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Economy

$535B budget projects $39.8B deficit, aims to restore economic fairness

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OTTAWA — The 2024 federal budget will provide “generational fairness” to younger Canadians by raising taxes on those who have already capitalized on Canada’s economic strengths, Finance Minister Chrystia Freeland said Tuesday as she tabled the document in the House of Commons.

The budget comes as the Liberals have watched their once-healthy voting base among young people evaporate in favour of the Conservatives, largely as younger Canadians feel like the economic deck is stacked against them.

Freeland denied Tuesday that her latest budget is mainly a political exercise — but nonetheless acknowledged that for anyone under 40 in Canada, it’s “just harder to establish yourself” than it was for the generations that came before.

A middle-class income and a good job is no longer enough to feel economically secure, she said.

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“It really isn’t fair what they are struggling with right now,” Freeland told a news conference earlier in the day prior to her budget speech in the House.

Freeland said the 2024 budget is designed to fix that problem, to “unlock the door to the middle class” for more Canadians. The budget document itself uses the word fairness 50 separate times.

There is $8.5 billion in new spending over the next five years to build millions of new homes and nearly $2.6 billion to enhance student aid and grant programs and open up new job opportunities.

“We are acting today to ensure fairness for every generation,” Freeland said.

Overall, the budget’s projected spending will rise to $535 billion in 2024-25, compared with $497.5 billion in 2023-24. The deficit is projected at $39.8 billion, compared with $40 billion last year.

There is $11.5 billion in new spending this year and $53 billion over the next five years.

Freeland said she is maintaining the fiscal anchors she set for the government, keeping the deficit below $40 billion and to less than one per cent of GDP starting in 2026-27.

Ottawa is paying for some of that with better-than-expected economic growth, but also with targeted changes to the capital gains tax that are expected to raise more than $19 billion over the next five years.

Currently Canadians only pay taxes on 50 per cent of the money they make from capital gains, which refers mainly to profits made from selling an asset like a stock.

Freeland is adjusting that to 66 per cent for all capital gains made by corporations and trusts, and for those that exceed $250,000 for individuals.

She said the change should affect 0.13 per cent of Canadians who have an average annual income of $1.4 million. She said she knows the tax increase will generate blowback.

“But before they complain too bitterly, I would like Canada’s one per cent — Canada’s 0.1 per cent — to consider this: what kind of Canada do you want to live in,” she asked in her speech.

The budget includes money for new national dental care and pharmacare programs, and also includes previously announced spending for a new national school lunch program.

“Do you want to live in a country where you can tell the size of someone’s paycheque by their smile?” Freeland asked.

“Do you want to live in a country where kids go to school hungry? Do you want to live in a country where a teenage girl gets pregnant because she doesn’t have the money to buy birth control?”

James Orlando, director of economics at TD, said while it’s true the budget keeps the government within its fiscal anchors on paper, the new tax hike is not helpful for productivity and said the new spending is “greater than we ever thought.”

The budget, he said, is more about thinking ahead to the economy the government believes Canadians want in the future.

“This isn’t spending just to boost the economy today, but rather improve the trajectory of the Canadian economy going forward,” he said.

“They would say that they’re focused on the long-term benefit of their spending right now, not just necessarily having an immediate impact on the Canadian economy.”

NDP Leader Jagmeet Singh, who has a supply-and-confidence deal with the Liberals to support them on key votes like the budget, nevertheless would not immediately promise to back the government’s latest spending plan.

The budget embraces multiple NDP ideas, including a protection fund for renters and pharmacare, but fails to go after “corporate greed,” Singh said.

Conservative Leader Pierre Poilievre was less equivocal.

“Conservatives will vote against this wasteful, inflationary budget that is like a pyromaniac spraying gas on the inflationary fire that he lit,” Poilievre said in the House.

“It is getting too hot and too expensive for Canadians, and that’s why we need a carbon tax election to replace him with a common-sense Conservative government.”

This report by The Canadian Press was first published April 16, 2024.

Mia Rabson, The Canadian Press

 

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Economy

Statistics Canada reports wholesale sales higher in July

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OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.

The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.

The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.

The personal and household goods subsector fell 2.5 per cent to $12.1 billion.

In volume terms, overall wholesale sales rose 0.5 per cent in July.

Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.

This report by The Canadian Press was first published Sept. 13, 2024.

The Canadian Press. All rights reserved.

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Economy

B.C.’s debt and deficit forecast to rise as the provincial election nears

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VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.

Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.

Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”

The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.

Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.

“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”

Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.

Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.

Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.

B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.

The election is expected to be called on Sept. 21, with the vote set for Oct. 19.

“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”

Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.

Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.

The premier said that now is not the time to reduce supports and services for people.

Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.

Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.

This report by The Canadian Press was first published Sept. 10, 2024.

Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.

The Canadian Press. All rights reserved.

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Economy

Mark Carney mum on carbon-tax advice, future in politics at Liberal retreat

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NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.

But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.

He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.

Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.

Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.

Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.

This report by The Canadian Press was first published Sept. 10, 2024.

The Canadian Press. All rights reserved.

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