Grandkids of boomers to face 'very high' tax burden: C.D. Howe Institute
Children peer through fogged-over windows on their way to school in Brooklyn, New York on Wednesday, Dec. 5, 2018. (THE CANADIAN PRESS/AP-Wong Maye-E)
Published Sunday, January 27, 2019 4:10PM EST
A new study that looked at the tax burden of various generations of Canadians has found that those born between the 1950s and 1990s aren’t paying their fair share, putting the burden on those born after 2005.
The federal debt has ballooned to $666 billion which translates to $18,030 per person, according to the Canadian Taxpayers Federation. Most provinces’ debts are also growing. Ontario now owes $322 billion, Quebec owes $188 billion and Alberta owes more than $51 billion.
But the C.D. Howe Institute’s new research shows that burden isn’t shared equally between the generations.
To conduct the research, Senior Policy Analyst Parisa Mahboubi examined current and future net revenues, as well as spending, net debt, and expected demographic changes like an aging population.
“The projected lifetime fiscal burdens of the youngest generation (born since 2005) and future generations are very high: higher than those of any other generations, especially those born from the mid-1950s to the 1990s,” Mahboubi found.
“Generally speaking, baby boomers and their children fare well … but the grandkids of baby boomers do not,” Mahboubi added.
The study points to health care costs as a particularly vexing challenge. It assumes 1.3 per cent annual growth in health care spending but says that if spending grows at the same rate it increased from 1996 to 2010 (3.3 per cent annually), that would “shift the resulting tax burden to future generations and render a large and untenable imbalance.” Another risk is rising interest rates.
Mahboubi writes that ensuring “intergenerational fairness and sustainability,” will require policies that “improve labour market outcomes of youth, women and immigrants, and that encourage a longer working life” while also “restraining the growth of health care spending.”