While Canadian governments of all political stripes have touted our low federal debt to GDP ratio, there are serious problems behind that headline number.
Aside from the overheated housing market, and struggling provincial governments, consumer debt is a serious issue.
A new CIBC survey shows that the debt burden of Canadian consumers remains high:
- 28 per cent of respondents said debt repayment is their top financial priority
- Of those who took on new debt, one-third said their income couldn’t keep pace with their expenses – leading to a need for debt financing.
And according to Statistics Canada, the debt burden of consumers – already high – has continued to rise.
The info shows that for every $1 of disposable income $1.67 is owed.
What does this all mean?
The low federal debt is a direct cause of the high consumer debt. As Canadians we pay high taxes, and the cost of our goods is high – such as our highest in the world phone bills.
At the same time, the government is expanding the temporary foreign worker program – which will give big corporations the chance to hire workers for cheap wages – which will hurt Canadian workers even more.
A Disturbing Record – Canadian Consumer Debt Surpassed Our GDP For First Time Ever In 2016
Overtaxation, and the high cost of goods combined with declining wages keeps federal debt relatively low, makes our big corporations profitable, but comes at a severe cost. That cost is the rising burden being placed on Canadian consumers.
It’s not a sustainable situation. At some point consumers will be unable to keep holding up the economy, and that could lead to a severe recession – or something even worse if it coincides with a global crisis.
The solution is for the government to reduce the tax burden on Canadians, while putting the interests of Canadian workers first. We also need to eliminate much of the bureaucratic restrictions that stop the true entrepreneurship of Canadians from expanding our economy and bringing prices down.