The first refers to the fact that the tax structures are taken as constants, when in fact modifications could occur and result in the allocation of more funds to the health care sector. Then, the second argument is that the business, technology and administrative communities present the population and the markets with various scenarios and tools for improvements in efficiencies (Brimacombe, Antunes and McIntyre, 2001).
5. Approaches of Federal and Provincial Governments
The federal and provincial governments often encounter difficulties in adequately collaborating for the well-being of the Canadians. The provincial governments for instance blame the federal one for decreasing its health care payment from 50 cents per dollar in the 1960s to 16 cents per dollar in 2004. The federals on the other hand argue that the 16 cents only account for direct medical costs, but that the additional coverage of research, schooling and other expenses are not being taken into consideration. The federal government argues that they contribute to the health care system through three simultaneous courses of action: federal contributions to provincial health through transfers for health, equalization and direct contributions to total public spending (Department of Finance Canada, 2007).
The current matter however deals with the future sustainability of the projected growths in health care costs. In 2000 for instance, the state organizations had contributed with a total of 31.1% of their total revenues to the health care system. By 2020, this contribution is expected to increase to 42% of the entire governmental revenue. Through the lens of the gross domestic product, the proportion of health care costs is likely to increase from 8.7% to 10.2% by 2020. Divided into public and private, the public health spending would grow from 6.0% to 7.1% and the private health care spending would increase from 2.7% to 3.1%. Based on this then, as well as the projected economic growth throughout the following two decades, the governments could argue that the growing costs of the health care system are sustainable.
It could also be argued that the foreseen expenditures in the Canadian health care system are financially sustainable as part of them will be generated by price increases due to inflation. This part of the expenses then will be economically regulated and accounted for and will generate neutral impacts as the price increases and inflation rates will be equal in all sectors, including industry, economy or medical care. Increased price and inflation could also generate more liquidity within the financial market. The ultimate impact of inflation however can only be established with further analysis on consumption and purchase behavior. These vary for each group of consumers, based on various group or individual data. The elderly for instance will tend to consume less and save more. The families of spouses and children will tend to spend and will dispose of reduced discretionary income. The young single adults will spend more and they will not be inclined towards saving. Therefore, the economic growth could be further supported through increased levels of consumerism.
The ultimate governmental features which could impact the revenue distribution towards the health care system from both federal and provincial institutions refer to the source of the revenue, including the stability and reliability of the respective source. Federal tax from VAT will continue to increase alongside with consumption, but property taxes are likely to remain constant. The governmental funds and their allocation are also determined by the interest rates practiced on public debt. Considering that Canada's creditors implement an increased interest rate, significant parts of the country's federal budget would be allocated to the payment of the contracted national loans and the subsequent interest rates and other commissions. The government and trade balance, as well as the stock of governmental debt will also impact the budget allocation and the funds redirected towards the public health care system (Brimacombe, Antunes and McIntyre, 2001).
6. Governmental Approaches and Theory
Based on their estimations on economic growth, real GDP growth and also increases in health care costs and spending, the federal and provincial governments found that the model is sustainable. However, the economic theory could argue the opposite and their primary argument would be based on the lack of a relationship between the economic growth and the level of government revenues due to taxes. "Given the manner in which our tax system is constructed, there is no one-to-one relationship between nominal economic growth and the public revenue dollars that accrue to governments. This means that some of our taxes, such as excise and property taxes, are not as responsive to economic...
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