Canada’s parliamentary budget officer is warning the federal and provincial governments are on shaky financial ground over the long term and will need to either increase taxes or chop spending to resolve their budgetary woes. The growing financial hole facing governments could have a profound impact on future health and education funding in the coming years, and could quickly erode the quality of programs and services delivered to Canadians. A greying of the Canadian population will put downward pressure on revenues as growth in the tax base slows, while spending demands will mount as more retirees tap seniors’ benefits. Even if the economy fully recovers over the next few years, the additional spending on health care and elderly benefits is expected to erode public finances, taking governments from surpluses over the medium term to “sizable deficits” over the long term, the spending watchdog estimates.

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