May 20th, 2024

$535B budget projects $39.8B deficit, aims to restore economic fairness

By Mia Rabson, The Canadian Press on April 16, 2024.

Finance Minister Chrystia Freeland arrives for a cabinet meeting on Parliament Hill in Ottawa prior to introducing the federal budget on Tuesday, April 16, 2024. THE CANADIAN PRESS/Sean Kilpatrick

OTTAWA – The 2024 federal budget will provide “generational fairness” to younger Canadians by raising taxes on those who have already capitalized on Canada’s economic strengths, Finance Minister Chrystia Freeland said Tuesday as she tabled the document in the House of Commons.

The budget comes as the Liberals have watched their once-healthy voting base among young people evaporate in favour of the Conservatives, largely as younger Canadians feel like the economic decks are stacked against them.

Freeland denied Tuesday that her latest budget is mainly a political exercise – but nonetheless acknowledged that for anyone under 40 in Canada, it’s “just harder to establish yourself” than it was for the generations that came before.

“It really isn’t fair what they are struggling with right now,” Freeland told a news conference earlier in the day prior to her budget speech in the House.

To try to fix that problem, the budget is promising $8.5 billion in new spending over the next five years to build millions of new homes and nearly $2.6 billion to enhance student aid and grant programs and open up new job opportunities.

“We are acting today to ensure fairness for every generation,” Freeland said.

Overall the budget projected spending will rise to $535 billion in 2024-25, compared with $497.5 billion in 2023-24. The deficit is projected at $39.8 billion, compared with $40 billion last year.

There is $11.5 billion in new spending this year and $53 billion over the next five years.

Freeland said she is maintaining the fiscal anchors she set for the government, keeping the deficit below $40 billion and to less than one per cent of GDP starting in 2026-27.

She is paying for some of that with better-than-expected economic growth, but also with targeted changes to the capital gains tax which is to raise more than $19 billion over the next five years.

Currently Canadians only pay taxes on 50 per cent of the money they make from capital gains, which refers mainly to profits made from selling an asset like a stock.

Freeland is adjusting that to 66 per cent for all capital gains made by corporations and trusts, and for those that exceed $250,000 for individuals.

She said the change should affect 0.13 per cent of Canadians who have an average annual income of $1.4 million.

Freeland said she believes all Canadians want young people to succeed.

This report by The Canadian Press was first published April 16, 2024.

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