Many of us have heard the expression "there is only one taxpayer". As much as there is only one taxpayer, here in Canada there are three layers of Government providing services that ultimately are funded through a variety of different types of taxation taken from taxpayers. As an elected official one of the first things I have learned is that the spending of tax dollars is generally far easier than raising taxes to pay for that spending. It is a problem that many governments, not just those in Canada, but worldwide are currently struggling with as government revenues in many cases are not keeping up with government spending.This obviously creates a serious problem and requires either increases in revenue through taxation or decreases in spending or some combination of both. Yet finding decreases in government spending is easier said than done and ultimately if left unchecked, it can lead to increases in debt.
I believe that debt is something that we all need to pay more attention to. Many of you may be aware of the current debt struggles in Ireland and Greece, where those countries share of gross debt has now well exceeded one hundred percent of the respective Gross Domestic Product (GDP). Having said that, how many of you are aware that the United States has now reached a point where the projected gross debt for 2011 is forecast to be a one hundred percent share equal to the GDP? This is an increasingly serious situation and more so as countries that we compete with, such China and India, have considerably lower debt levels with China at just 17% gross debt against GDP and India at 69%. South Korea as another example sits at 29%
Here in Canada our current gross debt to GDP ratio is roughly 84%. The good news is that our budget deficit between April and May from this same time last year has shown a decrease, largely due to increased revenues up close to 3 percent from both personal and corporate taxes.The importance of jobs and a strong economy cannot be overstated in helping to maintain important government services. Moody’s Investor’s Services has also confirmed Canada’s current economic direction by renewing our triple A credit rating.
I raise the issue of debt because it is important that government at all levels make efforts to control spending. Recently I had the opportunity to visit one community and met with a few interest groups who were promoting projects with a combined price tag in excess of $40 million. In both cases the local government was unable to contribute so the expectation was that higher levels of government might step in to make up the shortfall. As much as these were both great projects that the community in question would enjoy, we must also learn to live within our means. We can consolidate and often use existing buildings as opposed to constantly building bigger and building new. If one community cannot afford a one third share of a project perhaps the project should be scaled back to ensure it's future sustainability.
Ultimately as a country we must all be willing to do our part in our communities to ensure that we keep spending in control. Every dollar of increased debt means that tax dollars that should be used to fund core services such as healthcare, education and infrastructure as examples, are instead diverted to pay for the debt interest. The higher our debt, the greater the interest payments and less tax dollars available for other services. Over time this situation can create the need for drastic actions that can potentially threaten the viability of the services we depend upon. We must also recognize that important projects that help to increase government revenues ultimately help fund the very services we all depend upon. Keeping Canada strong will continue to be a priority of our Government and working in partnership with our communities we will continue to build upon the success of our great country.
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Dan Albas is the Member of Parliament elect for Central Okanagan-Similkameen-Nicola.