The Plan

With 19 days to go the Trudeau gang unveiled its plan Wednesday for the next few years. This blog will withhold comment on things it clearly knows nothing about (money for banning guns, a national menstrual equity fund, Indigenous reconciliation or paying people to buy EVs, for example), but we should all talk about the bucks involved.

Polls still indicate a Liberal-NDP coalition government. Perhaps that will shift. Maybe not. But at this point the odds are what they are. The PM will be T2 on 9/20 unless the winds continue to shift right. So let’s take the red manifesto seriously.

What does this mean for national finances, and for taxes?

New spending will be extensive. Just under $80 billion over the next five years. Despite rosy projections of post-pandemic growth, this will yield an annual deficit next year of $157 billion. Yikes. Yes, that’s down from the $354 bloodbath of last year, but it’s still triple the worst ever shortfall in Canadian history before Mr. Trudeau took office. (That was Harper’s $55 billion binge during the 2008-9 credit crisis.) Even in 2025-6 – if all goes well – we’ll still be $32 billion a year in the hole.

The accumulated new debt (atop the trillion now) over five years: $336,000,000,000. Tell your kids.

Now this red ink will come despite higher revenues from a growing economy after the virus is defeated, plus new taxes of $25.5 billion. Already cozying up to the Jagmeet Singh agenda, the Liberals are targeting higher-income Canadians, people who sell houses before they should, the oil & gas business (flow-through shares will be kaput) and especially the banks.

Not only will financial institutions like the Big 6 pay a 3% surtax on earnings, they’ll also be subject to something called the Canada Recovery Dividend. In total this will soak those guys for just under $11 billion. So, you should probably count on higher mortgage rates and bank fees. As for super-rich people like those useless heart surgeons and senior airline pilots, they’ll be paying at least $1.7 billion extra, while folks who sell houses they bought within 12 months (like the Liberal candidate in Vancouver Granville) will be taxed a total of $50 million.

Here is the Liberal fiscal plan. Check it out.

Click to enlarge. Wear PPE.

So more government, more spending, more deficits, debts and taxes. That’s the plan. It’s a gamble that everything will go well, the virus will be defeated, interest rates will never rise, there’ll be no recession or biggie natural disasters and that the financial markets will continue to fund and support a spreading ocean of public debt without punishing the currency. The plan builds on the trope that everybody gets a pony and by whacking corps and rich people the 99% can live happily ever after.

Maybe they can. But in human history, this would be a first.

By the way, that new TFSA for people under 40 wanting a house will cost $3.5 billion over four years. Doubling the homebuyers’ tax credit will cost $500 million and a program to “reduce monthly mortgage payments” will take another $2.1 billion. Add in $500 million for the intergenerational housing tax credit and the Liberal housing strategy has a pricetag of more than $7 billion without building a single new home. Of course, putting all that money into the hands of people seeking homes will – guess what? – probably increase prices. Progress?

As yet unknown are the details of the “minimum tax” the Libs are planning (apparently differing from the existing alternative minimum tax). This is intended to take more from high income-earners (already paying 54%) so they cannot make “excessive use of deductions and credits.” Details of that and a new CRA vendetta against “aggressive tax planning and tax avoidance” – both legal – will likely surface in the next Chrystia budget. If there is one.

Now don’t construe this post as being anti-Socks. It’s not. These are facts presented by the guys who want to be re-elected to run the nation. It’s their plan. It envisions a Canada that cannot pay for what it spends, ever, yet gives a better life for all. Oh, did I mention the $40 million for the Sexual Misconduct Resource Centre, an extra $400 million (above the usual amount) for the CBC, $440 million for the Home Appliance Repairs Tax Credit, $40 million for racialized journalists or $4 billion more in OAS pogey for the Boomers?

It’s almost like the overlords think this is a nation of financial illiterates.

We’ll see.

About the picture: “Augie is a rescue from Tennessee where he was housed with a 100+ dogs in terrible hoarder conditions,” writes Larry. “He’s about 5 years old, adorable and loving his new digs in Canada the last few months. I’m told he looks like a pure bred “Rat Terrier” but also might be part Jack Russell-Corgis cross. His favorite trick is to jump up on the dining table once we turn our backs and check for any scraps we “messy” humans leave behind. Garth, keep up the great work blogging and dogging.”