Trump Turmoil Unlikely to Affect Federal Budget
Since Donald Trump became U.S. president, there's been a steady stream of Canadian politicians heading south to meet with the new president. However, that doesn't mean the Trump influence will be felt in the upcoming federal budget, due Mar. 22.
Off the record, Canadian officials told MT that Trump's campaign pledges on issues like border taxes and reducing corporate and personal income taxes may never come to pass, or could be years down the road.
That's why Finance Minister Bill Morneau will likely not be influenced by Trump's proposals, and proceed with the budget plan created before Trump was inaugurated.
Liberals Move to Eliminate Harper-Era Boutique Tax Breaks
The Trudeau government has already started removing a series of relatively minor tax credits introduced by the Harper government, including fitness and arts credits for children. In last year's budget, the Liberals instead introduced an all encompassing Canada Child Benefit plan, applied to all children rather than just those in specific programs.
Other so-called "boutique" tax breaks that could be on the chopping block include the public-transit tax credit, the tradesperson’s tool deduction and a tax credit for volunteer firefighters and search-and-rescue workers.
Will This Be a "Tax Grab" Budget or Will the Liberals Stay the "Middle Class" Course?
Officials in Ottawa have told MT that there will be no significant changes to personal income taxes in this year's federal budget. But that hasn't stopped some experts from speculating that Ottawa will target high income earners in an effort to boost its coffers and reduce the deficit.
One persistent rumour has Ottawa increasing Canada's capital gains inclusion rate up to as high as 75%, compared to the 50% rate now. Such a move could impact both the TSX and the Canadian dollar, said Gluskin Sheff economist David Rosenberg in a note to clients.
Could Feds Provide Tax Breaks to Seniors?
Back in 2015, the Liberals pledged to enhance the Old Age Security and Guaranteed Income Supplement with a new Seniors Price Index. OAS and GIS payments already rise with inflation, but the Liberals noted that, according to a Statistics Canada study, the price of most things seniors buy tends to rise faster, so a new index would help them keep up with the cost of living.
Meanwhile, in its alternative budget, the Canadian Centre for Policy Alternatives suggested indexing OAS to the average industrial wage and salary instead of the CPI to ensure the flat retirement benefit keeps up with earned incomes. The centre also recommended increasing the incomes of the lowest income single seniors by $1,000 by boosting the GIS top-up.