EDITORIAL: A $50-billion hole in PM's fiscal plan

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During the recent federal election, Prime Minister Justin Trudeau campaigned on making the rich pay for the 103 election promises he made in his platform.

But there’s a financial black hole of more than $50 billion in that pledge.

Trudeau’s promises total more than $78 billion over five years, the most expensive being a $10-a-day national daycare program.

But the new taxes he plans to impose on banks, insurers, tobacco companies, the oil and gas sector, tax evaders and top income earners are projected to raise only $25.5 billion over five years.

That means there’s a hole of more than $50 billion in Trudeau’s accounting and the only way to pay for that is through higher taxes for everyone, cutting other government services or increasing the federal debt.

The problem, as Canadian economist Don Drummond told the Reuters news agency this week, is that under Trudeau’s fiscal plan, “nothing related to the cost of the pandemic … will be repaid by the current generation. And that’s very bold and risky.”

Risky indeed, given that Trudeau has no plan to pay down the enormous debt his government racked up during the pandemic — save for a $15 billion contingency fund over the next three years which is chump change compared to Canada’s total debt.

In its 2020-21 budget covering the first year of the pandemic, the Trudeau government reported a $354.2 billion deficit, raising Canada’s total debt for the first time over $1 trillion to $1.08 trillion.

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During the campaign, Trudeau said the cost of paying for his promises plus all other government services would result in a deficit of $156.9 billion this year, $62.7 billion in 2022-23, $49.6 billion in 2023-24, $34.9 billion in 2024-25 and $32 billion in 2025-26, raising Canada’s total debt in 2025-26 to $1.4 trillion.

The Liberals are banking on better than expected tax revenues as the economy recovers from the pandemic, plus low interest rates, to keep the government’s interest on debt payments manageable.

But that makes the country vulnerable to the next economic shock after the pandemic, whenever it happens.

As for making the rich pay for Trudeau’s election promises, most of that burden will eventually and inevitably be paid for by all taxpayers.