Thursday, 12 July 2018 11:02

Read the fine print on debt

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Editor:


From predatory lending agreements to unfair cell phone contracts, the best way to avoid getting hoodwinked by a bad deal is to always read the fine print.
This is the kind of advice my father tried to impress on me, and as far as I’m concerned it’s a lesson that should be taught in high school financial literacy classes.
There is no shortage of bad actors looking to trap today’s youth in bad deals, and they deserve a fair warning.
When it comes to bad deals, there is one that targets youth more than any other: unnecessary public debt.
Since I was first elected to Alberta’s Legislature in 2012, I have been cautioning anyone who will listen about the dangers of runaway debt. Borrowing, once reserved for emergencies, is now used to fund the day-to-day operations of government. While this approach may be expedient for politicians, it is the worst possible approach for future generations.
According to the NDP’s most recent financial plans, Alberta’s budget will not be balanced until at least 2023, at which time the debt will reach a staggering $90 billion. Albertans will be forced to shell out $3.8 billion annually just to cover the interest.
If this sounds like a bad deal, it gets worse when you read the fine print.
Just paying the interest on the NDP’s debt will require significant, generational tax increases.
A research team with the University of Calgary’s School of Public Policy crunched the numbers, and this is what they found: a typical senior will be forced to pay an additional $20,605 over the remainder of his or her life, just to cover the interest on Alberta’s debt. A typical 16-year-old in 2023 will be on the hook for an additional $42,252. The hammer falls hardest on those who turn 36 in 2023, who may end up paying nearly $50,000 on that debt.
Like most bad deals, this one gets worse. The NDP’s generational tax hike will fall hardest on our children and grandchildren. According to the U of C’s research team, those aged 16-25 will pay 20 per cent of the additional tax, compared to just 2.4 per cent for seniors. Today’s youth, who were given no democratic voice in this government’s reckless and irresponsible spending decisions, will be stuck with the consequences of today’s political decisions.
This is the fine print the NDP doesn’t want you to read: government borrowing always shifts the tax burden forward. For our youth, this is a bad deal.
Drew Barnes is the United Conservative Caucus Finance Critic and MLA for Cypress-Medicine Hat

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