Premier McGuinty and Finance Mister Duncan recently issued Ontario's Fall Economic Statement announcing, despite being one of the last governments in the country to balance its books, it will be one of the first to rush back to deficit financing. This hold-up of Ontario taxpayers is unnecessary, was avoidable and could still be averted with little effort and no cuts to spending. Taxpayers should turn to four rules of fiscal sanity for needed protection from the McGuinty-Duncan gang's nasty deficit deeds.
The first rule would outlaw spending over what was budgeted, even if revenues surpass expectations.
If they had stuck to their spending target would be no deficit at all. The March 2008 budget shows planned program spending at $86.2 billion. Yet, the McGuinty-Duncan gang is planning to break the bank by spending $86.9 billion - $700 million over budget. It is their failure to meet their own spending targets that is causing a deficit.
There is much talk lately, especially amongst pointy-headed economists, about whether so-called short-term deficits are acceptable. Premier McGuinty is trying to rely on part of this debate to justify holding up future taxpayers. When you borrow today, the taxpayers of tomorrow have to pay for it. Economists make it clear deficits need to be paid off. The problem is that Ontario hasn't done this. When Ontario tax revenues climbed by 42% in five years, only a paltry sum was paid back against the province's $172 billion debt. Instead, almost every penny was spent.
In each of its completed budget years the McGuinty government has increased spending by more than twice inflation and population growth - combined. In its first year, almost triple this rate. This is unsustainable and a result, in part, of having imposed the single largest tax hike in the history of Ontario through the health tax which drains over $2.6 billion a year from the pockets of Ontarions.
The second rule is a spending cap that would limit spending to no more than the combined rate of inflation and population growth combined. Such a rule would have kept the revenue windfall from having been irresponsibly spent away. Instead, debt would be falling, interest charges would be falling and we would be nowhere near a deficit.
The third is a Taxpayer Protection Act that would require balanced budgets and outlaw tax hikes without voter approval.
Ontario used to have such a law. It was put in place by Mike Harris with McGuinty's support. Since becoming premier, Mr. McGuinty gutted the law so he could raise taxes and run deficits. With such a rule taxpayers wouldn't be facing the prospect of deficits for the unforeseen future
Finally, the rule of holes: when you realize you are in one, stop digging.
For March 2008 Ontario's total debt was projected to be $162.9 billion. Six months later in September 2008 it has grown to $172.3 billion. That is $13,461 for each man, woman, and child in Ontario. To service this substantial and increasing debt load taxpayers pay $8.9 billion a year - $1.02 million per hour. What do we get for this expenditure? Simply put, nothing.
From every dollar tax sent in to the province by Ontario taxpayers, 10 cents goes to bank charges merely to pay interest on the debt. The Ontario government spends as much money in interest charges as would build 9 new Skydomes - every year. This ignores, of course, that the giant outstanding principal needs to be paid off sometime.
As if this wasn't bad enough, the McGuinty-Duncan gang are adding to this burden another $500 million, meaning even more will go to the banks and not to programs or tax relief. This is how the McGuinty-Duncan gang is robbing the taxpayers of tomorrow. With just a little protection taxpayers would be saved from these deficits acts.
