I speculated this earlier in my 2016 annual report, but these options for the Canadian government are most certainly still in play:
1. Flow-through share deductions will be eliminated.
2. Employee stock option deduction will have a full, instead of half inclusion rate, OR the amount will be capped to some nominal amount (e.g. CAD$50k allowed or something).
3. Taxation of capital gains on principal residences is going to have some restrictions (time, or value) placed.
4. Partial inclusion of capital gains will rise (right now a Canadian taking a capital gain will include 50% of the gain as income; I speculate this will increase to 2/3rds or even 3/4).
5. I do NOT believe the non-tax exemption for private and public health plans will be scrapped. This would be a political nightmare for the government compared to the rather esoteric notions on the items, but this was floated around last year.
6. The GST will rise (probably to 7%).
7. Corporate income taxes, on large corporations, will rise.
The Canadian government is going to be more and more desperate for money – with rising debt and rising interest rates, the interest bite will expand once again (the debt is roughly $650 billion, so a 1% rise is a $6.5 billion interest hike on a $300 billion budget). It is also very unlikely the existing government will focus on cost reduction, hence, they will be looking at every corner to pick away revenues. The items above seem to be the lowest lying fruit, although they each will come with their own political costs. The botched implementation of a corporate tax reform on passive income was met with a significant amount of opposition. The politically easier route would be to simply rack up the deficits and not offend anybody, especially since there will be an election within 20 months.
My guess is few if any tax increases. Seems they aren’t needed given that the economy continues to strengthen and the unemployment rate is low and falling reducing the deficit.
As I said in my post, they will get politically spineless this close to an election so they are more likely to take the easy route and just do nothing except spend, spend, spend.
Yup, as expected, one of the most spineless budgets I’ve seen.
“Budget” ha. No rigour, just pandering. Shifted infra spending to buy votes.
Feds and most provinces all seem determined to keep spending. Thoughts on BC budget?
The shift of payroll taxations (and stealing the extra year of revenue in 2019) was quite creative to offset MSP premiums. Very surprised at the lack of backlash on that one. They also are chipping away at the “upper 5%” of real estate so it will be interesting to see if it has any effect. Other than that it seemed to be a mostly do-nothing budget. Perhaps it is because they’re a flu away from losing their majority in the legislature, they’re playing it very cautiously.