In the face of Mr. Trump’s focus on tax cuts, it may also explain why a tax hike for Canada’s top one per cent was missing in Wednesday’s plans.
While the budget did not contain any measures aimed at cooling Canada’s hot housing market, Morneau promised additional money to gather housing data, seen as a possible first step to reining in foreign investment or speculation that observers say has created a bubble in Toronto, Canada’s largest city.
Budget 2017 announces an $11 billion national housing strategy – $1 billion a year over 11 years to try “to build, renew and fix Canada’s stock of affordable housing”.
Ottawa is hoping the plan will help lift the country’s growth trajectory.
The budget also announced the Liberal government’s intention to “advance reconciliation with Indigenous Peoples” though this reconciliation has often consisted of funneling more money into a reserve system that native leaders themselves admit is broken.
“CanWEA applauds the Federal Government’s commitment to continue its transition to a low-carbon economy and its recognition that doing so will provide significant economic benefits to Canada”.
This budget provides almost an additional $400 million for youth employment, which will help almost 50,000 youth develop new skills, obtain work in green jobs, and attain new jobs in the heritage sector. And Morneau set aside $125 million to launch a Pan-Canadian Artificial Intelligence Strategy with the expectation that this strategy will spur innovation.
“They recognize very clearly how well we’ve worked together with our allies”, Morneau said of a recent meeting with U.S. Defence Secretary James Mattis and Secretary of Homeland Security John Kelly. “This is a good start”, Tootoo said.
“Call it seed money for investing”.
The Liberals are also eliminating the 15 per cent tax credit for commuters who buy a transit pass, a move that will save the government $150 million but will be a significant hit for lower income Canadians, said Myron Knodel, director of tax and estate planning at Investors Group, .
The credit was introduced to encourage people to use public transit, thus reducing greenhouse gases, but the government says it hasn’t worked.
MORE: Did the budget walk the walk on the Liberals’ innovation talk?
Numerous spending announcements in this budget are actually being taken out of funds that were already committed in last year’s budget.
Although Trudeau’s Liberal government a year ago promised to keep cutting the debt-to-GDP ratio, the budget shows the ratio will increase slightly.
The ratio – a measure of the public debt burden – is now projected to only drop below 2016-17 levels in 2020-21.
Bringing back the cushion widened the projected deficit in 2017-2018 to C$28.5 billion from C$27.8 billion forecast in November, almost three times the C$10 billion annual deficit targeted by the Liberals during their 2015 election campaign.
The document was entitled “Building a Strong Middle Class” but it also continued to build government debt.
Morneau ducked and weaved when asked Wednesday about the lack of a road map to return to a balanced budget. Government will designate the Canada Deposit Insurance Corporation as the authority responsible for the country’s bank resolution regime and require the banks to develop and submit their resolution plans. “You have to spend in the billion-dollar range, and we are definitely not there”.
The Liberals won the 2015 election on a platform that vowed to invest billions in measures like infrastructure and child benefits as a way to re-energize Canadian growth, and to finance the plan with annual deficits of no more than $10 billion.