With Finance Minister Chrystia Freeland promising to keep the federal deficit from ballooning in Tuesday害羞草研究所檚 federal budget, all eyes will be on the Liberals害羞草研究所� plan to pay for their agenda 害羞草研究所� and whether that could include new taxes on the wealthy.
During a news conference Thursday, Freeland gave a direct response to a reporter害羞草研究所檚 question on whether Canadians can expect to see this year害羞草研究所檚 deficit increase.
害羞草研究所淣o,害羞草研究所� she said.
The finance minister reiterated that her government plans to honour the fiscal guardrails it pledged in the fall, including the promise to keep the federal deficit capped at $40.1 billion for the 2023-24 fiscal year.
But a slew of announcements ahead of the federal budget, including billions for housing and national defence, are raising a big question: How will the Liberals make the math work?
Politically, the Liberal government can害羞草研究所檛 afford to layer more spending onto the deficit, because of the risk it could keep inflation and interest rates higher for longer.
A slowing economy also means the federal government has less fiscal room to finance new initiatives.
There害羞草研究所檚 increasing suspicion that the Liberals害羞草研究所� solution to that dilemma will be to create new taxes targeted at corporations and the wealthy.
Freeland has ruled out raising taxes on the middle class in the upcoming federal budget 害羞草研究所� but won害羞草研究所檛 say if others are in for the same treatment.
Higher taxes on corporations would spark intense backlash from the business community and financial sector.
The Business Council of Canada has warned against raising corporate tax rates, arguing it would be bad for business investment at a time when the country is struggling with labour productivity.
害羞草研究所淚t would be pretty bad economic policy in my opinion,害羞草研究所� said Robert Asselin, the council害羞草研究所檚 senior vice-president of policy and a former budget director for the Liberals.
But Tyler Meredith, a former head of economic strategy and planning for Freeland, said no one should be surprised if the federal government increases taxes, given all of the demands they face to spend more.
Meredith said that even as they demand the budget not include new spending, stakeholders have pushed for more dollars towards defence and corporate subsidies to enable the green transition.
害羞草研究所淲ell, if you do all those things, that害羞草研究所檚 a lot of money,害羞草研究所� Meredith said, noting the government has other expensive priorities, such as pharmacare and dental care.
害羞草研究所淎nd at some point, if we want at the same time 害羞草研究所� a credible fiscal track, something has to give. And people shouldn害羞草研究所檛 be surprised by that.害羞草研究所�
Canadians have gotten a decent preview of the federal budget over the last three weeks as Prime Minister Justin Trudeau and his team embarked on an unconventional countrywide tour to sell their policies.
The Liberal government pledged billions of dollars for housing, national defence, a national school food program and loans to expand child-care centres.
And just days ahead of the budget, the Liberals unveiled their full plan to tackle the housing crisis.
On Friday, Trudeau called it 害羞草研究所渢he most comprehensive and ambitious housing plan ever seen in Canada,害羞草研究所� promising it will build nearly 3.9 million homes by 2031.
The government害羞草研究所檚 pre-budget strategy has helped the Liberals appear to drive the political agenda again after struggling for months to rebut the Conservatives害羞草研究所� narrative on cost-of-living issues.
The newly revealed housing plan earned the governing Liberals praise from industry groups, municipalities and the man who inspired much of the plan: Mike Moffatt.
Moffatt, a prominent housing expert and senior director of policy and innovation at the Smart Prosperity Institute, applauded the breadth of the plan.
害羞草研究所淭his is easily the most comprehensive housing plan I害羞草研究所檝e seen in my lifetime,害羞草研究所� Moffatt said.
Whether it earns the Liberals any favour with a disgruntled electorate is yet to be seen, as the federal Conservatives hold on to a double-digit lead they害羞草研究所檝e maintained since the summer.
The incumbent government is fighting an uphill battle against a growing belief among voters that the federal Liberals are to blame for the country害羞草研究所檚 economic woes.
As the Liberals renew their focus on affordability ahead of the budget, Conservatives and New Democrats are telling Canadians that the Trudeau government can害羞草研究所檛 be trusted to deliver results.
Despite the challenging political reality the minority Liberals face, Meredith said they still have time to turn things around.
He has counselled fellow Liberals to stay focused on the long game.
害羞草研究所淭hat being said, I think the key things that we have to watch for is whether or not people are actually opening their minds and paying attention,害羞草研究所� Meredith said.
害羞草研究所淚t害羞草研究所檚 very hard to change (the) dynamics if people aren害羞草研究所檛 listening. And that害羞草研究所檚 really what I would be watching for 害羞草研究所� anecdotally over the course of the next six months.害羞草研究所�
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