(Ottawa) Finance Minister Chrystia Freeland rejects the idea that the budget she tabled in the Commons, which announces the equivalent of $36 billion in new spending over five years, risks fueling inflation and undermine the work of the Bank of Canada to stabilize rising prices.
This budget, which keeps deficits below the 40 billion mark over the next two years, respects in all respects the budgetary anchors that it had set in its economic statement last November, she affirmed in an interview with has The Press the day after submitting its budget plan.
These anchors – a deficit of 40 billion for the last financial year which ended on March 31 and deficits below 1% of GDP in 2026-2027 and on a downward trajectory in the following years – were welcomed by the governor of the Bank of Canada, Tiff Macklem, last fall, she pointed out.
Even before the tabling of the last federal budget, the leader of the Conservative Party, Pierre Poilievre, accused Prime Minister Justin Trudeau of behaving like a “pyromaniac firefighter” who “throws gasoline on the inflationary fire” by spending lavishly.
And on Wednesday, the Minister of Finance of Quebec, Eric Girard, made equally critical comments, maintaining that his federal colleague had tabled a “spendable” and “inconsistent” budget with the monetary policy of the Bank of Canada to curb inflation .
“Completely false”
Mme Freeland countered that these analyzes do not stand up to the test of facts.
“It’s completely false,” retorted the country’s big money maker. “It’s just a fact, it’s just the reality that our government’s tax policy is not just responsible, but very, very responsible. In the fall economic statement, I made a very intentional decision and a very risky decision. I published three very specific and very easy to measure tax objectives. (…) These are objectives that were chosen with great caution. And we have achieved them, and even more,” explained the minister.
“These objectives were intended to demonstrate to the Bank of Canada that we are paying attention to inflation and that we will help the Bank of Canada in the fight against inflation. And Mr. Macklem said after these goals were released that they were very useful. My goal was to have a sustainable tax policy. As far as I’m concerned, it’s not a good idea to do something that will be appreciated today, but would not be sustainable in the long term. This is why the debt-to-GDP ratio is so important,” she added.
Since serving as Minister of Finance, Ms.me Freeland likes to point out that Canada is one of the few countries to still obtain an AAA rating from the main rating agencies. According to her, this is irrefutable proof that the Trudeau government manages state finances in a responsible manner.
She has also argued that she will have no problem defending her fourth budget in front of the financiers of these same agencies.
“We can have debates on different issues. But we can’t have a debate about the facts. This is why I often cite rating agencies. They are not liberal partisans. They are not very, very progressive people who work there either. It is reality. But these same people reaffirmed the AAA credit rating after the fall economic statement. They said our fiscal anchors were important and it was important for the government to achieve them. We did it ! »
In an interview, the minister also welcomed the latest Statistics Canada statement on the inflation rate for the month of March, which stood at 2.9%. “This is the third month that the inflation rate has been within the Bank of Canada’s range. This is very good news and we can draw a contrast with the United States where the inflation rate in March was 3.5% and where there is a tax policy different from ours. »
Housing and capital gains
In her budget, the minister confirmed a series of measures aimed at accelerating the construction of housing across the country. Mme Freeland said these investments are essential to ensure Canada does not penalize an entire generation who would be unable to afford housing.
To respect budgetary anchors while increasing spending, the Trudeau government has decided to dig deeper into the pockets of wealthy taxpayers as well as smokers. It has also been well served on the revenue front by slightly stronger economic growth than expected just six months ago.
Mme Freeland has in fact announced that as of June 25, the portion of capital gains that is taxable will increase from 50% to 66% for people who declare more than $250,000 in capital gains annually. This measure, which would affect 40,000 taxpayers, should bring in 19.3 billion over five years, including 6.9 billion this year and 3.37 billion in 2025-2026.
On Wednesday, his Liberal predecessor Bill Morneau sharply criticized this measure, saying it risked harming private investment and economic growth. But the Labor Congress welcomed Ottawa’s decision to move forward with this drain. “We appreciate the decision to increase taxes on the wealthiest Canadians and profitable corporations,” Congress said.
reference: www.lapresse.ca