didn’t mince words. Harper said what every Canadian knows but no one in the press gallery will admit: this country needs change—desperately.

And he didn’t hedge. He didn’t qualify. He didn’t say “both parties have made mistakes.” No. Harper made it clear: this crisis—soaring costs, collapsing standards, vanishing jobs, growing division—it wasn’t created by Donald Trump. It was made right here. In Ottawa. By three terms of Liberal government and the Prime Minister who wants a fourth.

“These were not created by Donald Trump… They were created by the policies of three Liberal terms—policies the present Prime Minister supported.”

That’s as blunt as Harper gets. And it should be a headline on every newspaper in the country. But it won’t be. Because it hits too close to home for the elite class that’s spent nearly a decade covering for Trudeau’s failures.

Harper pointed out that the Liberals and their media allies are now trying to blame everything on geopolitics. Blame Trump. Blame supply chains. Blame COVID. Blame war. Blame anything but themselves. Because the truth? They can’t run on their record—so they’re running from it.

What is that record?

  • Exploding debt
  • Collapsing GDP per capita
  • A federal bureaucracy that punishes work and rewards compliance
  • A housing market that’s locked out an entire generation
  • And an energy sector that’s been handed over to the Americans while Canadians sit unemployed on world-class resources

And now, as Mark Carney floats in with his $180 million CBC top-up and another round of green buzzwords, Harper reminded everyone: they’ve had their shot. Three terms. And they blew it.

He warned Canadians not to fall for the same routine again. Not to fall for the same slogans. Not to fall for the polished elites promising “solutions” to the very problems they created.

He reminded Canadians that while the Liberals talk about “fighting Trump,” they’re really just using the U.S. as a scapegoat for their own failures. And what did Harper offer instead? A rallying cry to seize this moment—not as an excuse—but as an opportunity to rebuild a truly independent Canada.

“The challenge from the United States… should not be another excuse for Liberal failure. It should be a historic opportunity.”

But the line that hit hardest? It was personal. Harper reminded everyone that he’s the only person alive who actually led Canada through the global financial crisis.

That little swipe at Mark Carney—you could feel the building rumble.

Carney wants credit for crisis leadership? Harper was running the country when the global economy was imploding. He knows what real leadership looks like—and he said flatly that Pierre Poilievre is the only one on the stage today who’s shown it.

Stephen Harper stood up and told the country what it needs to hear: Pierre Poilievre is ready to lead.

Not because of branding. Not because he’s a “fresh face.” Not because some elite committee in Ottawa thinks it’s his turn. No—because he earned it.

Harper laid it out plainly. Poilievre started in the back row. He built his career not on media hype or party privilege, but on policy work, persistence, and a rock-solid conservative vision. He wasn’t parachuted in. He wasn’t picked by insiders. He clawed his way up with substance.

“Pierre is not new to this. He’s been on the national scene for more than two decades. He has been in cabinet. He has been in opposition. He’s a serious policy-maker. A leader who has grown through experience.”

That’s what Stephen Harper said. And you could hear the crowd erupt when he said it.

Because Canadians are desperate—desperate—for someone who doesn’t just play politics, but actually understands the fight. Someone who knows how Parliament works. Someone who has taken on the gatekeepers—and won.

And Harper wasn’t just praising Poilievre’s résumé. He called him what the man actually is: an ideas-driven, battle-tested leader who has spent his entire career pushing back against the smug, bloated, bureaucratic class that now defines Ottawa.

“Pierre has always been guided by conservative values… smaller government, fiscal responsibility, and making this country work for those who do the work.”

Imagine that. A politician who talks about work—and means it.

Harper could’ve stayed silent. He’s done the job. He’s earned his peace. But he stepped into that warehouse in Nisku for one reason: to make it clear that this is Pierre’s moment—and Canada can’t afford to miss it.

“He is our leader. And he is the next Prime Minister of Canada.”

That wasn’t hyperbole. That was a warning shot to the Liberal machine. A message to the Laurentian elite, the smug consultants, the CBC newsrooms, and every Davos-friendly banker currently circling Ottawa like vultures: your time is up.

Stephen Harper didn’t back Pierre out of nostalgia. He backed him because he sees a real, competent, fearless leader—someone who knows that you don’t fix this country by managing the decline. You stop the decline.

Pierre Poilievre isn’t Trudeau with a different haircut. He’s the anti-Trudeau. He’s not trying to be liked by the press gallery. He’s trying to restore the country.

And if you want a Prime Minister who understands the value of work, who believes in the dignity of the individual, who will cut the red tape, slash the taxes, fire the gatekeepers, and take Canada back from the bureaucratic swamp—Harper made it clear:

There is only one choice.

Pierre Poilievre.

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