It’s silly to say, but “thanks” to inflation, which has pushed up nominal GDP, Justin Trudeau’s government is in a much better fiscal position compared to forecasts made by Treasury Secretary Chrystia Freeland last March Submission of their 2022-23 budget.
For the five fiscal years from April 1, 2022 to March 31, 2027, the Trudeau administration plans to collect $138.4 billion more than expected in income and corporate taxes.
There is also a tax surcharge of $17.5 billion in taxes and consumption taxes.
That means Treasury Secretary Chrystia Freeland will take about $156 billion more out of our pockets over those five years than the tax revenue originally projected in March.
When Secretary Freeland brags about helping certain groups of Canadian households more by improving some financial assistance programs, let’s just say she has the means.
And that’s the least it could do with the said $156 billion in additional tax revenue it’s going to take from us altogether.
To put it in perspective… in Ottawa, new financial assistance measures announced since the federal budget was presented last March total $44 billion for those five years.
That includes $18.1 billion in “policy action” taken between April and late October and the $25.9 billion in new action announced yesterday in the Fall 2022 Economic Report.
Of course, this additional federal aid is timely in these difficult inflationary times when everything is much more expensive. But let’s not lose sight of the fact that the Trudeau government will only return part of 28% of the 156 billion in additional taxes and levies it wants to elude us to the end into the pockets of less affluent households. of the 2026/27 financial year.
Lower federal deficit
For all five fiscal years (2022-23 to 2026-27), Secretary Freeland had planned last March to end those fiscal years with deficits totaling $147.5 billion.
Yesterday she gave us a much better picture of the federal budget situation. For the five fiscal years in question, the Treasury Secretary now forecasts deficits to reach $110 billion, a reduction of $37 billion.
debt reduction
In yesterday’s financial update, the Trudeau administration presented us with an “improvement” in the federal debt.
By the end of fiscal 2026-27, federal net debt is projected to increase by $116.7 billion over five years. That’s $30 billion less than the Treasury Secretary’s budget forecast last March.
But rising interest rates
It now costs significantly more to finance the huge federal debt.
Interest charges on government bonds were revised upwards, apparently due to the sharp rise in interest rates following the series of interest rate hikes by the Bank of Canada.
As such, the bill for said five-fiscal year federal debt interest (2022-23 to 2026-27) will be $167.7 billion, or $12 billion more than the bill reported during the March budget was forecast.
