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The fiscal world after the virus

The fiscal world after the virus

With the faintest glimmer of hope starting to emerge in the COVID19 pandemic, thoughts are beginning to turn to what the world is going to look like when it’s over.

The thought that haunts me most is this. The Coronavirus came out of nowhere. Thankfully, our governments responded quickly. But our national deficit will rise from the roughly $20 Billion where it was just 60 days ago to something approaching $200 Billion after COVID. What happens if we get hit with a brand new virus next year and we have to do this all over again?  It is hard to see how the government will be able to repeat this year’s response.

With that in mind, there are other areas in our lives that will likely change. One of them is taxation. For almost two decades, governments have been caught up in a mantra of low or no tax increases. But we didn’t change our lifestyle, just paid less in taxes. All you have to do is look at the state of our infrastructure to see how governments made up the difference. Downloaded highways deteriorated into third-world rutted tracks. We are not paying our way and COVID has shown how vulnerable we are as a result. Municipal property taxes are going to have to grow to meet our real needs, not what we can get away with by squeezing another year out of deteriorated infrastructure. To make that happen the majority who can afford to pay their taxes will have to support a provision to support people on extremely low pension or employment income to meet their taxes. Part of this can be mitigated by clamping down on the growth of public sector. Right now there is no incentive for bureaucrats to do more with less as almost everyone in the private sector have done for decades. Note we have 7,200 employees in the city of Hamilton– a number that cannot be justified in comparison to the growth in Hamilton’s population since amalgamation.

Low wage workers are another issue. We place our parents and grandparents into the care of staff earning not much more than minimum wage–people who are forced work in more than one location to accumulate enough hours to eke out a living. We’ve seen the inevitable result in the carnage that COVID has visited on the nursing home community. We need to pay these people properly and that will lead to higher fees or taxes. They are just one example. Retail workers are another. They have stayed on the job at great risk and at minimum wage. We need to be prepared to pay a little more for goods and services to improve the lives of these workers who have been proven to be front line workers in a time of need.

Reviewing this it admittedly reads like the Communist Manifesto. But if there is any good out of this horrible epidemic it has taught us what really is important. It has also highlighted the need for sharing on a broad scale. It has also taught us that the economic system we have been living in only works if there is no pandemic. We need to re-think some things, perhaps by looking at the sacrifices that were made in WWII by the general public. We’re not suggesting anything remotely approaching that era.

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