Commentary
The opening lines of the Liberal government’s new budget accurately sum up the situation Canadians are facing:
“A fair chance to build a good middle class life–to do as well as your parents, or better–that’s the promise of Canada. For too many, especially for young Canadians, that promise is at risk.”
A lot of Canadians reading that line, particularly younger ones, would nod in agreement. It’s the line that follows, though, that will have them do a double take.
“We have a plan to fix it,” writes Finance Minister Chrystia Freeland. “We have a plan to build a Canada that works better for you, where you can get ahead, where your hard work pays off, where you can buy a home–where you have a fair chance at a good middle class life.”
It’s true that people feel they can’t get ahead, that their hard work isn’t paying off, and that they can’t afford a home. That’s what Canadians are saying in tearful messages posted to Instagram and Facebook. It’s what the statistics tell us is the daily reality for too many Canadians.
But the idea that Prime Minister Justin Trudeau and his cabinet are the ones to fix it is going to be a tough sell for a lot of Canadians. After all, this is the government that has played a significant role in creating these problems. Are they really the ones best-positioned to fix it?
The economic problems Canadians currently face did not exist when Justin Trudeau first came to office. They do now, though, after almost a decade of Liberal government.
We will be worse off following the Trudeau years. That is a fact.
It’s at least good that the Liberals aren’t denying how difficult things are for Canadians. But, with this budget, they are ignoring their role in it and kidding themselves that they’re the solution.
In the budget document, the Liberals talk about how immigration was ramped up too quickly in too short a period of time, as if they weren’t the ones behind the increase in numbers.
They speak about inflation and how unaffordable housing is, as if they have nothing to do with those problems, instead of acknowledging that it’s something that happened on their watch.
It’s hard to believe that Canadians will buy the notion that Trudeau and Freeland can “fix it.” But this is their desperation budget, where they need to do whatever they can to woo voters back to the Liberal fold at a time when polls show Conservative Leader Pierre Poilievre is heading towards a landslide majority victory.
Their hopes are clearly that between now and the next election their policies and spending initiatives will see the economy improve enough that Canadians view the Liberals in a more favourable light.
Don’t bet on it. For starters, the polling numbers appear pretty set. The voters have really tired of Trudeau after almost 10 years in power and it seems there’s little that can be done to turn it around. But, perhaps more importantly, this tax-and-spend budget could end up making things worse instead of fixing things.
The budget proposes $53 billion in new spending, which leans heavily towards housing-related initiatives. It comes with a $40 billion deficit, which is higher than what was projected in the fall.
This will be paid for in part by increasing taxes. The Liberals propose to raise just under $20 billion by increasing capital gains taxes from the current 50 percent to 66 percent. This will apply to the sale of businesses but also to middle-class individuals who sell their investments, including second homes and cottages.
The opportunity cost to this could prove immense, as entrepreneurs and owners make business decisions based on how to best navigate the new rules. Those decisions could include not hiring, letting employees go, not investing, or expanding outside of Canada.
Tax-and-spend advocates who want robustly funded social programs don’t appreciate that we can’t share the wealth if we don’t first grow the wealth. This capital gains tax rule doesn’t at all help grow the wealth.
It’s rather jarring that Trudeau, while claiming to get the economy back on track, has made one of his signature budget measures a tax change that will likely discourage investment in our struggling economy.
On April 15, former Bank of Canada Governor David Dodge appeared on TV to respond to the rumours that this change was in the works. His words were damning.
“I think this is likely to be the worst budget since [1982], in the sense of pointing us in the wrong direction as to how we go about raising the incomes of Canadians and actually making Canadians feel better over the medium term,” said Dodge, who was governor from 2001 to 2008.
“I think there is a very real possibility that they’ll do exactly the wrong thing and tax the very folks and the very corporations that are going to make the investments that will actually raise income over time,” he added.
The Liberals are claiming that with this budget they’ll fix the problems they caused. But it’s more likely they’re just going to make things even worse.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
