Quote:
Originally Posted by Makarov
Sorry, I'm waiting for $11 billion in actual painless savings. Otherwise taxes (well, revenue) must go up in order not be using revenue from our children's resources to keep our taxes artificially low.
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Here is the problem with the resource revenue arguement. We don't need to save all of the oil revenue we extract out of the ground. We need to save enough resource revenue so that as production drops in the future we have saved enough to cover the loss in revenue. So say we have 100 years of oil extraction left and we need to replace 11 billion in revenues. To replace that 11 billion we need around 200 billion in todays dollars saved by year 100. Now assuming we take out growth after inflation out of the fund as a dividend to the province to reduce taxes we would only need to save about 2 billion a year to hit 200 billion when our oil runs out.
The goal of the resource revenue fund should be to create a constant taxation level forever. So because we have no savings now it doesn't make sense to cut all 11 billion and greatly increase the tax burden today so that our children have no taxes in the future. Balance is needed.
So I think when you frame it as finding 2 billion in cuts rather than 11 billion in cuts I think you can have a much more reasonable discussion. Please feel free to play around the numbers rates of return, inflation as you like but the general concept is that we want constant revenue and constant taxation over time.