There is a new tax on big bank profits.
The 2022-23 budget was tabled in the House of Commons on Thursday.
The photo was taken by Blair Gable.
13 financial institutions and research outfits forecast the federal government's economic outlook. The unemployment rate is expected to be around 5 per cent over the next two years, which would be historically low. If the war in Ukraine gets worse, and if Russia pulls back, Finance created a scenario analysis of what might happen. A better-than-expected outcome would see growth of four per cent next year, while the former would result in growth of just 0.4 per cent.
Over the next five years, the combination of inflation and stronger corporate profits will leave Finance Minister Freeland with about $41 billion in unexpected revenue. She didn't want to spend all of it. The budget predicts that the deficit will be $114 billion in the fiscal year that ended on March 31, and will be down to $53 billion this year.
Freeland's fiscal anchor is a promise to keep debt as a percentage of GDP on a downward track. Her outlook probably doesn't achieve that commitment as forcefully as some of her critics would like. The debt is more than 50 per cent of GDP. Over the next five years, it is predicted to decline to 41.5 per cent of GDP. In five years, the debt is projected to rise to more than $1 trillion, but the government is counting on a growing economy to keep it under control.
Liberals have a $53 billion budget deficit and have scaled back campaign promises.
Canada's housing crisis has been targeted with a $10 billion, three-pronged strategy that includes cracking down on speculators, aid for first-time homebuyers, and programs to increase supply.
Foreign companies and non-Canadians would not be allowed to buy non-recreational residential property in Canada for two years. There are new rules to discourage property flipping in the budget.
A new Tax-Free First Home Savings Account would allow first-time homebuyers to save up to $40,000. Contributions would be tax-deductible, but withdrawals would be tax-free. The budget proposes to double the tax credit for first-time home buyers.
The Canada Mortgage and Housing Corp. would get $4 billion from the Trudeau government over the next five years. 100,000 new homes would be created over the next five years according to the budget.
Trudeau promises support for young Canadians in the federal budget.
The budget would impose a 15-per-cent tax on income over $1 billion of Canada's biggest banks and insurers. The financial institutions would be hit with a permanent 1.5 percentage point increase in the corporate income tax rate.
Big banks and insurers have to pay a one-time 15% tax on income over $1 billion.
Carbon-capture technology is being bet on by the government. Companies that invest in equipment that pulls carbon out of the air and stores can apply for tax credits of 35 per cent, 50 per cent, and 60 per cent, depending on the type of gear purchased. The budget estimates that the credits will cost over $2 billion a year for the first five years. In 2031, the credits will be cut in half, and the government included an incentive to companies to move now.
Trudeau proposes tax credit to cover 50% of carbon capture technology cost.
Canada and its allies seem to be committed to ending their dependence on autocratic nations. The new budget proposes allocating $3.8 billion between now and 2030. The infrastructure needed to support the development of the critical minerals deposits and supply chains that will be required to get those minerals to factories for processing has been set aside.
Ontario risks losing its crown as cheap, green power gives Quebec the edge.
The Canadian government is looking at ways to boost innovation and drive company growth. $1 billion will be invested over five years to support the initial operations of the federal innovation and investment agency.
A wake-up call for startup funding in Canada.
Private sector investment will be encouraged to help meet national economic policy goals including emissions reduction, economic diversification, and restructuring of critical supply lines. The Canada Growth Fund wants to match every dollar with $3 from private sector investment.
If BlackBerry sells its patents, the first place to go is the Canadian capital.
The capital threshold for the 9% small business tax rate would be raised to $50 million before the 15% tax rate kicks in. The government says this will allow more medium-sized businesses to save $660 million in tax over the next five years.
If the COVID-19 crisis really is unprecedented, using the old debt playbook isn't good enough.
The budget would create the Employee Ownership Trust to support employee ownership.
According to exclusive CRA data, there is a surge in new businesses, but culture change is still needed to succeed.
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