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Monday, September 14, 2009

Deficit spending nightmare

B.C.'s deficit is spiraling out of control because of a huge increase in spending. If the government spending spree is not brought under control, current and future generations will be left with a legacy of debt and higher taxes.

Why is deficit spending wrong? It creates three problems: higher debt servicing costs; young people left saddled with a financial burden they didn't create; and once the boomer generation retires, there won't be enough taxpayers working to pay the taxes to finance the debt and pay the pension benefits of future retirees. This spending spree endangers the retirement security of the boomer generation.

Debt servicing costs are exploding. By 2011, B.C. taxpayers will be paying $8 million per day to finance the debt. Hard-earned dollars that could go to pay for services people want, or better yet -- left in peoples' pockets -- go to bankers and bondholders to pay the interest on the debt.

We can't expect future generations to take on a massive tax burden for spending they didn't vote for to get things, like billion dollar convention centres or fast ferries, they probably won't want. In 2011, every child born in B.C. will owe more than $11,000. Is it right to leave a fiscal hangover to unborn children to pay for our free-spending ways?

The demographic reality is that we'll have fewer and fewer young people paying into the system through taxes, relative to those taking out. According to Stats BC, the number of people aged 15-24 will drop by 2.5 per cent between 2009 and 2029 while the number of people 65 years and older will almost double. Tomorrows taxpayers left to foot today’s bill will strain under an unsustainable tax burden unless spending is brought under control.

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