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Freeland’s new federal budget hikes taxes on the rich to cover billions in new spending

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Finance Minister Chrystia Freeland‘s fourth budget delivers a big-ticket housing program for millennials and Generation Z voters — a multi-billion dollar commitment to be paid for in part with a tax hike on the rich and corporate Canada.

Freeland’s document calls for about $52.9 billion in new spending over the next five years — a significant jump over what Ottawa had said it would spend in the fall economic statement released just a few months ago.

To offset some of that new spending, Freeland is pitching policy changes the government says will generate roughly $21.9 billion in new revenue. That money is to come in part from higher capital gains taxes and a hike to excise taxes on cigarettes and vaping products.

“We are making Canada’s tax system more fair by ensuring that the very wealthiest pay their fair share,” Freeland said Tuesday after tabling her budget in Parliament.

“We are doing this because a fair chance to build a good, middle class life — to do as well as your parents, and grandparents, or better — has always been the promise of Canada.”

The result is a projected budget deficit of about $40 billion in the 2024-25 fiscal year — roughly what Freeland had predicted.

While the government is spending more overall, it says that better-than-expected economic growth and higher taxes will keep the deficit under control.

The Liberal government’s preferred “fiscal anchor” — the budget benchmark that guides its decisions — has long been to keep the net debt-to-GDP ratio on a declining trend, with debt levels closely tracking the overall size of the economy.

The budget document says the government must meet that benchmark in the years ahead to retain Canada’s triple-A credit rating.

Debt charges soar

Deficits eventually roll over into long-term debt. The cost to finance Canada’s growing debt pile — which has more than doubled over the last nine years to $1.4 trillion — is eating up more and more taxpayer dollars as the government is forced to refinance its borrowing at higher rates.

Public debt charges will cost $2 billion more this year than the forecast in November as the Bank of Canada keeps rates relatively high to tame inflation — which has shown signs of slowing down.

With interest rates at a 20-year high, Ottawa’s cost to borrow has spiked from $20.3 billion in 2020-21 to $54.1 billion in 2024-25.

That means Ottawa will spend more to service its debt than it will on health care this year — and the debt charges will march even higher in the years ahead.

Carrying the debt is expected to cost the federal treasury $64.3 billion in 2028-29 — more than double what Ottawa sends to the provinces through equalization payments.

“The interest rates are hurting the government just as much as they’re hurting us consumers,” said Sahir Khan, a former deputy parliamentary budget officer and the executive vice-president of the uOttawa Institute of Fiscal Studies and Democracy.

“It’s now a meaningful amount relative to other spending pressures and it’s going to start squeezing other programs. The government built up a stock of debt subject to prevailing interest rates and that creates a risk.”

Billions more for housing

The budget allocates $8.5 billion more to housing to help alleviate a crisis that has locked a generation of young people out of the dream of home ownership. The government maintains its housing measures will drive the creation of roughly four million more homes by 2031.

 

New investment to lead ‘housing revolution in Canada,’ Freeland says

 

Finance Minister and Deputy Prime Minister Chrystia Freeland said this year’s federal budget will pave the way for Canada to build more homes at a pace not seen since the Second World War. The new investment and changes to funding models will also cut through red tape and break down zoning barriers for people who want to build homes faster, she said

Freeland has freed up money to send more cash to municipalities through the Housing Accelerator Fund, build more homes on underused public lands and at Canada Post outlets, cut cheques for new water and solid waste infrastructure in growing communities, offer tens of billions of dollars in loans to spur new rental construction and secondary suites, and help non-profits acquire existing rental homes and keep them affordable.

“We are moving with purpose to help build more homes, faster. We are making life cost less,” Freeland said. “Millennial and Gen Z Canadians, we want them to look forward to the future with a sense of anticipation, not angst.”

A man wears a cardboard house on his head during a demonstration calling for more affordable housing and social housing in Montreal. (Graham Hughes/The Canadian Press)

The government also has committed to maintaining the already well-subscribed tax-free savings account, extending mortgage amortization terms and increasing the RRSP withdrawal limit for some first-home buyers, among other measures.

The housing program is a “home run,” said Armine Yalnizyan, a progressive economist and the Atkinson Fellow on the Future of Workers.

