OTTAWA—With its largely status quo 2017 budget, the federal government has failed to chart a clear course for taxpayers, entrepreneurs, and businesses and risks making Canada even less competitive.
“This budget decided not to decide until President Trump decides, and that leaves taxpayers, entrepreneurs, and businesses guessing about what Canada’s economic policies will be,” said Charles Lammam, director of fiscal studies at the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“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 is not going to do anything to 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 2017 budget provides no plan to end deficit spending and return to balance. So far the current government is on track to rack up over $140 billion in new debt over six years.
“Deficits and increased debt now increase the likelihood of higher taxes later, and that uncertainty about future taxes impedes investment and entrepreneurship today,” Lammam added.
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.
“The preliminary results of the tax code review are underwhelming. Rather than use the extra revenue to cut tax rates, which would actually foster economic growth, the review means many Canadians will see their tax bill rise instead,” Lammam said.
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. Thus uncertainty continues with respect to these potential tax hikes, which impedes decisions by entrepreneurs and investors.
“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.”
MEDIA CONTACT: Bryn Weese, Media Relations Specialist, Fraser Institute, bryn.weese@fraserinstitute.org
The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 86 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute’s independence, it does not accept grants from governments or contracts for research. Visit fraserinstitute.org.
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