Prime Minister Justin Trudeau has vowed to increase tax-revenue and ramp up spending, as part of what is turning out to be a tight race for re-election.
According to a document released by the Liberals on Wednesday, Trudeau has laid out nearly 100 new spending projects affixed with a combined price tag of $78 billion over a duration of five years. His platform plans to invest in a variety of efforts, including climate change, arts and culture, as well as restoring employment to above pre-pandemic levels.
Moreover, the Liberal party also provided additional context about its housing strategy, which targets making 1.4 million new and refurbished homes available to Canadians. Trudeau also promised to ban international property investors from purchasing homes for two years, as well as propose an anti-flipping tax that would force homebuyers to own the house for at least one year before they can resell it.
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In order to pay for the new spending plans, the Liberals propose new forms of tax revenue, such as boosting the corporate tax rate from 15% to 18% on banks’ profits exceeding $1 billion, in addition to raising the minimum tax on those making above $214,368 to 15%. When combined, the tax revenue measures are expected to create approximately $25.5 billion over a span of five years.
The new fiscal policy plans came just as Statistics Canada showed that the economy contracted 1.1% in the second quarter from one year ago, which will likely lead to criticism of the Liberals’ leadership throughout the pandemic. With the new spending initiatives in mind, Trudeau is forecasting a budget deficit of $336 billion over the next five years, just above the shortfall previously projected by the Liberals in their April budget. However, the projected budget deficit is significantly larger than the $266 billion baseline forecast by the Parliamentary Budget Office.
Information for this briefing was found via Bloomberg and Statistics Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
