A new report says young Canadians are set to inherit a mountain of government debt and the burden of increased annual interest payments.
Fraser Institute, an independent, non-partisan Canadian public policy think-tank, says the debt will have to be disproportionately paid for by younger Canadians as Canadians aged 16 to 35 are expected to collectively pay an additional $205.1 billion in personal income taxes over their lifetimes.
This works out to $19,880 per person for those aged 16 to 35 in personal income taxes over their lifetime.
By comparison, Canadians aged 65 and older will only pay an additional $1,524 in income taxes over their lifetimes.
In total, Canadian taxpayers are expected to bear an additional $332.5 billion in additional personal income taxes due to existing federal debt and what’s expected to be borrowed in the future.
Though this may not seem like a drastic increase in per year tax payment (lifetime tax divided by total years of remaining life expectancy), the lifetime tax burden for Canadians could easily increase exponentially should interest rates rise.
Fraser Institute says if the 10-year bond interest rate on the federal debt in 2025 rises from 2.7 to 4.0 per cent, the total lifetime tax burden for all Canadians due to the increase in federal debt rises from $332.5 billion to $887.0 billion. In such a case, a typical 16-year-old can expect to pay $64,882 in additional personal income taxes over their lifetime to pay for the increase in federal debt while the average tax burden for Canadians between the ages of 16 to 80 would increase substantially from $10,498 to $28,006.
You can read the detailed report here.