Yalnizyan said Conservative Leader Pierre Poilievre’s early focus on housing hurt the Liberals’ standing among some millennial voters.

Now, the Liberals are trying to reclaim some of those votes with an ambitious program which, if it’s carried out as planned, will meaningfully increase the country’s housing supply, she said.

“It’s really an attempt to stop the Conservatives from eating their lunch,” she said.

A tax hike on the rich

As Ottawa moves to remake the housing landscape, roll out a national dental care program and launch pharmacare, Freeland’s budget includes a number of targeted tax hikes that it says will yield some $21.9 billion in new revenue over the next five years.

The biggest windfall will come from an increase to the capital gains inclusion rate.

Under the current regime, only 50 per cent of capital gains are taxable. If a taxpayer sells an asset like a cottage, an investment property, a stock or mutual fund for $100,000 more than they paid, they are taxed only on $50,000 of that profit.

With this new budget, the “inclusion rate” will increase from one-half to two-thirds on capital gains above $250,000 per year for individuals, and on all capital gains realized by corporations and trusts.

The move is likely to be seen by business-friendly groups as an attack on the people and businesses that create jobs.

Freeland said she anticipates some blowback.

“I know there will be many voices raised in protest. No one likes paying more tax, even — or perhaps particularly — those who can afford it the most,” she said.

“Tax policy is not only, or chiefly, the province of accountants or economists. It belongs to all of us because it is how we decide what kind of country we want to live in and what kind of country we want to build.”

New Democratic Party Leader Jagmeet Singh has been pushing for higher taxes on the wealthy. (Adrian Wyld/The Canadian Press)

The NDP — the government’s partner in the supply-and-confidence agreement — likely will welcome the change; party leader Jagmeet Singh has said the wealthy and big corporations should shoulder more of the country’s tax burden.

“We are asking the wealthiest Canadians to contribute a bit more, so that we can make investments to ensure a fair chance for every generation,” the budget document says. “Canada’s tax system can be more fair.”

The change will not apply to any capital gains from the sale of a primary residence. Investment income earned in an RRSP or TFSA, including capital gains, also will not be taxed.

According to government data, only 0.13 per cent of Canadians — people with an average income of about $1.4 million a year — are expected to pay more in personal income tax on their capital gains as a result of this change.

Jimmy Jean, an economist at Desjardins who tracks Ottawa’s spending, said the federal government’s goal of collecting about $19 billion from the capital gains measure may be difficult to achieve.

“The jury’s out on whether they can get that much,” Jean said.

“Targeting the income and wealth of the wealthy — it’s difficult because it’s more mobile, they can move it around. I’m skeptical.”

Other new revenue-generating measures in the budget include a promise to crack down on bankruptcy fraud and tackle “aggressive tax planning schemes.”

Beyond housing, there’s also a promise to top up the incentives for zero-emission vehicles, deliver a new carbon tax rebate for small businesses, stand up an $800-million energy efficiency retrofit program, increase student grants, create a $500-million fund for youth mental health, launch a $6 billion Canada Disability Benefit, fund a $1 billion national school food program and deliver a $900-million top-up to the Indigenous infrastructure program.

CBC/Radio-Canada will get a one-off $42 million budget boost for news and entertainment programming — a cash injection that will help the company avoid some of the previously announced layoffs.

VIA Rail Canada stands to gain about $400 million over the next few years to turn the dream of high-frequency rail in central Canada into a reality.

 

What’s in the new federal budget?

 

CBC News breaks down the biggest items in the new federal budget — and how the government is planning to pay for billions in new spending.

Poilievre blasts budget, Singh stays noncommittal

Poilievre pilloried the budget and said his party would vote against it.

Speaking in the House of Commons, the Conservative leader said the Liberal government has never presented a balanced budget in all the years it’s been in office and the promised $40 billion in new spending will drive inflation higher.

“This is the ninth deficit. The ninth deficit after the prime minister promised the budget would balance itself and what did he do with the money? Everything he spent it on has become more expensive,” Poilievre said.

“This is like a pyromaniac spraying gas on the inflationary fire that he lit. 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.”

Conservative leader rises in House of Commons to reject Liberal budget

Responding to Tuesday’s budget by the federal Liberals, opposition Leader Pierre Poilievre says Conservatives will vote against the financial plan, and renewed his call for ‘a carbon tax election’ to replace Prime Minister Justin Trudeau.

