Canada faces a significant challenge in meeting NATO's new target of 5% of GDP for defence spending, requiring an additional $50-billion annually. Economist Todd Hirsch proposes a "Shared Sacrifice Plan" involving a 1% cut across all federal programs, shrinking the tax gap, and issuing "Canadian Sovereignty Bonds" to fund the increase.
Opinion: To up defence spending, Canada must cut deeper, tax harder and borrow more – all at once
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TL;DR: Key points with love ❤️Canada faces a significant challenge in meeting NATO's new target of 5% of GDP for defence spending, requiring an additional $50-billion annually. Economist Todd Hirsch proposes a "Shared Sacrifice Plan" involving a 1% cut across all federal programs, shrinking the tax gap, and issuing "Canadian Sovereignty Bonds" to fund the increase.
Trending- 1 Second World War: Canada issued Victory Bonds.
- 2 2014-2018: Data used for 2021 CRA report on tax gap.
- 3 2021: Canada Revenue Agency report estimated $18-23 billion in uncollected taxes.
- 4 Last week: NATO meetings where the new 5% GDP defence spending benchmark emerged.
- 5 Ongoing: Debate and planning for Canada to meet its increased NATO obligation.
- Significant changes to Canada's fiscal policy
- Potential public debate and unpopular decisions
- Increased national debt
- Potential for stronger defence capabilities
What: Canada needs to increase its defence spending to meet NATO's new 5% GDP target, requiring an additional $50-billion annually. A three-pronged approach involving spending cuts, increased tax collection, and new borrowing is proposed.
When: Last week (NATO meetings); 2021 (CRA report data); 2014-2018 (tax gap data); Second World War (Victory Bonds).
Where: Canada; Ottawa.
Why: To meet NATO's new, significantly higher defence spending target and fulfill global commitments.
How: By implementing a "Shared Sacrifice Plan" combining a 1% cut across federal programs, shrinking the tax gap, and issuing "Canadian Sovereignty Bonds."