![]() ![]() However, the growth dividends that the Government expects to generate through these investments are not built into their projections. There are smaller investments in immigration systems and in a center to promote liberalization of interprovincial trade that would also contribute. The big-ticket item contributing to future growth is a national daycare program, patterned off of the Quebec system, which is expected to lead to higher labor force participation. The thrust of the Budget is to put the pandemic behind us, which does require additional fiscal support, and then focus on investing for future growth. As a result, the ratio of federal debt to the economy peaks at 51%, remains there for three years, and then eases to 49% by 2025-26. The fiscal year just ending is estimated to yield a shortfall of $354 billion, and this is projected to fall very quickly, to $155 billion next year and then to $60 billion. This adjustment created about $50 billion in new flexibility for the Government to work with in the first two years, and because the level of national income is higher than expected for the entire scenario there is more revenue than expected every year. These assumptions come from a survey of economists, not from the government.įiscal deficits have been lowered in this Budget because the economy recovered more strongly during the second half of 2020 than factored in previously. Oil prices remain steady at around $60 (WTI) and the Canadian dollar inches higher to around 81 cents US. Short term interest rates make their way very slowly back to around 1.5% in 2025, 10-year yields return to about 2.7% in the same time frame. Inflation surges to 3.3% this year, making up for less than 1% inflation in 2020, and then settles at around 2% from then on. The economic assumptions are not controversial – after a big recovery in 2021 with 5.8% growth, followed by 4% in 2022, the economy settles into a sub-2% trend growth rate. From a macroeconomic standpoint, however, the Budget represents a relatively modest adjustment to previous plans. There are many moving parts in this Budget, so much so that it takes fully 724 pages to lay out all the facts, the projections, and the Government’s initiatives. Report from Osler Special Advisor Stephen Poloz, former Governor of the Bank of Canada Increased funds for improving tax compliance and client service.Electronic Filing and Certification of Tax and Information Returns.Rebate of Excise Tax for Goods Purchased by Provinces.Input Tax Credit Information Requirements.Taxes Applicable to Registered Investments.Fixing Contribution Errors in Defined Contribution Pension Plans.Proposed Tax on Unproductive Use of Canadian Housing by Foreign Non-resident Owners.Rate Reduction for Zero Emissions Technology Manufacturers.Capital Cost Allowance for Clean Energy Equipment.Immediate Expensing – Temporary 100% CCA deduction for CCPCs.Broadening audit power to compel oral responses. ![]()
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