Singh, meanwhile, said it’s too early to say if his party will support the budget.

While he praised some measures he said his party forced the government to include, such as dental care, pharmacare and a national school food program, Singh said he wants to meet with Trudeau to raise some other “concerns” before making a final decision.

Singh said he’s not onside with a plan to cut about 5,000 public servants through attrition — the federal bureaucracy has grown to about 357,247 workers under Trudeau — and he said there’s inadequate funding for Indigenous peoples.

 

Liberals ‘ignored opportunity’ in budget to tackle corporate greed, NDP says

 

NDP Leader Jagmeet Singh says while he is glad to see some measures in the 2024 budget like protections for renters and the national school food program, he believes the Liberals could have done more to bring grocery, internet and housing prices down.

If Singh and his NDP MPs withhold their votes, the minority government could lose the confidence of the House of Commons, tipping the country into an early election.

While the capital gains tax increase will cost the country’s big businesses billions more than what they pay now, Singh said “the Liberals ignored the opportunity to take on corporate greed.”

Singh said the companies he blames for inflation — grocery store chains, telecommunications companies and “housing and corporate landlords” — should have faced tax hikes.

Green Party Leader Elizabeth May said her caucus will vote against Freeland’s budget.

She said the government’s planned disability benefit, which amounts to about $200 a month for eligible Canadians, is too low.

May also said there’s not enough money earmarked for social housing — just more loans for developers to build more affordable homes.

“The budget falls far short of our hopes,” May said. “It’s not meeting the moment. We need dramatic, transformative changes to our society to be able to afford the things we need.”

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Bad traffic, changed plans: Toronto braces for uncertainty of its Taylor Swift Era

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TORONTO – Will Taylor Swift bring chaos or do we all need to calm down?

It’s a question many Torontonians are asking this week as the city braces for the arrival of Swifties, the massive fan base of one of the world’s biggest pop stars.

Hundreds of thousands are expected to descend on the downtown core for the singer’s six concerts which kick off Thursday at the Rogers Centre and run until Nov. 23.

And while their arrival will be a boon to tourism dollars — the city estimates more than $282 million in economic impact — some worry it could worsen Toronto’s gridlock by clogging streets that already come to a standstill during rush hour.

Swift’s shows are set to collide with sports events at the nearby Scotiabank Arena, including a Raptors game on Friday and a Leafs game on Saturday.

Some residents and local businesses have already adjusted their plans to avoid the area and its planned road closures.

Aahil Dayani says he and some friends intended to throw a birthday bash for one of their pals until they realized it would overlap with the concerts.

“Something as simple as getting together and having dinner is now thrown out the window,” he said.

Dayani says the group rescheduled the gathering for after Swift leaves town. In the meantime, he plans to hunker down at his Toronto residence.

“Her coming into town has kind of changed up my social life,” he added.

“We’re pretty much just not doing anything.”

Max Sinclair, chief executive and founder of A.I. technology firm Ecomtent, suggested his employees avoid the company’s downtown offices on concert days, saying he doesn’t see the point in forcing people to endure potential traffic jams.

“It’s going to be less productive for us, and it’s going to be just a pain for everyone, so it’s easier to avoid it,” Sinclair said.

“We’re a hybrid company, so we can be flexible. It just makes sense.”

Swift’s concerts are the latest pop culture moment to draw attention to Toronto’s notoriously disastrous daily commute.

In June, One Direction singer Niall Horan uploaded a social media video of himself walking through traffic to reach the venue for his concert.

“Traffic’s too bad in Toronto, so we’re walking to the venue,” he wrote in the post.

Toronto Transit Commission spokesperson Stuart Green says the public agency has been working for more than a year on plans to ease the pressure of so many Swifties in one confined area.

“We are preparing for something that would be akin to maybe the Beatles coming in the ‘60s,” he said.

Dozens of buses and streetcars have been added to transit routes around the stadium, and the TTC has consulted the city on potential emergency scenarios.

Green will be part of a command centre operated by the City of Toronto and staffed by Toronto police leaders, emergency services and others who have handled massive gatherings including the Raptors’ NBA championship parade in 2019.

“There may be some who will say we’re over-preparing, and that’s fair,” Green said.

