Host­ing Olympics is a bad way to grow the econ­omy

Prairie Post (East Edition) - - Opinion - BY FRANCO TER­RAZ­ZANO

If your goal is to give a real boost to the econ­omy, which of these op­tions would you choose: in­crease taxes, run up a deficit, trans­fer money be­tween gov­ern­ments or put your eco­nomic eggs in a month long bas­ket? Prob­a­bly none of the above.

Yet, this is how Cal­gary 2026 hopes to kick start the econ­omy some­time in the next eight years. They have es­ti­mated the Olympics will spur $7 bil­lion in eco­nomic for­tune. For­tu­nately, econ­o­mists have been quick to de­cry these es­ti­mates as be­ing ab­so­lutely over­stated.

Here are four rea­sons why host­ing the Olympics is a bad way to grow the econ­omy.

First, taxes will in­crease. Tax­pay­ers are ex­pected to foot a $3-bil­lion tab. With his­tory sug­gest­ing these costs will con­tinue to rise, Cal­gar­i­ans bet­ter brace for the next wave of tax hikes to foot a grow­ing bill.

Many fam­i­lies and busi­nesses have al­ready seen ever-grow­ing costs from higher prop­erty taxes, in­come taxes, busi­ness taxes and a new car­bon tax. Abruzzo Ris­torante, Stu­dio Revo­lu­tion Fit­ness and the Ri­ley & Mc­Cormick western wear store cited greater tax bur­dens as a con­tribut­ing fac­tor be­hind de­ci­sions to close their doors. Things have be­come so bad on the prop­erty tax front that Cal­gary city coun­cil has re­bated tens of mil­lions of dol­lars over the last two years to help busi­nesses stay afloat.

A heav­ier tax bur­den is the last thing Cal­gar­i­ans need.

Sec­ond, there is no money for this. Cal­gar­i­ans have been warned by city coun­cil that they al­ready face tax hikes or ser­vice cuts. Af­ter years of run­ning large deficits, the aver­age Cal­gar­ian now owes nearly $30,000 in provin­cial and fed­eral debt.

Gov­ern­ment debt will need to be paid even­tu­ally and un­cer­tainty over fu­ture tax hikes will do lit­tle to en­cour­age busi­nesses and in­vestors to make Cal­gary their new home.

It’s not fi­nan­cially smart for a fam­ily to go fur­ther into debt to throw a party, es­pe­cially when there are other pri­or­i­ties they can’t af­ford. Why then, is this a smart fi­nan­cial move for gov­ern­ments?

Third, re­ly­ing on fed­eral trans­fers is not a path to de­vel­op­ment.

Cal­gary 2026 hopes the fed­eral gov­ern­ment will dish out $1.5 bil­lion. This may be the least Al­ber­tan eco­nomic strat­egy imag­in­able. Rather than fo­cus­ing on in­ter­nal poli­cies that pro­mote growth — re­duce red tape, lower taxes — the Olympic bid is a plea for gov­ern­ment trans­fers.

Sure, equal­iza­tion is a mess and fed­eral trans­fers are im­bal­anced, but the so­lu­tion is to get them fixed, not to try and right sys­temic wrongs by host­ing the Olympics ev­ery 40 years. In­stead of re­ly­ing on gov­ern­ment trans­fers, why not push the fed­eral gov­ern­ment to take fewer dol­lars in the first place?

Fi­nally, the real chal­lenges im­pact­ing in­vest­ment are be­ing swept un­der the rug.

The plan sug­gests the Olympics will help at­tract in­vest­ment by putting Cal­gary on the radar. Are we miss­ing out on in­vest­ments be­cause the in­ter­na­tional com­mu­nity doesn’t know Cal­gary ex­ists, or is it be­cause in­vestors know our prob­lems all too well?

The Olympics won’t solve core in­vest­ment is­sues such as tax com­pet­i­tive­ness, the ev­er­grow­ing cost to do busi­ness, the night­mar­ish reg­u­la­tory sys­tem, the in­abil­ity to get large pro­jects built and un­cer­tainty around fu­ture tax hikes. In fact, the games could make some mat­ters worse.

It’s time to stop pro­mot­ing the Olympics as a way to grow the econ­omy.

Franco Ter­raz­zano is the Al­berta Di­rec­tor with the Cana­dian Tax­pay­ers Fed­er­a­tion

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