Due to the particularly sharp rise in interest rates for inflation and its impact on the Canadian economy and the increase in federal health transfers, Federal Minister of Finance Chrystia Freeland’s new budget for 2023-2024 will present a clearly greater deficit than expected.
In its latest economic statement, the government’s treasurer, Justin Trudeau, decided to reduce the deficit to 30.6 billion dollars in 2023-2024.
However, the new fiscal year deficit is expected to increase from $15 to $20 billion, or in the $45 to $50 billion range.
Other support measures
Not only will revenues for 2023-2024 drop by several billion dollars compared to the minister Freeland’s fall forecast, but the Trudeau government will also openly announce new financial support measures for low-income families, in addition to the “financial obligations” under its agreement with the New Democratic Party (NDP).
This agreement with NDP leader Jagmeet Singh, it should be noted, allows Justin Trudeau’s minority government to remain in power for the four-year electoral mandate.
The new health deal
In essence, the new 10-year agreement recently concluded with the provinces on federal health transfers will result in additional spending to the federal government of several billions per year, or even about $3 billion in 2023-2024.
In an effort to financially support low-income and modest-income families during this inflationary period, the Trudeau government may make another round of GST credit payments.
Last fall, he added an additional $2.5 billion through a special GST payment credit to some 11 million Canadians.
This increase in payment could reach $234 for one person (without children) or $306 in the case of two (without children). For one child, the credit jumped to $387; with two children it was $467; with three at $548; and fours $ 288
Another measure is likely to be offered again to the least affluent in society: supplementing the Canada Housing Benefit. Aimed at families with a net income of less than $35,000 and individuals earning less than $20,000, this tax-free supplement of $500 reached 1.8 million low-income renters.
Extended dental benefit?
As part of his new budget, Minister Freeland is undoubtedly “compelled” to expand the pool of beneficiaries of the new Canadian dental benefit. Currently covering children under 12, many observers expect the benefit to soon cover those under 18 and the elderly.
The Sword of Damocles still looms over the Trudeau NDP government, eager to see if the new budget will allocate concrete sums to drug enforcement. The Parliamentary Budget Officer estimates the potential cost of this insurance Canada-wide at some $11 billion per year.
Given the rising cost of living, the Trudeau government will probably not dare to raise taxes in 2023-2024.
