Ottawa announced nearly $15 billion of tax breaks for Corporate Canada in its fall economic update, but drew criticism for going deeper into debt in order to pay for those tax cuts.
Finance Minister Bill Morneau introduced $15.7 billion worth of new stimulus measures over five years in the fall economic update delivered on Wednesday – $14.8 billion of which is devoted to business tax breaks and programs to expand trade and innovation. The federal government also announced $12.1 billion worth of measures to support steel and aluminum producers, as well as to repair the rail line to Churchill, Manitoba.
But while the tax cuts were applauded by business leaders, federal officials in Ottawa drew sharp criticism for going deeper in the red in order to finance them. Morneau announced that Ottawa is now forecasting a $19-billion shortfall for this fiscal year – with the federal deficit projected to fall to $12 billion by 2022-23. The Liberal government of Prime Minister Justin Trudeau came to power on a promise for the federal deficit not to exceed $10 billion.
Conservative Party Finance Critic Pierre Poilievre said the fall economic update shows the Liberals will break their 2015 campaign promise to balance the books before the next election.
"Like most Canadians, we have come to accept that these Liberals never take responsibility for anything," he said. "But what is startling about this particular statement is that they just go on doing more and more damage to the fiscal situation of this country without any concern or hesitation."
However, the tax measures announced in the fall economic update were warmly embraced by the business community, which had been lobbying for Ottawa to take steps to make Canada more competitive with the United States, where U.S. President Donald Trump has delivered a $1.5 trillion tax cut. Critics in Canada said the U.S. has been drawing away considerable business investments over the past year.
Morneau defended the fall economic update, and tax cuts, saying that Ottawa was taking steps to keep Canada competitive.
"We could have ignored the concerns of business leaders… and we would have had a lower deficit as a result," said Morneau. "To do so would be neither a rational response, nor a responsible one."
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