Federal Budget 2017 projects $28.5 billion deficit
With its largely status quo 2017 budget, the federal government has essentially decided not to decide until President Trump decides. And that leaves taxpayers, entrepreneurs and businesses guessing about what Canada’s economic policies will be.
With the Trump administration and Congress in the process of negotiating potentially large tax changes south of the border, this sit-on-our-hands approach by Ottawa won’t improve our competitiveness or provide any certainty about the future.
Following last year’s $23 billion deficit, this budget projects a $28.5 billion deficit for 2017/18.
What’s more, the budget provides no plan to end deficit spending and return to balance. So far the current government is on track to rack up more than $140 billion in new debt over six years.
Again, deficits and increased debt now increase the likelihood of higher taxes later, and that uncertainty about future taxes impedes investment and entrepreneurship today.
The federal government also revealed initial results of its review of the tax code, which will ultimately result in nearly $5 billion in additional tax revenue for the government over the next five years. Rather than use the extra revenue to cut tax rates, which would actually foster economic growth, the review means many Canadians will actually see their tax bill rise.
Critically, the budget does not provide a definitive answer on whether some of the rumoured tax hikes, particularly with respect to capital gains, will or will not materialize in the coming year. This uncertainty impedes decisions by entrepreneurs and investors.
Simply put, with this status quo budget, Ottawa has failed to chart a clear course forward and entrepreneurs and business investors will continue to sit on the sidelines—or worse, take their investment elsewhere where there’s more certainty regarding economic policy.
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