The last federal budget (February 26, 2008) predicted that personal tax revenuesóby far the largest revenue line item for the governmentówill increase by $2 Billion in 2007-2008 and thereafter increase faster than personal income growth to $125,475 Billion in 2009-2010.
It's time to revisit this trend in light of the current global economic crisis, as this party too, may end soon. The need for governments to rein in spending and expectations for revenue growth may be as necessary as it is for families.
Why? Canada's primary taxpaying base is disappearingóthe baby boomersóare getting ready to retire, against the backdrop of financial uncertainty.
Add to this a global economic crisis the likes of which has never been experienced before and you have the potential for unprecedented hard times for governments and the taxpayers who depend on redistributed tax dollarsósometimes too much.
As a bear market descends firmly upon usófor what seems to be more than a short termósolid financial fundamentals are required to take us through to the next generation, a smaller taxpaying base, which may not have the same potential to fund the numerous needs our society demands of them.
To have the opportunity to spend in the right places, when needed, requires budgeting with new precision and above all waste management. It also requires some creative thinking about going back to the same trough over and over again.
Security comes in many formsóand people need to be safe from financial insecurity. Canadians and their governments need to master their finances, now in a time of relative wealth, to be ready for tomorrow.
FACTS ON FINANCIAL LITERACY:
Source OECD Study, 2005. Note The Knowledge Bureau is publishing a series of books on Mastering Your Personal Finances starting in November 2008.