Letter: Government debt is one of the most concerning problems for future generations
By Letter to the Editor on November 10, 2021.
Dear editor,
One issue that all federal parties have avoided is coming up with a plan for paying down the federal government debt, currently at about $1.2 trillion. A potential plan is that a debt repayment would be taken from the estate of a deceased person and would be based on their share of the federal deficit for each year they lived as an adult in Canada.
For example, someone born in 1957 who turned 19 in 1976 would owe $442 for the year 1976 based on a deficit of $6.9 billion with an adult population of 15.6 million in the 1976/77 fiscal year.
Going through the years to 2021 that person’s share would accumulate to about $47,000, which would be paid out of their estate if deceased in 2021.
Key details:
First and most importantly, the revenue would go into a separate account dedicated to paying down the debt. It would not go into general revenues and governments would not be able to use it to prevent a deficit in a given year. Governments could still be held accountable for deficits during their term in the next election.
Second, the first $25,000 of an estate would be exempt.
Third, if there was a surviving spouse, the debt repayment could be delayed until the surviving spouse died.
Based on current demographics, about $625 billion could be paid against the debt by 2050.
Some may think that $47,000 left to their beneficiaries would have better value than paying down debt but they are overlooking that interest of about $1,500 per year on Government of Canada borrowings would be saved for the remainder of their beneficiaries’ lives. An even greater benefit would be lower interest rates as Canada’s credit rating would improve.
Some may consider that they were not responsible for deficits, which is debatable, but deficits typically have a positive effect on the economy, which benefits all. An example is in 2009, when Stephen Harper’s Conservatives had a deficit of $55.5 billion due to the 2008 global financial crisis. Balancing the budget with either tax increases or spending cuts at that time would have been catastrophic for an already struggling economy.
Government debt is one of the most concerning problems for future generations. Canada needs to come up with a plan.
Denis Hoffman
Medicine Hat
I certainly agree but you will never fix it by watching these reformers continue to give away our oil, gas and tax wealth to benefit their rich friends, and Albertans were fools for allowing it to happen. Alaska and Norway didn’t.