From a modest six per cent of GDP in Macdonald’s time the consolidated spending of all levels of government rose to 14 per cent in 1930. With the Great Depression and post-Second World War reconstruction, public spending funded new priorities in transportation, education, health and social services. By 1968, as Pierre Trudeau became prime minister, consolidated public spending exceeded 30 per cent of GDP.
Are governments really that starved for funds that they need an even bigger share of the economy’s resources? Those proposing higher taxes argue we need massive new social programs like a guaranteed income and tens of billions more for climate-change subsidies. Other would-be tax-raisers argue that the COVID debt needs to be paid back, evidently not realizing that inflation has boosted public revenues so much that most provinces are running surpluses and could reduce debt without new taxes.
Before jumping on the bandwagon for higher taxes, people need to take a hard look at public spending. When the Liberals took power, federal spending GDP was 14.3 per cent of GDP. It’s now 17 per cent, 2.7 percentage points higher.
Let’s fight inflation with raising taxes…
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