TOTAL GENERAL GOVERNMENT DEBT, 2014 (Percentage of GDP)
200
150
100
50
0 Source: OECD
and overinvesting in housing with borrowed money.” In fact, it’s this overborrowed middle class that Park worries about most. “Rising interest rates will have a huge impact and the debt in the system is taking money away from programs they rely on, such as education and healthcare,” she says. Credit makes everything more fragile, says Park, because
there is less flexibility to withstand any shock when the eco- nomic tide turns — which it will. She says the credit crisis of 2007-’08 was never really resolved and will come around again in full force soon enough. “If we’d used the money to invest in infrastructure, that would have been constructive,” she says. “But we are incredibly brittle today.” Brigitte Alepin, FCPA, FCA, is a tax policy expert whose book The Coming Fiscal Crisis inspired an award-winning 2014 doc-
umentary about the tax havens used by large corporations to dodge their fair share of taxes (i.e., the statutory rate the govern- ment has mandated, whatever that may be). She too thinks we are in danger of another fi scal crisis primarily because we have a tax system that is no longer working. “In Canada, we are borrow- ing instead of making sure our multinationals are paying their fair share of taxes,” she says. As a result, individuals and small to medium-sized businesses are leſt with an unsustainable burden to carry.
Charles Lammam, director of fiscal studies at the Fraser
Institute, says Canada has moved away from an unwritten rule to balance budgets in times of economic growth and this could come back to haunt us. “We have yet to get back on track despite the fact as a whole we’re not in a recession anymore,” he says.
MARCH 2017 | CPA MAGAZINE | 47
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