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International Monetary Fund applauds Canada

On April 10, 2011 the International Monetary Fund reported that Canada’s policy makers have the country on the right fiscal track with a sound and credible plan to return to a balanced budget.

Comparing ourselves to Europe or even the United States is fine, but what does it all mean?

With all the news coverage of wars and disasters, we get very little accurate information about the realities of the financial meltdown in Europe.  Sure we hear of bailouts and austerity budgets, but what do they mean to the average person?

Some countries have arrived at the precipice of bankruptcy and there is a

lineup of more countries waiting.  Greece, Ireland and Portugal are in serious trouble and face real threats of breaking down.  Spain and Italy are close to the brink.

The steps or changes in these countries budgets and how those changes affect the ordinary citizen are what we need to hear more about.  What would you or I face if we woke up tomorrow morning in one of these countries?

In Ireland you stand a good chance of paying over 1,000 more euros in income tax each year, depending on your status.  You would face a revised universal social charge that ranges from 4,004  to 16,016 euros.  The same charges would be assessed against pension deductions.

All kinds of tax relief programs would be eliminated.  From deductions of union dues

to employer provided child care.  Tax relief for severance pay would be assessed and

relief for artists, those on profit sharing and “save as you earn schemes” would be harmed.

Cuts to welfare are huge, given the cost of living folks face in Ireland.  Child benefits and payments to the disabled face immediate large cuts.  Maternity leave and associated benefits face cuts as well as payments to those seeking work (a form of employment insurance).

Children and those going to school face cuts from 50 euros to as much as 650 euros and even child transportation costs will be hit.

The citizens of Ireland are in for a very bleak future until they can recover and that will take time.

Greece saw some scary changes. Public servants must pay into a pension fund for 40 years to get a full pension and for every year less there is a six per cent penalty. No more having a pension based on your best five or six years. Old age pension had a huge cut and an additional tax on what was left.

How about going shopping tomorrow and finding out that the HST is 23 per cent.  They call this a standard VAT and there are some items reduced, but still, shopping for me would be a nightmare.

In the end, over 60 per cent of Greek society is having a real tough time.  With an approximate 15 per cent cut in public service wages and frozen pensions, the average person is in tough financial shape and it’s almost impossible for some to make ends meet.

Budgets for many of us are really just a bunch of words until we have to pay the rent or buy food.  It’s then that we are forced to ask, how did we get here?

The answer is fairly simple, they allowed politicians to entice and coerce them with grand allowances and payouts.  They backed themselves into government programs that they could not afford.  That was followed by loans to pay for what they could not afford, and now no one will finance them any longer.

Most of Europe faces these same draconian measures and the United States has internal political battles going on to deal with these same issues.

It’s both dangerous and counterproductive for any society to fall into the trap of blaming some other segment of that society for its dilemma.  The realities of unions blaming corporations or vice versa, or affluent citizens blaming welfare recipients won’t solve any problems. Enticing one group to blame another is a disservice to everyone.

If the International Monetary Fund concludes that we are on the right track, why should we risk change?

I wonder if Canadians have the wisdom to insist that we stay the course or will we, like many Europeans give in to the expectations and promises of “more” when we can’t afford it?