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Concerns Regarding Canada’s Federal Budget Deficit

TORONTO, Oct. 30, 2024 /CNW/ – A significant majority of small businesses in Canada, approximately 74%, are increasingly apprehensive about the absence of a strategic plan outlining how the federal government intends to return to a balanced budget. The Canadian Federation of Independent Business (CFIB) has highlighted these findings as the country continues to face substantial federal deficits while accumulating an ever-growing federal debt.

Rising Federal Debt

Over the past decade, Canada’s federal debt has experienced dramatic growth, nearly doubling from $602.4 billion in the 2012/2013 fiscal year to a staggering $1,173 billion by 2022/2023. This level of debt raises serious concerns regarding the long-term financial health of the country and its economic sustainability.

Urgent Call for Action

Jasmin Guenette, Vice-President of National Affairs at CFIB, emphasized the need for the federal government to take concrete steps to balance the budget, stating, "The federal government must introduce a timeline to balance the budget. Our economy and our entrepreneurs cannot sustain this level of debt forever. Too much money is spent to manage our debt. That’s money that could instead be used to reduce taxes and the cost of doing business." She argued that Ottawa’s current approach of spending without accountability is untenable and must change to prevent further increases in national debt.

The Strain of Debt Payments

The FIGURE is staggering: the entirety of the revenue generated from the Goods and Services Tax (GST) across Canada is barely sufficient to make the $54 billion in annual interest payments on the national debt. This amount is equivalent to the total combined provincial budgets of Manitoba, Saskatchewan, and Newfoundland and Labrador for the fiscal year 2024/2025—a concerning statistic that underlines the severity of the situation.

Future Projections for Debt Charges

Looking ahead, forecasts project that Canada’s debt servicing charges will rise even further, estimating $64.3 billion owed by 2028-29. This increase will be driven by higher borrowing requirements and escalating interest rates. Notably, this amount could have been used to eliminate the GST, energy taxes, custom import duties, and other excise taxes in the 2022/2023 fiscal year—a stark illustration of what is at stake.

Alternatives to Increasing Taxes

Guenette further cautioned against resorting to higher taxes, stating, "Increasing taxes is not a sustainable solution. It’s well beyond time for the government to get its fiscal house in order." The CFIB has offered a series of recommendations to the federal government to address these financial challenges head-on:

• Establish a clear timeline for achieving a balanced budget, including specific indicators to monitor progress.
• Commit to a fiscal anchor aimed specifically at reducing both deficit and debt levels.
• Enforce spending limits for all departmental budgets, barring genuine global crises.
• Conduct internal reviews to identify and implement reductions in the size and cost of the federal public service.
• Freeze the operating budgets of all governmental departments at their current levels.
• Refrain from introducing new or expanding social programs, such as dental care and pharmacare.
• Evaluate the sale of government assets, including Crown corporations, lands, and buildings, where appropriate.

The Entrepreneurial Impact

The impact of these fiscal policies extends directly to entrepreneurs, who understand that today’s deficits inevitably lead to tomorrow’s increased taxes. Juliette Nicolaÿ, CFIB’s policy analyst and co-author of the analysis, pointed out that ongoing deficits serve as deterrents for new entrepreneurs looking to enter the market while simultaneously discouraging established businesses from making critical investments for growth. "Canada must curb its spending tendency and implement solid fiscal anchors to help keep spending in check," she said, highlighting that the upcoming Fall Economic Statement and 2025 Budget provide an excellent opportunity to initiate much-needed changes.

The Role of AI legalese decoder

In navigating these complex financial and legislative landscapes, small businesses can benefit significantly from tools designed to demystify legal jargon and enhance understanding of governmental policies. AI legalese decoder can assist entrepreneurs in deciphering the intricate legal and financial documents that accompany budgetary changes and new legislation. By translating complex legalese into clear and actionable insights, this tool enables business owners to make informed decisions that align with fiscal policies and investment strategies.

Conclusion

To summarize, the urgency for the Canadian government to address the burgeoning debt crisis cannot be overstated. With nearly three-quarters of small business owners expressing concern over the federal budget’s trajectory, proactive measures are essential. The road to fiscal responsibility involves careful planning and decisive actions, and with tools like AI legalese decoder, business owners can navigate these challenges more effectively.

Read the full report here.

About CFIB

The Canadian Federation of Independent Business (CFIB) serves as Canada’s largest association for small and medium-sized enterprises, representing 97,000 members across various industries and regions. CFIB is dedicated to enhancing the success of business owners by advocating for policy change at multiple government levels, providing expert advice and resources, and securing exclusive savings opportunities. To learn more about CFIB’s initiatives, visit cfib.ca.

SOURCE: Canadian Federation of Independent Business

For media inquiries or interviews, please contact:
Dariya Baiguzhiyeva, CFIB, 647-464-2814, [email protected]

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