Political maneuver or really good idea? Canada unveiled new taxes on the richest on Tuesday April 16 during the presentation of its federal budget. This measure should make it possible in particular to finance housing and appeal to younger people affected by the increasing cost of living.
Justin Trudeau's government is forecasting more than 20 billion Canadian dollars in revenue over five years, mainly thanks to this new tax system.
It is also counting on a slowdown in its economy in 2024 but believes it can avoid recession despite relatively high interest rates which are weighing on the economy. Most of the new spending is aimed at the education, housing and jobs sectors, all pressure points for young voters.
With more than 10 points behind his main rival, Conservative leader Pierre Poilievre, in the polls, Liberal Prime Minister Justin Trudeau must regain the support of Canada's youngest voters who propelled him to power in 2015 in order to win the election expected in a little over a year.
“Today, a carpenter or a nurse can pay taxes at a marginally higher percentage than a multimillionaire. It is not fair. This must change, and it will change
,” Budget Minister Chrystia Freeland said on Tuesday.
The latter promised
“fairness for every generation”
.
“For too many young Canadians, especially Millennials and Generation Z, it feels like their hard work isn't paying off
,” she explained.
They do not benefit from the same conditions as their parents and grandparents.”
With the rising cost of living being a major concern for most Canadians, Chrystia Freeland's budget presents a series of new spending to reduce household bills.
Free contraception
The government has also committed, in the context of a housing crisis, to building 3.87 million additional homes by 2031
“at a pace and on a scale not seen since the post-Second World War”
, a declared Chrystia Freeland in Parliament. To do this, Ottawa will open public land for housing, convert federal offices into apartments, and tax vacant properties.
New home prices fell slightly in March, but not enough to offset rising mortgage interest costs that kept many new buyers out. Inflation has been below 3% since January, but for the moment without leading to a reduction in the interest rates set by the Bank of Canada.
The budget also provides funds for a program allowing free contraception, strengthening budgets to fight foreign interference as well as more to counter forest fires. In anticipation of a fire season that promises to be catastrophic, Ottawa is also doubling the tax credit for volunteer firefighters.
Furthermore, economists surveyed by the government have revised upwards forecasts now counting on growth of 0.7% this year compared to 0.5% announced in the November economic report. Chrystia Freeland indicated that the national debt will increase slightly during the 2024-2025 fiscal year to reach a new record of 1.3 trillion Canadian dollars. Canada's debt-to-GDP ratio is expected to fall to 41.9%. As for the deficit, it should be a little lower than expected, at 39.8 billion Canadian dollars, and remain stable before starting to decrease in 2026-2027.