Anonymous
Anonymous asked in TravelCanadaToronto · 8 years ago

Why is Ontario so Debt-Ridden?

Ontario owes $300 billion and debt and the provences infrastructure is falling apart

9 Answers

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  • SteveN
    Lv 7
    8 years ago
    Favorite Answer

    Try not to look at the problem from a $300 billion number. Many people can't fathom how a number can get that large. Look at it from your own typical household.

    Meet Tom.

    Tom has a job that earns him $65K a year. (That's the money that comes in. That's like the taxes Canadians pay to the government...in this case Ontario)

    Tom needs a car to get around town and a home to live in. So he gets himself a $40K loan for a car and a $450K mortgage for his home.

    So here you see that Tom has $65K coming in to his "budget" but also has $490K worth of debt.

    Tom could not keep that up, spending that kind of money every year. But in this case his debt will be spread out over the next several years. And by paying $1000 on a mortgage and $500 on a car loan per month, he can afford it in his budget.

    But what happens if he loses his job? Or if he has to take a pay cut? Or if mortgage and loan rates go up and he is paying twice as much interest on the car and home? His bank may give him SOME leeway and be flexible, but Tom can't keep up those payments and will eventually end up thousands of dollars in debt and having to declare bankruptcy.

    This same situation can happen on a municipal, provincial, or even federal level. You need only look at Detroit. The city could no longer afford to pay all its bills and had to declare itself bankrupt in order to protect itself from its creditors. Without that, it would have had to cease functioning, since no one would lend it any more money to fix the streets, water mains, traffic lights, etc. Whoever has been lending Ontario the money over their last several budgets eventually may say "Hold on! We want you to repay that money now." and that's when the fit hits the shan.

    It's not something many tax payers like to think about, and it's why when some "responsible" government comes in and tries to balance the budget, it usually requires raising taxes or cutting spending. And the minute you say "I'm going to have to raise your taxes", that politician is probably not getting elected (or re-elected) during the next term. But we have to understand that we cannot simply keep spending and adding more infrastructure and more social programs without somebody somewhere having to pay for that.

  • Anonymous
    8 years ago

    Ontario use to be one of the most prosperous provinces in Canada and was required to share the wealth with the other Provinces, specifically Quebec. If Ontario is debt-ridden, blame the politicians who are like pigs at the trough.

  • Anonymous
    8 years ago

    Because of Dalton Mcguinty! He spent $10 Billion for every year he was in office. Now THAT takes talent. People like Kathleen Wynne already has plans to slowly pay off the debt, time will tell if that works.

    Source(s): Torontonian
  • 8 years ago

    Because Ontario governments have been spending more money than they take in in taxes.

    Simple as that. You spend more than you make, you go into debt.

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  • Anonymous
    8 years ago

    Debt is caused by governments borrowing money and spending more than they bring in. Same thing that causes individual debt.

  • 8 years ago

    Simple the Liberal Govt looking after the taxpayers money has no clue they have ripped off the taxpayers of Ontario millions that should be paid back. Poor money management as well.

  • 8 years ago

    Probably the same reason why governments all over the world are so far in debt. Overspending, waste, irresponsibility, entitlements, economic slowdown among other things.

  • Kessie
    Lv 5
    8 years ago

    Same reason as any other province or household is so debt-ridden: spending more than they make and poor money management.

  • ?
    Lv 7
    8 years ago

    Buy war bonds!

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