Was it Christmas in April in Ottawa? No, but there were gifts for everyone in the copious 483-page budget tabled on Tuesday by the Trudeau government, which is desperately seeking to climb back up in the polls.
There was something for everyone, but in particular for millennials – the largest cohort of the Canadian population since 2023 – and for their youngest generation Z, a good part of whom are now of voting age.
The young people who helped the Trudeau government come to power in 2015 now have morale in their heels, as evidenced by the World Happiness Report, where Canada ranks 15e position. But for young people under 30, the country slips to 58e place… about the same point as the Dominican Republic. 1
So, it is for young people that the Minister of Finance, Chrystia Freeland, reserved the first words of her budget, insisting on the fact that they must have the chance to “succeed as well as their parents, or even better”. in a context where the housing crisis undermines their hopes of accessing property.
Ottawa is therefore injecting 8.5 billion over five years to accelerate the construction of housing and help those who have difficulty affording a roof. The intention is good. But the means raise eyebrows.
First, Ottawa is blithely plunging into provincial areas of jurisdiction, probably betting that voters who want results will forgive this intrusion, while some provincial governments are dragging their feet. This is the case of the Coalition Avenir Québec (CAQ).
Then, it is not certain that we will find the workforce to achieve the ambitious objectives of Ottawa, which wants to add almost four million housing units by 2031.
Those expecting quick results will have to be patient: it will take years to bring real estate back down to earth.
In the meantime, Ottawa is offering various measures to help renters and first-time buyers (although giving them more resources risks adding fuel to the fire and pushing house prices up).
Ottawa is also releasing money for youth mental health and to reduce the burden of student debt. In addition, he ensures that all children from less fortunate families who are entitled to the Canada Learning Bond, a windfall of $2,000, will get their due. Well done !
What else ?
Ten billion for defense and democracy, 9 billion for Indigenous people, 5 billion to establish a tax benefit for people with disabilities, 7.5 billion to stimulate the economy, productivity and research and development…
Casually, Ottawa is adding another 58 billion in new spending by 2028-2029.
If the federal government manages to make new largesse, without deviating from the budgetary targets it set in its economic statement last fall, it is because the economic forecasts have improved. The recession that we feared seems to have been avoided.
Note, the Liberals could have used their room to maneuver to clean up public finances, but that is not their habit. We are far from the good years of Paul Martin, when the Minister of Finance was almost criticized for making overly cautious forecasts and then using good surprises to repay the debt!
If Ottawa succeeds in meeting its targets, it is also because it brought out the big guns: a tax increase which will bring in $18 billion over five years.
Ottawa will tax more capital gains, i.e. the profit made when reselling property that has increased in value, such as shares in a non-registered account or an income property (the main residence is sheltered from the tax, and will remain so).
The capital gains “inclusion rate” will increase from 50% to 66% for taxpayers who make a gain of more than $250,000 per year. They are not legion: barely 0.1% of Canadians will be affected by the measure.
As the capital gain will now be two-thirds taxable, the tax bill will therefore amount to 35.5% for a Quebecer at the maximum tax rate of 53%.
This assumes that the Quebec government will follow suit, which is highly likely.
In fact, for the provinces, this is an unexpected opportunity to increase their revenues without suffering the odiousness of decreeing a tax increase.
If no one is happy about a tax increase, the chosen method is still well-crafted. But we would have preferred more discipline. Less waste ArriveCANno more restraints in the bureaucracy.
Since the Liberals came to power in 2015, government spending has increased from 14.1% of GDP to 17.5%. And the public service has swelled by 100,000 employees, although the federal government is now committed to reducing its workforce by 5,000 workers.
Today, it is the richest who pay for Ottawa’s ever-increasing interventionism.
1. Consult the World Happiness Report 2024 (in English)
reference: www.lapresse.ca