Question

1. In order to host the Winter Olympic games, the city of Vancouver incurred a large debt, which will have to be repaid over time. Reflecting on this fact, one Vancouver resident complained, “The average guy is going to see his taxes increase”. Assume that Vancouver does raise taxes to pay for the debt. Who is going to bear the burden of these future taxes? [Hint: Take advantage of the theory of tax capitalization.]

Please answer clearly.

Answer 1

Government has to incur the huge expenditure to host the winter olympic games. Government does not have enough revenue or budget to fund such game. thus government has to resort to debt for financing games.

Game that is financed through the debt causes burden of tax on future generation. Usually, people with higher assets value tend to pay taxes. Thus More burden shall be on the such people who have more income. it would be inequitable for future generation if such games are not able to generate productive assets. If such games generate tourism and productive assets in future, then future generation is less likely to bear the burnt of higher taxes.