Monday September 22, 2014




Think about the country’s future

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If you know someone who pays more attention to Justin Bieber’s latest antics or Kim Kardashian’s baby bump, try and talk to them about the future of our country.

If you can get them focused on big picture challenges – like our nation’s aging population – you might just save yourself a small fortune in taxes.

Consider how our country is changing. Back in 1971 there were 7.8 people between the ages of 15-64 in Canada for every person over the age of 65. By 2010 that ratio had shrunk to just 4.9 people of working age for every retiree. By 2030 the federal government expects the ratio to shrink again; to just 2.7 people of working age for each retiree. This change can be chalked up to the massive “baby boom” generation born after World War II and a subsequent drop in the birth rate.

Why do those numbers matter? Well, who do you think pays more in taxes – a 55-year-old person who is working and making $60,000 per year or a 70-year-old retiree getting by on a $25,000 annual pension?

Obviously it’s the person working, as he or she will pay more in income taxes and likely more in sales taxes as well. That’s not a knock against senior citizens, it’s just a fact of life. But for governments, an aging population presents a major challenge.

How can governments pay for health care, fix our roads and provide other important services in the future if a greater share of citizenry are earning less and paying less in taxes?

One might assume since our governments have known about this challenge for decades they must have put aside some savings to help address the matter. Sadly they haven’t. Our federal debt is over $600 billion and if you throw in provincial and municipal debt in Canada it’s well over $1 trillion.

But that hasn’t stopped most Canadian politicians. Many are still out building expensive new football stadiums (instead saving millions by renovating old ones), signing far too generous contracts with government employees (anyone else out there retiring in their early 50s?) and giving big cheques to businesses through corporate welfare programs.

Unless governments want to sink further into debt and flirt with the Greek model, experts advise that governments are going to have to cut spending, raise taxes or a combination of the two.

To put the demographic shift problem into perspective, a 2013 report by the federal government’s Parliamentary Budget Officer suggests that provincial governments in Canada are going to face a shortfall of about $36 billion each year as our nation grows older. As a point of reference, the GST brought in about $30 billion in 2013-14.

For simplicity, just imagine going to the store and paying not only the GST and PST on your purchase, but also a second GST. Some studies project the situation to be much worse.

Either way, hopefully you can see why it’s important for more people to pay attention to what our elected officials are spending money on and the big picture issues that lie ahead.

Paying attention to the “Bieber news” can be entertaining, but if too many people skip the real news, it’ll cost us all dearly.


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