Business
Higher Capital Gains Taxes cap off a loser federal budget
From Frontier Centre for Public Policy
By Lee Harding
Even former Liberal Finance Minister Bill Morneau told the Financial Post the capital gains tax increase would be “very troubling for many investors.” He added, “I don’t think there was enough effort in this budget to reduce spending, to create that appropriate direction for the economy.”
New taxes on capital gains mean more capital pains for Canadians as they endure another tax-grabbing, heavy-spending federal deficit budget.
Going forward, the inclusion rate increases to 66 per cent, up from 50 per cent, on capital gains above $250,000 for people and on all capital gains for corporations and trusts. The change will affect 307,000 businesses and see Ottawa, according to probably optimistic projections, rake in an additional $19.4 billion over four years.
A wide chorus of voices have justifiably condemned this move. If an asset is sold for more than it was bought for, the government will claim two-thirds of the value because half is no longer enough. It’s pure government greed.
If you were an investor or a young tech entrepreneur looking for somewhere to set up shop, would you choose Canada? And if you’re already that investor, how hard would you work to appreciate your assets when the government seizes much of the improvement?
Even before this budget, the OECD predicted Canada would have the lowest growth rates in per-person GDP up to 2060 of all its member countries.
In a speech in Halifax on March 26, Bank of Canada senior deputy governor Carolyn Rogers put the productivity problem this way: “You’ve seen those signs that say, ‘In emergency, break glass.’ Well, it’s time to break the glass.”
What can Canadians bash now? Their heads against a wall?
Even former Liberal Finance Minister Bill Morneau told the Financial Post the capital gains tax increase would be “very troubling for many investors.” He added, “I don’t think there was enough effort in this budget to reduce spending, to create that appropriate direction for the economy.”
No kidding. Not since the first Prime Minister Trudeau (Pierre) have Canadians been able to count so reliably on deficit spending, higher expenditures, and more taxes.
Long ago, it seems now, when Justin Trudeau was not yet prime minister, he campaigned on “a modest short-term deficit” of less than $10 billion for each of the first three years and a balanced budget by the 2019-2020 fiscal year.
His rationale was that low interest rates made it a rare opportunity to borrow and build infrastructure, all to encourage economic growth. Of course, the budget never balanced itself and Canada has lost $225 billion in foreign investment since 2016.
The deficits continue though the excuse of low interest rates is long gone. Despite higher carbon and capital gains taxes, this year’s deficit will match last year’s: $40 billion. Infrastructure seems less in view than an ever-expanding nanny state of taxpayer-funded dental care, child care, and pharmacare.
Of course, the Trudeau deficits were not as modest as advertised, and all-time federal debt has doubled to $1.2 trillion in less than a decade. Debt interest payments this coming fiscal year will be $54.1 billion, matching GST revenue and exceeding the $52 billion of transfers to the provinces for health care.
In 1970, columnist Lubor Zink quoted Pierre Trudeau as saying, “One has to be in the wheelhouse to see what shifts are taking place . . . The observer . . . on the deck . . . sees the horizon much in the same direction and doesn’t realize it but perhaps he will find himself disembarking at a different island than the one he thought he was sailing for.”
Like father, like son, Justin Trudeau has captained Canada to a deceptive and unwelcome destination. What started as Fantasy Island is becoming Davy Jones’ Locker.
Lee Harding is a Research Fellow at the Frontier Centre for Public Policy
Business
While Canada’s population explodes, the federal workforce grows even faster
From the Fraser Institute
By Ben Eisen and Milagros Palacios
Hiring by the federal government in excess of population growth cost taxpayers $7.5 billion in 2022/23.
The federal workforce has grown more rapidly than the Canadian population starting in 2015/16, imposing significant costs on taxpayers, finds a new study published by the Fraser Institute, an independent, non-partisan Canadian public policy think tank.
Federal government employment has grown significantly faster than the Canadian population starting in 2015/16, and we’re already seeing the consequences,” said Ben Eisen, senior fellow at the Fraser Institute and author of Growing Government Workforce Puts Pressure on Federal Finances, the first in a series of studies on federal reform.
The study finds that between 2015/16 and 2022/23, the latest year of data available, the number of full-time federal workers has increased by 26.1 per cent compared to growth in the overall Canadian population of 9.1 per cent.
“Growth in federal employment has almost tripled the rate of population growth since 2015/16, which is simply unsustainable” commented Eisen.
