As a result of the government’s unprecedented spending during the COVID-19 pandemic, young Canadians are expected to collectively pay an additional $117.9 billion in personal income taxes over their lifetimes, according to a new Fraser Institute report.
This substantial increase in the future tax burden is largely attributable to measures such as the Canada Emergency Response Benefit (CERB), wage subsidies and an increase in transfers to provincial governments.
The report highlights how debt accumulation has skyrocketed during the pandemic and states that Canada is projected to have added $500 billion in federal debt.
The Trudeau government has created a monumental deficit of over $350 billion, well above pre-pandemic levels and the largest annual deficits as a percentage of the Canadian economy since World War II.
The Fraser Institute report states that Canadian taxpayers also face a significant risk of a potential rise in interest rates in the future, which could increase federal debt accumulation and impose a larger tax burden.
“Today’s deficits are tomorrow’s taxes,” and “on a per-person basis, all individuals who are 16 to 25 can expect to pay a lifetime tax burden of at least $20,000 as a consequence of the increase in federal debt,” reads the report.
“The implications of the pandemic will be unevenly felt by Canadians, with noticeable differences in burdens between generations.”
According to the report, younger individuals will bear the brunt of the tax burden. They will be responsible for paying 80% of the “increase in personal income taxes associated with the uptick in federal debt to GDP.” This is because young individuals still have many years ahead of them in their careers and have a longer time period left to pay taxes than older Canadians over 65, who will pay less than 3% of the total tax burden.
If politicians in Canada do not curb spending in the near future, the budget won’t be balanced until 2070 according to the most recent PBO Fiscal Sustainability Report. The Canadian Taxpayers Federation criticized the Trudeau government for its failure to attempt to rein in spending, saying that “if things don’t change, Canadians will lose out on a tonne of money to the bond fund managers because of government debt interest charges. That money can’t go to health care or lower taxes because of these huge debt interest costs.”