A deficit is still on the horizon. Finance Minister Chrystia Freeland predicts it will hit $40 billion this year and gradually decline to $14 billion in five years. No return to balanced budgets is expected. Government spending, which exceeds $490 billion in 2023-24, will continue to increase year on year. The deficit this year is expected to be 1.4% of real gross domestic product (GDP), adjusted for inflation, and the federal debt 43.5% of GDP. Despite the economic uncertainty, Ottawa expects these two indicators, which measure the health of public finances, to improve.
The government will continue to double the GST tax credit, as demanded by New Democrats. The $2.5 billion measure is billed as “a new grocery rebate,” though it’s not entirely new. It aims to give some respite to people whose incomes are low or modest while the inflation rate of the grocery bill remains above 10%. Eligible people will therefore be able to receive a single amount of up to $467 for couples with two children, up to $234 for single people and $225 on average for seniors.
Government expects electricity demand to double by 2050. Budget provides $6.3 billion over four years starting in 2024-25 to fund a 15% refundable tax credit for clean electricity generation . This incentive, which is inspired by the Inflation Reduction Act passed by the Biden administration in the United States, aims to stimulate the production of electricity without greenhouse gas emissions. Crown corporations, such as Hydro-Québec, will be entitled to it as much as the private sector. The aim is to send a clear and predictable signal to the market, argued a senior government official.
The federal dental care program turns out to be more expensive than expected. The government is planning 13 billion over five years, almost double what it budgeted last year for its implementation. It will be accessible to anyone whose family income is less than $90,000 annually. Details will be announced later this year. This is one of the key measures of the agreement reached between the Liberals and the New Democrats to allow the minority government of Justin Trudeau to remain in power until 2025. No money is provided for the drug insurance, another key New Democratic Party (NDP) demand.
The budget provides $4 billion over seven years to develop a housing strategy for Indigenous people living off reserve in urban, rural or northern settings. The money will be disbursed to the organizations that help them through the Canada Mortgage and Housing Corporation starting in 2024-2025. The government provides 300 million in the first year and 500 million in subsequent years. Only 1.9 billion is budgeted until 2027-2028.
The government is modifying the application of the alternative minimum tax (AMT) to prevent the wealthiest from reducing their tax bill as much as possible thanks to all kinds of deductions. He hopes to raise revenues of 3 billion over five years by raising this minimum tax from 15 to 20.5%. It also changes the income bracket to which AMT would apply, from $40,000 to $173,000 per year. The government wants the wealthiest to pay their fair share of taxes while allowing middle-class individuals to loosen their belts.
The Canadian government will continue to support Ukraine in 2023 with an additional $2.4 billion loan administered through the International Monetary Fund. No new military aid is planned to counter the Russian invasion beyond the 200 million already planned for 2022-2023. An envelope of 84.8 million is planned in 2023-2024 for humanitarian aid. This is not new money, but a reallocation of funds already allocated to the Department of Global Affairs. The government is also planning an additional $171.4 million over three to extend the recently announced temporary immigration program for Ukrainians.
What do you think of this federal budget tabled by Chrystia Freeland?