How much will this growth in government cost Canadian taxpayers?
According to the study, if federal hiring had simply kept pace with the rate of Canada’s population growth taxpayers would have saved $7.5 billion.
The reduced spending on federal employees would lower the federal deficit, which is expected to exceed $35.3 billion in 2022/23.
“The growth in the number of federal employees has been a major contributor to the growth in federal government spending and the size of deficits in recent years,” Eisen said.
- The Canadian federal government workforce has grown more rapidly than the Canadian population starting in 2015/16, imposing significant costs on taxpayers.
- In fact, between 2015/16 and 2022/23, the latest year of data available, the number of full-time federal government workers has increased by 26.1 per cent, compared to growth in the overall Canadian population of 9.1 per cent.
- If federal hiring had simply kept pace with the rate of Canada’s population growth taxpayers would have saved $7.5 billion.
- The reduced spending on federal employees would lower the federal deficit, which is expected to exceed $35.3 billion in 2022/23.
Business
From Smug to Subservient, Justin Trudeau Bows to MAGA Realities at Mar-a-Lago
After years of mocking Trump and betting on a woke Washington, Trudeau now finds himself groveling to save Canada’s economy from MAGA’s hardball tactics.
Justin Trudeau has spent years mocking and deriding the MAGA movement, banking on a continuation of woke, progressive leadership in Washington. He bet everything on a Kamala Harris presidency, believing the days of Donald Trump’s America-first agenda were a distant memory. Now, with Trump back in office, Trudeau finds himself groveling at Mar-a-Lago, trying to salvage what’s left of Canada’s crumbling economic future.
This is the same Justin Trudeau who painted MAGA as a dangerous fringe movement, aligning himself with global elites and lecturing Americans on their supposed moral failings. He openly scoffed at Trump’s tariffs, his immigration policies, and his tough-on-China stance. Trudeau’s bet? That a Democrat-controlled America would reward his sycophantic pandering with favorable trade deals and continued subsidies for his progressive fantasies.
But Trudeau’s gamble failed. Trump is back, and Trudeau’s entire house of cards is collapsing. Canada’s economy, propped up by unfair trade advantages and U.S. energy consumption, is suddenly exposed. The 25% tariff threat on Canadian imports has Trudeau scrambling, not with bold leadership, but with empty promises and nervous laughter at Mar-a-Lago.
In a moment of pure irony, Trudeau, who once lectured Trump about values, now finds himself kneeling to kiss the ring. MAGA, what? Gone is the smug defiance, replaced by desperate platitudes about border security and economic cooperation. But let’s be clear: Trudeau isn’t there to protect Canadian interests; he’s there to save face. His government is woefully unprepared for Trump’s hardball tactics, and the Prime Minister’s office knows it.
During a recent dinner at Mar-a-Lago, President-elect Donald Trump reportedly suggested that Canada could become the 51st U.S. state if it couldn’t handle the economic impact of proposed tariffs. This remark came after Prime Minister Justin Trudeau expressed concerns that a 25% tariff on Canadian imports would “kill” Canada’s economy.
Trump’s comment underscores the significant economic interdependence between the two nations. In 2022, trade between the U.S. and Canada exceeded $900 billion, with the U.S. accounting for 63.4% of Canada’s global trade. This deep economic integration means that shifts in U.S. trade policy can have profound effects on Canada’s economy.
Trump’s quip about Canada becoming the “51st state” wasn’t just a joke; it was a power move, a reminder of who holds the cards in this relationship. While Trudeau nervously laughed, the message was clear: Canada needs the U.S. far more than the U.S. needs Canada. Trudeau’s weakness has brought us here. Instead of securing energy independence, he’s strangled Alberta’s oil industry with crippling regulations. Instead of standing up to China, he’s kowtowed to Beijing while relying on U.S. trade to keep his agenda afloat.
And now, Trudeau is at the mercy of a man he spent years mocking. Trump’s tariffs are a direct consequence of Trudeau’s inability to lead. His failure to address illegal immigration and the fentanyl crisis has made Canada not just a bad neighbor, but a liability.
Trudeau’s Liberals have always been more concerned with appearances than action, more focused on virtue signaling than real governance. But now, the bill has come due. And the man holding the ledger is none other than Donald J. Trump.
So here we are: Justin Trudeau, the woke globalist, reduced to pleading for mercy at Mar-a-Lago. His smugness replaced by desperation, his rhetoric exposed as hollow. MAGA what, indeed.
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