Taxpayers Federation: Budget 2018 still offers no plan back to balance
- Federal debt to rise a further $80 billion by 2022 – a total increase of $110 billion since Liberals came into office
- Tax changes will squeeze an additional $1 billion annually out of small businesses by 2022
OTTAWA, ON – The Canadian Taxpayers Federation (CTF) today expressed concern about the Trudeau government’s 2018 budget, which did not lay out a clear path to eliminate the deficit and failed to address growing concerns about Canada’s tax competitiveness.
“The good news is this budget largely holds the line on spending,” said CTF Federal Director Aaron Wudrick. “The bad news is the government has once again failed to tackle the structural deficits it created in the 2016 budget and which will add $80 billion in new federal debt by 2022.”
The federal debt is projected to rise to $730 billion by 2022 with debt interest costs alone expected to jump from $26 billion per year in 2018 to $33 billion per year by 2022.
The government’s proposed treatment of small business passive investment abandoned the proposed hard limit of $50,000 on annual passive investment income in favour of a gradual phase out of the deduction limit for annual passive investment income between $50,000 and $150,000.
“The new passive investment rules, combined with the new income sprinkling rules, will still squeeze businesses for more than $1 billion a year by 2020,” said Wudrick. “But it’s fair to say these further revisions are a big improvement over the government’s original proposals.”
Wudrick also noted that the federal budget does not include any measures to respond to the major business tax cuts in the United States which are expected to impact Canada’s ability to attract and retain jobs and investment.
“This budget is chock full of sunny-sounding social policy, but if the Americans end up eating our lunch on the tax front, we won’t have the revenue to pay for any of it,” noted Wudrick.
Wudrick also panned the budget’s panoply of subsidies and handouts offered under the guise of “innovation and skills.”
“Slush funds for corporate welfare and regional development are being consolidated and rebranded, in some cases with more money. There’s even $50 million for failing newspapers and another taxpayer bailout for the Canada Media Fund,” said Wudrick.
The CTF did welcome several measures in the budget, including the government’s commitment to expanding international trade, additional funding for the Auditor General and Information Commissioner, and further measures to crack down on tax evasion.