A Responsible Fiscal Plan

Table of Contents

What We Believe In

Four years ago, we were clear with Canadians about the things we believe in. That hasn’t changed.

We know that a country can’t cut its way to prosperity. Cuts don’t help people. Austerity doesn’t grow the economy. And putting the interests of wealthy people ahead of the middle class is not how you keep a country like Canada moving forward.

>We Believe That A Strong Economy Starts With A Strong Middle Class.

That’s why one of the first things we did as a government was raise taxes on the wealthiest one percent, so that we could cut taxes for the middle class. And it’s why, in our very first budget, we introduced the Canada Child Benefit – to help families with the high cost of raising their kids.

We Believe In Investing In People And In Our Communities.

Not only because it makes good economic sense, but because it’s the right thing to do. Our investments in young people and families are helping to make life more affordable, and giving more of our kids a good start in life.

Our investments in seniors are helping more people have a secure and dignified retirement. And our historic investments in infrastructure are helping to build communities that are better places to live today, and better prepared for a changing climate tomorrow.

We Believe That Everyone Deserves A Real And Fair Chance At Success.

In 2015, after years of austerity and cuts, the economy was slowing down – and people were feeling it. Especially those whose real needs didn’t line up with aggressive plans to eliminate the deficit, like people living in poverty, Indigenous Peoples, women, young people, racialized people, people living with disabilities, members of the LGBTQ2 communities, and our most vulnerable seniors.

Because we believe that everyone deserves a real and fair chance at success, we took a different approach, investing in people with a plan that is targeted, measured, and fiscally responsible.

What we’ve delivered

This plan to invest in people – combined with Canadians’ hard work – helped to move our economy forward.

Canadians created more than one million new jobs in just four years. Stronger wage growth is helping more Canadians get ahead, but further progress is needed. With an economy that is strong and growing, and with steadily declining debt relative to the size of our economy, Canada now has the best balance sheet in the G7. And together, we’ve helped to lift 900,000 people out of poverty.

At the same time, we know that we need to be prepared for whatever challenges come our way. In 2019, there are events taking place around the world that are creating a real sense of global economic uncertainty, and we need to be ready to respond.

Moving our Economy Forward

We Will Continue To Reduce The Government’s Debt As A Function Of Our Economy Each And Every Year.

Our net debt-to-GDP ratio – currently at 30.9 per cent – is on a downward track, and we have laid out a new fiscal track that will see this fiscal anchor continue to decline even further.

That puts Canada in an enviable position, especially compared to other G7 countries. Our net debt-to-GDP ratio is less than half of the EU average, and less than a third of where the United States is right now.

That relatively low level of debt is a serious competitive advantage. And our government is fully committed to maintaining that advantage in an increasingly volatile and unpredictable world.

We Will Continue To Build Confidence In Canada’s Economy, Making Sure That The World Continues To See Us As A Great Place To Invest.

Canada has a “triple A” credit rating from the three most recognized credit rating agencies. Of other countries in the G7, only Germany can boast of a similarly strong record.

This strong rating reflects the confidence that ratings agencies have in Canada’s economic strength. We will preserve this rating.

More importantly, these ratings show what many people already understand: that even though there is more work to be done, our economy is strong and growing.

We Will Continue To Invest In People And In The Things That Give People A Better Quality Of Life.

The last four years have shown what can happen when we put people first and invest in the things that make their lives easier: more money for families to help grow the economy, more good jobs
and more liveable communities, and 900,000 fewer people living in poverty.

While others seek to move our country backward balancing the books at all costs, on the backs of hard-working Canadians – we will move forward with the investments that we know make a real difference.

We Will Keep Our Economy Moving Forward.

Even though Canada’s economy is doing well, we need to be ready to respond to whatever challenges might arise, with the right tools at our disposal so that we can react quickly and appropriately when we need to.

Our new fiscal track recognizes the challenging economic realities we may face in the years ahead. It recognizes what the Parliamentary Budget Officer has affirmed – that current government spending is sustainable over the long term – and gives us the room we need to invest for long-term growth.

PBO Baseline Planning Framework ($m) 2020-21 2021-22 2022-23 2023-24
PBO Fiscal Projection (June) -23,262 -15,426 -12,528 -11,214
New Revenue 5,225 6,285 6,668 7,192
New Investment 9,344 14,586 15,954 16,984
Platform Fiscal Projection -27,381 -23,727 -21,814 -21,006

New Revenue: Making Taxes More Fair

To ensure that we continue to have the resources needed to invest in people and keep our economy strong and growing, we will move forward with a transparent and publicly reported review of several existing tax measures and will take action to make taxes more fair. This includes taking steps to crack down on corporate tax evasion and avoidance, and asking the wealthiest Canadians to pay a little bit more. We will:

  • undertake a new comprehensive review of government spending and tax expenditures, to ensure that wealthy Canadians do not benefit from unfair tax breaks (a similar review, which we committed to in 2015, identified more than $3 billion a year that could be reinvested in the middle class);
  • modernize anti-avoidance rules to stop large multinational companies from being able to shop for lower tax rates by constructing complex schemes between countries;
  • enhance our existing whistleblower programs, based on the best practices in other countries, including the United States;
  • crack down on corporate tax loopholes that allow companies to excessively deduct debt to artificially reduce the tax they pay;
  • introduce a new 10 per cent tax on luxury cars, boats, and personal aircraft over $100,000; and
  • make sure that multinational tech giants pay corporate tax on the revenue they generate in Canada. We will also work to achieve the standard set by the Organisation for Economic Co-operation and Development (OECD) to ensure that international digital corporations whose products are consumed in Canada collect and remit the same level of sales taxation as Canadian digital corporations.

