Justin Trudeau’s Liberal government will table its budget Thursday in Ottawa. What can we expect from the next federal fiscal year, which will be unveiled at the end of the day? Here are a few things to watch out for.
1. The influence of the New Democratic Party
The New Democratic Party (NDP) recently pledged to support the Liberal Party — and thus keep it in power in a minority context — in exchange for progressive policies.
As stipulated in the agreement between Prime Minister Justin Trudeau and New Democrat Leader Jagmeet Singh signed in March, the NDP is strongly committed to ensuring that the new budget contains the first steps of national drug and health care plans. dental. The budget could also provide for a one-time $500 supplement to the Canada Housing Assistance Benefit, which could be renewed in future years if cost-of-living issues persist, depending on the agreement between the two parties.
This budgetary exercise will be like a balancing act for the Minister of Finance, Chrystia Freeland, who will have to meet the demands of the New Democratic Party (NDP), without alienating her troops, who plead for financial rigor at the end of the pandemic. Liberal MP interviewed at Law even called for a “prudent” budget.
2. Room for maneuver
To cushion the cost of some new programs, the Liberals could benefit from some breathing room, as the economy rebounds faster than expected and rising oil prices and inflation are expected to boost the government’s bottom line . In its last budgets, the Trudeau government has rarely made restoring balance a priority. It remains to be seen if he will take advantage of having the wind in his sails to achieve it this time around.
According to Canada’s latest economic update tabled last December, the federal deficit stood at nearly C$145 billion for the fiscal year just ending, and could drop to around C$60 billion this year.
3. Military expenditure
Ottawa is also expected to increase its military spending in this new budget, without necessarily meeting the North Atlantic Treaty Organization (NATO) target that member countries of the alliance devote at least 2% of their GDP to defence. The investments should nevertheless be “major”, according to liberal sources. According to CBC NewsOttawa could inject up to $8 billion in new money into the Department of National Defense to improve North American military capability.
Currently, Canada spends about 1.36% of its GDP on military spending, according to the latest NATO data. That’s well below the level of the United States, which spent 3.57% of its GDP on defense in 2021 — or more than US$811 billion. By comparison, Canada spent about US$27 billion that year, again according to NATO.
4. Big Bank Profit Tax
The federal government could also raise the corporate tax rate for the country’s largest banks and insurance companies on annual profits above C$1 billion — a promise made by the Liberal Party during the 2021, and reiterated last month in the agreement with the NDP.
As part of the agreement, Prime Minister Justin Trudeau has indicated that he will move forward “in the short term with respect to tax changes on financial institutions that have made big profits during the pandemic” .
The Liberals estimate that this tax measure would bring about $1.2 billion a year into the state coffers.
With The Canadian Press