The federal government promised billions more in deficit spending in their 2019-20 budget, the last budget of Justin Trudeau’s current term in office.
The budget contains a projected deficit of $19.8 billion, improving to a deficit of $9.8 billion in 2022-23.
The federal government notes, however, that Canada still maintains the lowest debt-to-GDP ratio in the G7. The budget predicts a modest GDP growth of 1.9 per cent, the second highest in the G7, sitting just behind the projected GDP growth of the United States.
The spending includes increases in support for Canada’s Indigenous peoples, the first steps towards a national pharmacare plan, new incentives for first-time homebuyers and billions in spending on a promise to deliver high-speed internet with speeds of 50 megabits per second download and 10 megabits per second upload to 100 per cent of homes and businesses by 2030.
In the opening pages of the budget document, the federal government defended its decision to increase spending.
“The alternative — making aggressive cuts to the services Canadians rely on to eliminate the deficit faster — will not help the economy, and will not help Canadians,” the government wrote.
“Canadians understand that a country cannot cut its way to prosperity.”
The conservatives, however, decried the increased spending, calling it a “$41-billion cover-up.
“Mr. Trudeau’s plan is obvious,” he said. “Massive deficits to distract Canadians from his corruption before the election. Massive tax hikes to pay for them after the election.”
The federal government has denied it plans to hike taxes further. No plans for increased taxes, aside from already-announced measures such as the carbon tax, were included in the budget document.
The budget did promise to crack down on the use of stock options by employees in large, established firms to avoid income taxes.
Those options will now be capped at $200,000, aligning the Canadian treatment of tock options with that of the US. Employees at start-ups and rapidly-growing businesses would not be subjected to the limit.
Erin Weir, the MP for Regina-Lewvan who was elected under the NDP banner, said closing that stock option tax loophole could be lucrative for the Liberals.
“Budget 2019 includes some welcome investments in the middle class while keeping Trudeau’s powder dry for Election 2019,” he wrote.
“The budget provides about $4 billion annually of new spending paid for with revenues slightly above, existing expenditures slightly below, and debt-servicing costs slightly below previous projections. This accounting balance allows the government to unveil some new initiatives without changing its underlying deficit projections.”