To limit the housing speculation that can drive up home prices, we will also put in place a consistent national tax on vacant residential properties owned by non-Canadians who don’t live in Canada

New Revenue ($m) 2020-21 2021-22 2022-23 2023-24
Tax fairness measures
New tax expenditure and government spending review 2,000 2,500 2,500 3,000
Cracking down on corporate tax loopholes 1,738 1,642 1,545 1,448
Making multinational tech giants pay their fair share 540 600 660 730
Taxing speculators and the top 1%
Speculation tax on vacant residential property 217 229 241 256
10% luxury tax 585 597 609 621
Other measures
Self-Financing EI Measures 145 592 613 637
Trans Mountain expansion project 125 500 500

New Investments: Choosing Forward

In 2015, we promised to help Canadians make informed choices during elections, by adding the costing of party platforms to the Office of the Parliamentary Budget Officer’s mandate. We followed through on that promise.

Recognizing the resource limits that the Office has placed on each of the parties, we focused on working with the Office on the largest and most complex commitments, particularly those where
costing may be uncertain due to a lack of available public information.

We also referred to the Office all proposals related to changes to personal or corporate income taxes.

New Investments ($m) 2020-21 2021-22 2022-23 2023-24
Helping Canadians keep more of what they earn 2,890 3,861 4,855 5,664
Enhancing the First-Time Homebuyers Incentive -8 -5 -11 -13
More help for families with kids under one 777 1,074 1,115 1,156
More affordable and accessible child care 535 535 535 535
Making PSE more affordable 172 780 951 1,030
Making travel more affordable for people living in the North 22 22 22 23
E.I. Career Insurance Benefit 22 48 50 53
Increasing E.I. sickness benefits from 15 to 26 weeks 306 471 488 507
Ensuring apprentices get the work experience they need 150 150 150
Helping people with disabilities work or attend school 20 40 40 40
Strengthening public health care 750 1,750 1,750 1,750
Doubling the Canada Child Disability Benefit 391 534 548 561
Pediatric cancer research 30
Increasing OAS by 10% for seniors as of age 75 1,626 2,258 2,349 2,564
Canada Entrepeneur Account 25 100 100 100
Reducing fees for SMEs 54 58 60 63
E-payroll system 50 100
Zero-emissions clean technology incentives 14 33 57 67
National Infrastructure Fund 25 50 100 100
Tourism Community Infrastructure Fund 25 25 25 25
Canada Water Agency and other measures to protect oceans and fish and support coastal communities 45 70 70 70
Retained earnings to finance expanded services to the agricultural sector -64 -58 -52 -46
Investing in natural climate solutions 300 300 300 300
Helping people prepare for and respond to floods 50 50 50
Increasing the Disaster Management Assistance Fund 100 100 100
Making homes and businesses more energy efficient 320 362 398 432
New rebate for used ZEVs 22 17 8 4
Electrifying transit and transportation 160 180 180 180
Learn to Camp 75 150 150 150
Tackling gun crime 250 50 50 50
Free legal aid to survivors of sexual assault and intimate partner violence 10 10 10
Additional resources for the RCMP and hiring of more judges and prosecutors 122 125 127
Expanding access to drug treatment and combatting opioid and meth addiction 100 250 250 100
Supporting the mental health and wellness of veterans 53 105 105 105
Improving veterans disability benefits 194 197 199
Helping spouses of CAF and RCMP who relocate 15 30 30 30
Addressing veterans’ homelessness 15 15 15 15
Supporting diversity, anti-racism and multiculturalism initiatives 50 91 100 100
More support for arts and culture 135 135 135
Training for teachers (immersion and second-language) 40 85 100 100
Community infrastructure for official language communities 15 15 15 15
Distinctions-based Indigenous infrastructure planning 25
Enhancing support to UN peacekeeping, peace-building and conflict prevention 50 50 50
Playing a bigger role in the training and support of international allies 15 15 15
Establishing the Centre for Peace, Order and Good Government 50 50 50
International leadership to ensure refugee children get high quality education 150 150 150
Making applying for Canadian citizenship free for permanent residence 75 101 105 110
Monies to be reinvested in related measures 72 63 63 59
Total New Investments with Fiscal Impact 9,344 14,586 15,954 16,984