Some Thoughts On Where Your Income Taxes Go

This being the end of April many Canadians are grinding through their income tax calculations. It is not a joyful season. Some may be dismayed by the parade of recent announcements from Ottawa that will increase the burden in future years.

  1. On April 20th Prime Minister Trudeau touted a subsidy in excess of $13 billion for Volkswagen to build an EV battery plant in Ontario, claiming that it would create thousands of jobs.
    Joblessness is one of Canada’s least pressing issues, with unemployment hovering around 5%. Many employers struggle to find workers at a time when we are adding 500,000 new Canadians a year.
  2. When the Trans Mountain pipeline expansion was bought by the federal government for $4.5 billion in 2018 the estimate for completing it was $7.4 billion. That has ballooned several times and last month stood at $30.9 billion with completion forecast for next year.
  3. Ottawa forecasts spending of $20 billion dollars to compensate indigenous people harmed by Canada’s discriminatory child welfare system. The Canadian Human Rights Tribunal ruled in 2016 that $40,000 should be paid to each First Nations child unnecessarily placed in foster care, for a cost of $20 billion. A further $20 million is to “reform a system that tore First Nations children from their communities for decades.”
    It may be that these amounts are justified but it is troubling that spending at that level can be ordered by judges rather than debated in parliament. The 2022–23 estimated spending for indigenous affairs is $45 billion.
  4. Taking note of these numbers, police chiefs presiding over First Nations police forces in Ontario have launched a human-rights complaint alleging that the federal government is placing reserves in crisis by failing to deliver adequate funding. They are seeking damages of $40,000 per reserve resident as well as orders directing Ottawa officials to negotiate deals in better faith.
  5. The carbon tax increased to $65 per ton on April 1, on its way to $170 in 2030. No, you don’t get it all back through the rebate program. The carbon taxes for electricity, hospitals, schools, government buildings and vehicles will be reflected in your electricity bill and your provincial and municipal taxes.
  6. A national pharmacare plan is in the works at an annual cost of $11 billion. That is in addition to an emerging dental plan costing $4 billion. The biggest winners for both will be corporations that have been providing those benefits to their employees
  7. The government has published draft regulations requiring that all new passenger vehicles and light trucks sold in Canada after 2035 be electric zero-emission vehicles. The rules will be phased in gradually, starting with a 20% requirement in 2026.
    The share was 8.9% in 2022, so it is not clear that all manufacturers will make that requirement. Those who don’t may abandon the market, reducing choice and thereby raising prices. Nor is it clear when there will be sufficient charging stations.
    Coal is Nova Scotia’s largest single source of electricity today. Replacing that is a looming challenge, with no indication that the Atlantic Loop will happen. Beyond that, more power will be needed to charge up car batteries.
  8. The government has added over 79,000 employees over the last eight years, much of it recently. The payroll increased by $8 billion during the pandemic. In October the CBC reported that there were 335,957 employees plus 93,252 in the Department of National Defence and 31,119 in the RCMP.
  9. Why do we have civil servants policing Canadian content requirements which may or may not apply to American broadcasts, Netflix and the other streaming services, as well as YouTube and social media? Why, when we have record low unemployment, do we have civil servants insisting that employers advertise jobs and wait a while before recruiting temporary foreign workers? Why do we prevent private daycare operators from growing to meet the surging demand for more spaces?

The one area of conspicuous restraint is National Defence. The 2022–23 estimate to date for National Defence is $28 billion, about 1.4% of GDP. Notwithstanding the spike in inflation, the budget for 2023-2024 is a little less. We are in a period when Russia is an active threat to NATO allies and China is relentlessly expanding its presence. The expectation for NATO membership is spending at 2% of GDP, yet Trudeau has made a point of telling our allies that he has no intention to meet it.

Angus Reid’s polling of Canadians shows Trudeau having a 57% disapproval rating, compared to 37% approving. Perhaps he could do his party and the country a service by stepping down. That might make taxpayers less fearful of further punishment.


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