CTF’s Franco Terrazzano discusses the long-term effects of COVID on the economy

·3 min read

With the COVID-19 pandemic now in our rearview mirror, there are many things we are doing to get back to normal, but there have also been things that have been fundamen- tally changed due to the pandemic.

Franco Terrazzano, federal director of the Canada Taxpayers Federation, gave his opinion on what some of the permanent changes could be to the econ- omy stemming from the two-year COVID-19 pandemic.

“I think there’s going to be many, many Ph.D. dissertations on that and I think that people are going to be debating that for years, but one of the big things that we are seeing right now is inflation because of how our government responded,” said Terrazzano. “Canada was a relatively big government spender during the pandemic, but we didn’t get the best outcomes for all that spending, and another thing we have to look at is how the government is financing its spending. Essentially, it seems like the government is using the Bank of Canada to finance a good chunk of its deficit. The broad implications, at least right now, is this high inflation because you have — on the one hand the government financing its deficit by printing new dollars out of thin air which increases the cost of living — but on the other hand, you have the government paying people to stay home. That is the perfect storm for inflation, where you have too many dollars chasing too few goods because you have too many dollars being printed and way less production because people were being paid to stay home.”

Answering a question if the spending issues could’ve been compounded due to the necessary increase in spending within healthcare.

“I think the issue was compounded by the overall level of spending because here’s the thing — I think when you face difficult times, many Canadians un- derstand that you have to prioritize resources,” said Terrazzano. “Maybe shift spending from one area to another area to focus on an issue, but the government didn’t prioritize spending. The government just spent more money on everything. That’s the issue — the total level of spending just kept going up. What the govrenment should have done was prioritize spending to address the pandemic while cutting back spending in another area. That’s what families and businesses do to address issues, but this government, the federal government, did not do that. The total level of spending absolutely is exacerbating the inflation that we are feeling today.”

Terrazzano also added how Albertans can feel their wallets being lighter due to the increase in taxes.

“What else has exacerbated the pain that we are feeling today is the fact that the government has raised taxes during the middle of the pandemic. Trudeau has raised the carbon tax three times during the pandemic. Trudeau is raising payroll taxes this year and Trudeau raised alcohol taxes during the pandemic.”

When asked about the federal government giving rebates on the carbon tax, Terrazzano broke down the numbers showing the average Alberta household is still losing money from these taxes.

“They are doing rebates, but the parliamentary budget officer which is the government’s own independent watchdog, shows that the carbon tax costs Canadian families more than what they’re getting in rebates,” said Terrazzano. “In 2021, the carbon tax, even if you include the rebate, cost the average Alberta household $507. This year, the carbon tax, including rebate, will still cost the average Alberta household $671. That cost again including rebate is going to reach more than $2,200 in 2030 for the average Alberta household.”

Ian Croft, Local Journalism Initiative Reporter, The Taber Times

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