“But we know based on what’s happened in other places, better to be over-prepared than under-prepared.”

Metrolinx, the agency for Ontario’s GO Transit system, has also added extra trips and extended hours in some regions to accommodate fans looking to travel home.

A day before Swift’s first performance, the city began clearing out tents belonging to homeless people near the venue. The city said two people were offered space in a shelter.

“As the area around Rogers Centre is expected to receive a high volume of foot traffic in the coming days, this area has been prioritized for outreach work to ensure the safety of individuals in encampments, other residents, businesses and visitors — as is standard for large-scale events,” city spokesperson Russell Baker said in a statement.

Homeless advocate Diana Chan McNally questioned whether money and optics were behind the measure.

“People (in the area) are already in close proximity to concerts, sports games, and other events that generate massive amounts of traffic — that’s nothing new,” she said in a statement.

“If people were offered and willingly accepted a shelter space, free of coercion, I support that fully — that’s how it should happen.”

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



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‘It’s literally incredible’: Swifties line up for merch ahead of Toronto concerts

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TORONTO – Hundreds of Taylor Swift fans lined up outside the gates of Toronto’s Rogers Centre Wednesday, with hopes of snagging some of the pop star’s merchandise on the eve of the first of her six sold-out shows in the city.

Swift is slated to perform at the venue from Thursday to Saturday, and the following week from Nov. 21 to Nov. 23, with concert merchandise available for sale on some non-show days.

Swifties were all smiles as they left the merch shop, their arms full of sweaters and posters bearing pictures of the star and her Eras Tour logo.

Among them was Zoe Haronitis, 22, who said she waited in line for about two hours to get $300 worth of merchandise, including some apparel for her friends.

Haronitis endured the autumn cold and the hefty price tag even though she hasn’t secured a concert ticket. She said she’s hunting down a resale ticket and plans to spend up to $600.

“I haven’t really budgeted anything,” Haronitis said. “I don’t care how much money I spent. That was kind of my mindset.”

The megastar’s merchandise costs up to $115 for a sweater, and $30 for tote bags and other accessories.

Rachel Renwick, 28, also waited a couple of hours in line for merchandise, but only spent about $70 after learning that a coveted blue sweater and a crewneck had been snatched up by other eager fans before she got to the shop. She had been prepared to spend much more, she said.

“The two prized items sold out. I think a lot more damage would have been done,” Renwick said, adding she’s still determined to buy a sweater at a later date.

Renwick estimated she’s spent about $500 in total on “all-things Eras Tour,” including her concert outfit and merchandise.

The long queue for Swift merch is just a snapshot of what the city will see in the coming days. It’s estimated that up to 500,000 visitors from outside Toronto will be in town during the concert period.

Tens of thousands more are also expected to attend Taylgate’24, an unofficial Swiftie fan event scheduled to be held at the nearby Metro Toronto Convention Centre.

Meanwhile, Destination Toronto has said it anticipates the economic impact of the Eras Tour could grow to $282 million as the money continues to circulate.

But for fans like Haronitis, the experience in Toronto comes down to the Swiftie community. Knowing that Swift is going to be in the city for six shows and seeing hundreds gather just for merchandise is “awesome,” she said.

Even though Haronitis hasn’t officially bought her ticket yet, she said she’s excited to see the megastar.

“It’s literally incredible.”

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

The Canadian Press. All rights reserved.



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Via Rail seeks judicial review on CN’s speed restrictions

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OTTAWA – Via Rail is asking for a judicial review on the reasons why Canadian National Railway Co. has imposed speed restrictions on its new passenger trains.

The Crown corporation says it is seeking the review from the Federal Court after many attempts at dialogue with the company did not yield valid reasoning for the change.

It says the restrictions imposed last month are causing daily delays on Via Rail’s Québec City-Windsor corridor, affecting thousands of passengers and damaging Via Rail’s reputation with travellers.

CN says in a statement that it imposed the restrictions at rail crossings given the industry’s experience and known risks associated with similar trains.

The company says Via has asked the courts to weigh in even though Via has agreed to buy the equipment needed to permanently fix the issues.

Via said in October that no incidents at level crossings have been reported in the two years since it put 16 Siemens Venture trains into operation.

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

Companies in this story: (TSX:CN)

The Canadian Press. All rights reserved.



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