Mr. Speaker, just because the member does not understand the fact, that does not erase that it is indeed a fact.
I thank the member for Timmins—James Bay for his help along the way.
Peter Hogg, who, until his death last year, was Canada's leading constitutional scholar, underscored the point that I am making now in a 2002 article:
It must be remembered that the taxing power is the one upon which the rest of governance depends. As the King and Parliament both recognized in the 17th century, nothing important can be done without resources, and it is control of the taxing power that provides the resources. Moreover, no other power has as direct and immediate an effect on citizens as the taxing power, and (for that reason) nothing government does is as unpopular as the imposition and collection of taxes. There is a huge incentive for governments to offload this power to a delegate, who can raise taxes quietly without any irritating fuss in the Parliament or Legislature, and who can shoulder the blame when the media do get wind of the action.
As Professor Hogg noted, this is not a new problem. In fact, it is one of the oldest and most important matters in the system of parliamentary democracy. It is hardly an exaggeration to say that taxation is the reason we are all here today. The Crown's power to tax and the need to obtain the consent of those paying the taxes is why Parliament exists in the first place. We could look at 800 years of history, going back to the Magna Carta, to find that the principal disagreement between Crown and commoner has been on the subject of taxation.
It is essential to the privileges of every member of this House that every single levy or tax come before us to be voted on before it is enacted. I think I have clearly proven that it is the privilege of every member to vote on a tax increase before it is imposed.
What is the tax of which I speak? The answer is, it is the inflation tax. Is excessive inflation, which results from excessive money creation, in fact a tax? We can look to the definition of “tax” found in Oxford Languages, a 150-year-old dictionary, which defines taxes as follows:
A compulsory contribution to state revenue, levied by the government on workers' income and business profits, or added to the cost of some goods, services, and transactions.
I will break down that definition. First, it is state revenue, “levied by the government”. Second, it is “added to the cost of some goods, services, and transactions.” Third, it is a “compulsory contribution”.
First, is the inflation tax designed to generate state revenue, levied by the government? I will give the data to prove that in fact it is. In February 2020, the Bank of Canada owned $106 billion of government debt. As of the end of last month, that number had reached $412 billion. That is an increase of almost $300 billion in one year. It is also an increase of 300%. Last year, the amount that the Bank of Canada produced for the government by purchasing government debt was over $300 billion. It was the single biggest source of revenue for the government, bigger than income tax, consumption tax, tariffs and private loans combined.
Never before has the Bank of Canada been the single biggest provider of funds for the government's operation. It does this through a process whereby the government sells debt onto the market and the bank buys it back at a higher price. This has the effect of flooding government coffers with cheap credit that it could spend liberally, as it did last year and continues to do right now.
The result is a massive increase in the money supply. When the Bank of Canada uses its balance sheet to buy government debt, it increases the number of dollars in circulation. In the period since late winter and early spring of 2020, the money supply has increased by over $300 billion. In fact, from February 2020 to February 2021, the money supply grew by $354 billion. The deficit for the last fiscal year was $354 billion. In other words, the same amount the government needed to borrow was the amount that the Bank of Canada created.
This led to a 20% year-over-year increase in the number of dollars in coins, bills and bank deposits. That is the biggest increase since 1974, which was the last time the government went on a money-printing binge, which led to major inflation crises thereafter. For context, the increase in the money supply is so large that it could fund our Canadian Armed Forces for 10 years. To use another measure, fully one in six dollars in the entire M2 money supply has been created in the last year alone.
In the fiscal year 2021, the Bank of Canada was the single largest source of funds for the Government of Canada. All revenue from other sources was $294 billion, and net new borrowing was $41 billion, but revenue from the bank was $303 billion. That $303 billion is an extraordinary and unprecedented sum.
The bank did not do this on its own. Let me now speak about the direct coordination between the government and the bank that led to this massive increase in the money supply.
The Parliamentary Secretary to the Minister of Finance actually said that there was coordination between the bank and the government. The coincidence that we see in the amount of money printed and the amount of money spent demonstrates this coordination as well. For example—