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October 23, 2003 | EST. READ TIME 2 MIN.

Tax and Expenditure Limitations: The Next Step in Fiscal Discipline

Canada as a nation and its constituent provinces have travelled a difficult path over the better part of the last decade to achieve balanced budgets. It is critical for Canada and the provinces to take the next step on the continuing path towards fiscal responsibility. That next step is the introduction of constitutionally entrenched laws enforcing tax and expenditure limitations (TELs).

Balanced budget laws, which exist in eight of the ten Canadian provinces, are substantially different from Tax and Expenditure Limitations(TELs). Balanced-budget laws attempt to achieve just that: the balancing of revenues with expenses such that debt is not accumulated by government. TELs, on the other hand, attempt to constrain the growth of government spending and taxes regardless of fiscal balance.

The presence of balanced-budget laws in Canada has promoted the balancing of expenses and revenues. This study found that seven of the eight provinces (Appendix A) with such laws in place experienced material decreases in the 5-year average deficit. In addition, six of the eight provinces actually moved into surplus positions shortly after adopting laws enforcing balanced budgets.

Adopting balanced-budget laws has not, however, restrained the growth of government, measured by either growth in spending or revenues. The adoption of laws enforcing balanced budgets in Canada has actually coincided with increases in government spending and taxation: seven of the eight provinces with balanced-budget legislation experienced increases in government, as measured by real per-capita consolidated (provincial and municipal) government expenditures and revenues, after the implementation of the balanced-budget laws.

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Jason Clemens

Executive Vice President, Fraser Institute

Jason Clemens is the Executive Vice President of the Fraser Institute and the President of the Fraser Institute Foundation. He
has an Honors Bachelors Degree of Commerce and a Masters Degree in Business Administration from the University of Windsor as well as a Post Baccalaureate Degree in Economics from Simon Fraser University. Before rejoining the Fraser Institute in 2012, he was the director of research and managing editor at the Ottawa-based Macdonald-Laurier Institute and prior to joining the MLI, Mr. Clemens spent a little over three years in the United States with the San Francisco-based Pacific Research Institute. He has published over 70 major studies on a wide range of topics, including taxation, government spending, labor market regulation, banking, welfare reform, health care, productivity, and entrepreneurship. He has published over 300 shorter articles, which have appeared in such newspapers as The Wall Street Journal, Investors Business Daily, Washington Post, Globe and Mail, National Post, and a host of U.S., Canadian, and international newspapers. Mr. Clemens has been a guest on numerous radio and television programs across Canada and the United States. He has appeared before committees of both the House of Commons and the Senate in Canada as an expert witness and briefed state legislators in California. In 2006, he received the coveted Canada’s Top 40 Under 40 award presented by Caldwell Partners as well as an Odyssey Award from the University of Windsor. In 2011, he was awarded (along with his co-authors) the prestigious Sir Antony Fisher International Memorial Award for the best-selling book The Canadian Century. In 2012, the Governor General of Canada on behalf of Her Majesty the Queen, presented Mr. Clemens with the Queen Elizabeth II Diamond Jubilee Medal in recognition of his contributions to the country.
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Todd Fox

Todd Fox is a 2003 North American Leaders NAFTA Fellow and the Program Supervisor for the Americas at the Washington
Center for Internships and Academic Seminars. He is a former Fullbright Scholar and Fraser Institute Intern. He spent the 2001/02 Academic year as a visiting research fellow in North American Studies at McGill University in Montreal. As an undergraduate at Le Moyne College, Mr Fox held internships at the United States Department of Commerce and the Metropolitan Development Association. He lives in Washington, DC. He holds a BA in political science from LeMoyne College.
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Amela Karabegovic

Amela Karabegovi is a former Senior Economist of the Fraser Institute. She holds a B.M. (Great Distinction) in General Management
from the University of Lethbridge in Alberta and an M.A. in Economics from Simon Fraser University in British Columbia. She was a coauthor of the Economic Freedom of North America , Economic Freedom of the Arab World , Myths and Realities of TILMA , Transparency of Labour Relations Boards in Canada and the United States , Measuring Labour Markets in Canada and the United States , Measuring the Flexibility of Labour Relations Laws in Canada and the United States , Tax and Expenditure Limitations: The Next Step in Fiscal Discipline , and the Prosperity Series-Ontario .
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Sylvia LeRoy

Sylvia LeRoy was a former Policy Analyst in the Fiscal Studies Department at the Fraser Institute and Program Manager for
the Donner Canadian Foundation Awards for Excellence in the Delivery of Social Services. She has an Honours BA in Political Science from the University of Western Ontario and an MA in Political Science from the University of Calgary. She is co-author of Can Markets Save Canada's National Parks?, Donner Non-Profit Performance Report: An Analysis of Management, Staff, Volunteers, and Board Effectiveness in the Non-Profit Sector, Welfare Reform in Ontario: A Report Card, Tax and Expenditure Limitations: The Next Step in Fiscal Responsibility, and Judicial Accountability in Canada . She is a regular contributor to Fraser Forum and has published articles on social, legal, and environmental issues in such newspapers as The National Post, The Calgary Herald, The Vancouver Sun, The Vancouver Province, The Ottawa Citizen, and The Windsor Star. She has appeared as a commentator on various radio and television programs on CBC, Global, and CTV.
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Niels Veldhuis

President, Fraser Institute

Niels Veldhuis serves as President of the Fraser Institute, Canada’s most influential think tank.In his over 20-plus-year career in public
policy, Niels has authored six books and more than 50 peer-reviewed studies on a wide range of economic topics. In 2011, he was awarded (along with his co-authors) the prestigious Sir Antony Fisher International Memorial Award for the best-selling book, The Canadian Century.Highly regarded for his opinions and perspectives on major economic and social issues, Niels appears regularly in the media across Canada and the United States. He has written hundreds of commentaries that have appeared in over 50 newspapers, including the Globe and Mail, Wall Street Journal, National Post, and The Economist.Known for his ability to explain matters of economics and government policy in a down-to-earth and easily understood manner, Niels travels widely across North America. His speaking engagements extend to diverse audiences, including business groups, corporate gatherings, community organizations, and students.Niels has had the privilege of sharing the stage and moderating discussions with prominent business and political leaders from around the world. Notable individuals include Prime Minister Stephen Harper, Prime Minister Brian Mulroney, and BC Premier Gordon Campbell. He has also moderated discussions with distinguished Canadian journalists such as Chantal Herbert, Andrew Coyne, and Rex Murphy, as well as diplomats such as Canada’s Ambassador to China and Israel’s Ambassador to Canada. Niels moderated a discussion between United States Presidents Bill Clinton and George W. Bush in 2011 and has facilitated conversations with impactful authors like Mosab Hassan Yousef (author of "Son of Hamas") and Lord Conrad Black.Niels Veldhuis is an alumnus of Simon Fraser University, was one of Vancouver’s Top 40 under 40 by Business in Vancouver in 2010, and is a member of the Young Presidents’ Organization (YPO).
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