Federal budget opportunities will result in higher tax rates
Canadians will pay out of pocket for health care and child care.
Canada's federal budget deficit, like that of many other countries, has developed rapidly since the COVID-19 pandemic began. Nor is the state of provincial budgets far behind. All because of the need to cope with health emergencies and to use taxpayers' money to support the country's economy.
For 2020-2021, the deficit is $354 billion CAD. The plan is to halve that figure by 2022, but is that possible given the ambitious goals of Christie Freeland's recently unveiled financial plan?
Ottawa's 2021 budget includes a host of new measures, from a national child care system to updates to the outdated employment insurance program and increases in old-age benefits. They go far beyond temporary increases in federal spending to support the country.
For now, the Canadian government is only announcing a tax increase on luxury cars, yachts and private jets, and ordinary residents should sleep well. However, economists do not believe that such an increase will play a big role in the federal government's balance sheet.
The only way out is to increase the Goods and Services Sales Tax (GST), a step that cannot be resolved. Since 2008, the rate of this tax is 5% and its increase could effectively solve the problem of budget deficit.
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