I find it weird how frequently government expenses are casually referred to as “taxpayer dollars” or costs to taxpayers—when in fact the dollars that the Canadian federal government spends need not come from taxpayers.

Common parlance certainly has it otherwise. Ex. “The extension of the light rail line is expected to cost taxpayers about $3 billion”; or, remarking upon a government expense that one sees as imprudent or frivolous, “So that’s what my tax dollars are going towards!” To me, these turns of phrase suggest that most people think

• that the money that governments spend comes from the taxes its citizens and corporations pay; and
• that, as democratic institutions, governments should be held accountable to their (tax-paying) citizens in respect of their expenditures.

Basically, calling government money ‘taxpayer dollars’ or similar is a way of asserting ownership of it, so to speak. ‘It's really our money.’

Politically speaking, this is a perfectly democratic sentiment. I think it gets a lot of its force, though, from the idea that the government needs our money in order to fund its expenses. Which is not necessarily true, depending on which level of government you are talking about.

The federal government, in particular, does not depend on revenue in order to spend money. This is because its (domestic) expenses are in Canadian dollars, and it also is the issuer of Canadian dollars. It is not like us wage-earners who have to get dollars from somewhere else before we can spend them. City and provincial governments too need to get their dollars from taxes, borrowing, or federal grants: only the federal government has the currency-issuing power.

For the same reason, there are no financial limits on how many Canadian dollars the federal government can borrow. The idea of a goverment ‘borrowing’ in the currency that it alone issues is a bit weird anyway. One can hardly call that a debt-obligation.

This is just a fact about currency-issuing national governments like that of Canada. That it is a controversial and poorly-known fact testifies to the weirdness of modern economic discourse. I really only understood it relatively recently.

There are certainly many other ways besides talking about “taxpayer dollars” in which the media, economists, politicians, and the general public perpetuate the idea that the federal government is constrained by revenue or by limits on how much it can borrow. But “taxpayer dollars” seems to me to be the most pervasive.

For more reading on how goverment-issued currency actually works, why the magnitude federal deficit does not matter, and related topics, see this explanation of Modern Monetary Theory. For an excellent and highly readable book on the subject, check out The Deficit Myth.