Government of Canada announces budget
Canada’s Finance Minister Chrystia Freeland recently unveiled the Canadian Government’s new budget, projecting a deficit around $10 billion higher than initially expected. The budget includes a range of measures aimed at supporting low-income Canadians, students, and clean energy initiatives, along with targeted spending cuts over the next five years.
Included in the budget:
A one-time grocery rebate
The budget includes a one-time grocery rebate for low- and modest-income Canadians. Eligible couples with two children will receive up to $467 as a grocery rebate, while single Canadians with no children will receive up to $234 and seniors could receive $225. The rebate will be delivered through the same mechanism as the Goods and Services Tax Credit.
Targeted spending cuts
The government plans to cut $15.4 billion in spending over the next five years through targeted reductions. Among the planned reductions are more limited use of “professional services” and a reduction in travel expenses.
Increased Canada Student Grants
A 40 per cent increase to Canada Student Grants has been included in the budget to decrease the amount that students owe. Additionally, the Canada Student Loan limit is being increased from $210 to $300 weekly.
Expanded dental care plan
The budget outlines a $13-billion plan to expand dental care for families earning less than $90,000 a year. An estimated 9 million uninsured Canadians will qualify for coverage once the program is fully implemented in 2025. Families with an income of less than $70,000 will not have a co-pay.
Clean energy tax credits
The budget includes a new 15% refundable tax credit for clean electricity investments and a refundable 30% tax credit for investments in clean tech manufacturing.
Tax on share buybacks
Freeland introduced a new 2% tax on stock buybacks, hoping to encourage Canadian companies to spend their money investing their business and growing the economy, rather than increasing their profits. The government estimates the new tax will increase federal revenue by $2.1 billion over five years.
Relief from credit card charges
The government said it would work with credit card companies to lower transaction fees for small businesses. Some small businesses may also get free access to online resources related to fraud and cybersecurity.
Additional measures include a plan to amend the Criminal Code to cap the amount of interest that can legally be charged at 35%. The government has also said it would strengthen air passenger rights in response to high levels of traveller frustration during the summer and winter of 2022.