The COVID-19 PANDEMIC has created a huge government debt. There are traditional ways of dealing with debt: by slashing spending, raising taxes, or a combination of both.
Canadian Taxpayers Federation has raised alarm of a possible tax on the sale of homes. They point to a study by the Canadian Mortgage and Housing Corporation which spent $250,000 to investigate such a tax.
Canada’s finance minister, Chrystia Freeland, recently outlined her approach to debt and it will not be to raise taxes or cut programs. In fact, spending on programs to help Canadians get through the pandemic will increase. She said: “To ensure that our recovery is as broad, robust and complete as possible, we will need to build our way out of it.”
The new way of thinking of debt is called “modern monetary theory,” which posits that large deficits are not a bad thing as long as inflation and borrowing rates are low.
I can remember the disastrous “bloodbath budgets” of Liberal Finance Minister Paul Martin in 1997. Martin warned that we were about to become a Third World country unless something drastic was done.
David Charbonneau is a retired TRU electronics instructor who hosts a blog at http://www.eyeviewkamloops.wordpress.com.