$3.8B debt interest will be burden for young Albertans, Calgary researchers say
School of Public Policy calculates NDP government on track for $90B debt by 2023
Alberta's debt is on track to hit $90 billion by 2023 and that's going to burden younger people with tens of thousands of dollars in additional income taxes, researchers at the University of Calgary say.
Bev Dahlby, research director at the U of C's School of Public Policy, who helped put the analysis together, says the NDP government's deficit-financed public spending is saddling Alberta's future taxpayers with a heavy load.
- Alberta's debt is growing, so how much is too much for Albertans?
- OPINION: Alberta's recession is over, and we'd best make peace with that
"Young people, that is, people aged 16 to 35, will bear over half of the total burden of the debt," he said.
"That's the nature of deficits and debt, it shifts the burden of paying taxes to the future. Who are the future taxpayers? They're largely young people."
The researchers note that Alberta governments returned to deficit spending in 2008. But the NDP's plan to wait another five years before balancing the budget will allow the total debt to reach $90 billion with annual interest payments of $3.8 billion in 2023-24, the paper says.
Dahlby says someone aged 16 in 2023 will face an additional tax burden of around $42,000 over the course of their lifetime just to pay the interest on that debt.
"There are two key message from these calculations. First, deficit-financed public spending imposes substantial burdens on future taxpayers, even when all we do is consider the cost of paying the interest on the debt," the paper says.
"Second, the burden of financing the debt falls disproportionately on younger age groups."
The paper says 16 to 25 year olds will bear 19.5 per cent of the total burden borne by all taxpayers in 2023.
Alberta Finance Minister Joe Ceci says deficit spending has been necessary given the drop in oil prices, and running deficits for a few years is a better policy than making severe cuts to programs and services and putting thousands of public servants out of work.
The school's calculations are based on the provincial government following through with its intention of eliminating the deficit by 2023-24.
"Now, if the government took measures to reduce the deficit it plans to incur more quickly, the debt in 2023 could be lower and therefore the future burden could be lower," Dahlby said.
- MORE ALBERTA NEWS | Alberta's still not the economic driver it once was: ATB report
- MORE ALBERTA NEWS | If you were laid off when oil prices tanked, this might help you launch a new career