Here’s what you need to know about tomorrow’s budget
The federal government is set to present its 2017 budget tomorrow, an event that may or may not be worth paying attention to, depending on what’s in it for the average Canadian.
Finance Minister Bill Morneau is, for the most part, expected to stick to script, continuing his government’s emphasis on innovation, infrastructure investment, skills training, and the middle class.
Here are a couple of things that we might see (and that you might care about) when the budget is tabled tomorrow:
The Innovation Budget
It is widely expected that the budget will include several directives aimed at boosting the innovative capacity of the Canadian economy. This is an enhancement of last year’s “cluster funding” project, where the federal government dished out $800 million to “high-growth” clusters, but was not specific over what exactly constituted a “cluster.”
According to Bloomberg, this year’s budget will initiate the process to pick these innovation clusters and a competition of sorts will be held in spring or early summer. This could mean a whole lot of money for companies in the tech hubs of Toronto, Montreal, and Waterloo.
Still on the innovation theme, expect to see some sort of directive addressing the talent shortage in Canada’s tech sector. Data from the Information and Communications Technology Council, predicts that by 2020, more than 200,000 positions in the tech sector will be unfilled. In November’s fall economic update, the Liberals promised to fast-track the process of securing work permits and visas for high-skilled individuals looking to work in Canada. That program is set to begin in June 12, so we might see some kind of budgetary breakdown of how much money it’s going to take to actually execute this program.
Are my taxes going to go up or go down?
There are a whole bunch of things in play when it comes to the government’s decision to adjust taxes. First, Canada’s oil sector is still in recession — companies and jobs related to the oil and gas industry have continued to bleed billions of dollars, and that inevitably translates into lower corporate and personal tax revenue for the federal government.
Second, Justin Trudeau’s government seems to have really ramped up spending since taking office. That’s not necessarily a bad thing, though. Strategic fiscal spending on infrastructure and jobs training programs, despite widening the budget deficit, has the potential to really rev up the Canadian economy in the medium term.
This combination of sluggish oil prices and increased government spending has created a necessity for additional revenue. So where’s that money going to come from? Arguably, the pockets of the average Canadian. But the Trudeau government might opt for the more politically strategic way to collect revenue without irritating the middle class by raising their taxes. Finance Minister Bill Morneau has said that the budget will include some kind of tax change, but he declined to specify. According to a pre-budget note from Scotiabank, Morneau might raise capital gains tax — a tax on the additional value gained by the sale of stocks, bonds or property. The choice to focus on capital gains stems from the fact that most lower to middle class Canadians do not invest at the scale or pace that the rich do. Raising the capital gains tax is an indirect way of taxing the rich.
More Affordable Housing
Home prices in Toronto and Vancouver are severely out of control — most Canadians earning a household income of under $200,000 are basically priced out of those two real estate markets. Provinces and municipalities are hoping to see more government money that will go into funding affordable housing, but all Morneau has promised so far is to “help Canadians deal with growing inequality and rising costs.”
There’s a strong chance that Budget 2017 won’t have much to add in terms of housing policy.
Is Budget 2017 going to help me get a full-time job?
Tech is a double-edged sword. The Liberal government is focused on pumping money into the tech sector, but innovative tech companies tend to also be disruptive — not only has the the sharing economy has created an army of part-timers, contractors, and freelancers, it has in some cases, completely wiped out full-time jobs.
Both Scotiabank and RBC are predicting that the budget will likely introduce some initiatives related to broadening workforce participation, specifically training programs for people who have been displaced from their jobs due to accelerated technological changes. As much as the federal government’s plan to fund the tech sector is commendable, it is absolutely crucial for them to pair that with jobs training programs to ensure that people who have had to take up part-time jobs because of disruption, are equipped with the right skills to transition into a new sector.
“I’m confident that my second budget will help Canadians get the skills they need in a challenging economic environment,” Bill Morneau said this week, at the G20 summit in Baden-Baden.
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