Chrystia Freeland’s fourth budget is less a fiscal plan than a political manifesto. She’s chosen again to spend in areas where the Liberals understand they are politically vulnerable while raising taxes on those who will cost them the fewest votes in the next election.
The finance minister and others in cabinet have been rolling out in a steady stream of new spending initiatives since Easter, $53 billion in total for housing, school food programs, a national disability benefit and other measures.
The goal is clear. The Liberals want to convince Millennial and Gen Z voters that they will help make life more affordable.
The flip side is that Freeland had to raise taxes to pay for these promises and to remain inside her fiscal guardrails – keeping the deficit at or below $40.1 billion while lowering the debt-to-GDP ratio this year and into the future.
The cost, according to many economists, is that there’s little in the budget to address Canada’s growing productivity gap with other industrialized nations, a gap the OECD projects will continue in the decades ahead threatening Canadians’ standard of living.
But the future for the Liberals is now with an election at most 18 months away. They need this spending to shore up support among younger voters, the ones who helped them win the past three elections, and to retain the support of their junior partners, the NDP.
The budget title sums up the theme, “Fairness for Every Generation.”
Fairness in this budget means higher taxes of more than $20 billion to be borne by a select group of mostly older Canadians.
Freeland is raising the capital gains inclusion rate from 50 per cent to 66 per cent for individuals, corporations and trusts reporting more than $250,000 in capital gains. The government says the change will affect only the wealthiest 0.13 per cent of Canadians.
No surprise there. A Navigator Discover poll conducted from March 26 to April 1 of 1,500 adults found the vast majority of respondents – 78 per cent – support taxing the ultra-wealthy.
The same poll suggested 85 per cent of respondents across age groups, regions and genders listed the high cost of living as the most important issue for government to address. When asked who was most to blame, they identified corporate greed and Justin Trudeau as the top two culprits.
One of those two is easier to blame than the other. Cue higher taxes on the wealthiest few. Spend billions on the young and the politically restless.
You can find our full analysis of the budget below. For more analysis, or support engaging government on any of the budget announcements, contact your Navigator team or reach out at info@navltd.com.
