Deputy Prime Minister and Minister of Finance Chrystia Freeland, who proposed $52.9 billion in new spending as part of the plan, predicted a deficit for the next five years as expenses rise.
She reiterated measures announced over the past few weeks to spend on a number of programs ranging from housing and national defence to child care and artificial intelligence.
Upon tabling the budget in the House of Commons, Ms. Freeland said her government is acting to ensure “fairness for every generation.”
“We are driving the kind of economic growth that will ensure every generation of Canadians can reach their full potential,” she told members of Parliament. “And we are making Canada’s tax system more fair by ensuring that the very wealthiest pay their fair share.”
Increased Taxes
The Liberal government is targeting the richest 0.13 percent of Canadians with higher taxes on their capital gains.
Increasing the taxable portion of capital gains above $250,000 to two-thirds from one half is expected to generate $20 billion in government revenues over the next five years.
“I know there will be many voices raised in protest. No one likes paying more tax, even—or perhaps particularly—those who can afford it the most,” Ms. Freeland said. “But before they complain too bitterly, I would like Canada’s 1 percent—Canada’s 0.1 percent—to consider this: What kind of Canada do you want to live in?”
The Liberals will also increase excise taxes on tobacco and vaping products, with an increase of $4 per carton of cigarettes and 12 percent on vape supplies. The government expects an increase in revenue of about $1.7 billion over five years from these tax hikes.
The government says the increased taxes will help shrink the projected deficit to $39.8 billion in the fiscal year that began on April 1 from $40.0 billion in the fiscal year that just ended. Ms. Freeland, who plans some $535 billion in total expenses this year, forecast that the budget shortfall will narrow to $20 billion in 5 years.
The government plans to borrow $508 billion this year, 83 percent of which will go to refinancing part of Canada’s $1.4 trillion in debt.
Among the fastest-rising expenses is paying for the ballooning debt. Borrowing charges will jump by 15 percent to $54.1 billion this year from last year.
The Liberal spending plan must be voted on by the House of Commons for its adoption.
NDP Leader Jagmeet Singh, whose party continues to back the Liberals to keep them in power, declined to say whether he will support the budget. The Liberal government has already introduced legislation to meet the New Democrats’ key demands for maintaining their supply-and-confidence agreement, including national dental care and pharmacare programs.
Expenditures
The government, which says it will build 3.9 million new homes by 2031, announced a number of initiatives toward accomplishing that target. It will raise the capital cost allowance rate for apartments to 10 percent from four, resulting in greater tax write-offs for builders, extend the mortgage amortization period to 30 years for first-time homebuyers of new build, make Canada Post and National Defence properties available for home construction, and allocate $250 million to address encampments and shelter shortages for the homeless.The budget also targets $48 million over four years and $15.8 million thereafter to forgiving student loans of early childhood educators. Another $253.8 over four years and $84.3 million a year thereafter will go toward forgiving student loans for students in the fields of health and education.
The government is also earmarking $52 million over five years for its controversial proposed Online Harms Act. Other figures in the millions of dollars are being allocated for initiatives to combat “hate,” including $276 million over six years for community outreach, $32 million over six years and $11 million a year thereafter for physical security for community and religious hubs, and $7.3 million over six years for special envoys to combat anti-Semitism and Islamophobia.
The budget is providing more than $900 million over six years for home energy efficiency programs, and $15 million to the Canada Mortgage and Housing Corp. to create a national flood insurance program by 2025. Tax credits are also being offered for electric vehicle production and renewable energy-related expenditures.
The new pharmacare program will cost $1.5 billion over five years supplying free contraceptives and diabetes medication. Another $150 million over three years will help municipalities and indigenous communities deal with the opioid crisis, while $6.1 billion over six years and $1.4 billion a year thereafter are set for Canada Disability Benefit and related costs. The government is also setting up a $500 million fund to provide more mental health care to young people, and $630 million toward mental health services for indigenous people.
The government is also allocating $5 billion in loan guarantees for resource projects for indigenous communities and spending $1.2 billion on education and infrastructure on First Nations reserves, as well as $918 million for indigenous housing and infrastructure.
Military spending will be boosted to 1.76 percent of GDP by 2030, still short of the 2 percent required by NATO. This includes $8.1 billion over the next five years in defence expenditures and $73 billion over the next 20 years.
For Ukraine, the government is earmarking $1.6 billion in military aid over five years.
The budget is also designating $50 million over two years to recognize foreign credentials of those in construction and health care, and another $77.1 million to integrate internationally educated health care professionals.
Another $1.1 billion over three years is being spent on housing assistance for asylum claimants, while $272 million is budgeted over five years for immigration and refugee legal aid.
The government is budgeting $2.4 billion on artificial intelligence development and $1 billion for a national school food program. Another $1 billion will go toward low-cost loans and grants to expand child-care centres.
