About three-quarters of the billions in federal tax cuts and increases in benefits promised to Canadians this year will be offset by provincial tax hikes and cutbacks, the Bank of Montreal says.
In a research note early Monday, BMO economist Robert Kavcic calculates that the provincial budgets unveiled in British Columbia, Saskatchewan, Alberta and Quebec have announced a collective $2 billion in new tax hikes on citizens, or cuts to services, to balance the books — part of a new age of austerity prompted by lower oil prices.
By Kavcic's reckoning, Ottawa has promised a combination of tax cuts and benefit hikes that add up to about $4.5 billion back to Canadians in its current fiscal year.
The Harper government has delayed releasing its budget to give it more time to gauge the impact of oil prices, but a few election-year tax cuts have already been telegraphed. While it's uncertain what Ottawa has in store, Kavcic says, "most of what Ottawa will be returning to one taxpayer’s pocket, the provinces will take out of the other."
With debt-laden governments in Ontario and Atlantic Canada yet to hint at their spending plans, it's likely the theme of austerity will continue, which means even more ways that top-level tax relief will be clawed back in one way or another.
The next one could come as early as Tuesday, when New Brunswick introduces its budget.
Related Stories
