The Liberal government is expected to announce on Tuesday a new federal budget with a deficit in the area of about $30 billion.
There’s been a lot of concern about that huge deficit but a number of economists calculate that Canada could actually absorb a much larger deficit and that it may not be even enough to push the economy along and pull down the unemployment rate.
Here are some of the things that various sectors should look out for in the upcoming budget announcement.
Prime Minister Justin Trudeau promised $40 million a year to aid business owners to create co-op placements for students in science, engineering, technology, math, and business.
The Liberals also promised $10 million to expand apprenticeship programs and $25 million to bring back the Youth Service Program that will provide the youth with work experience in community projects
The party also promised a 12-month break on employment insurance premiums to businesses that hire workers between the ages of 18 and 24 into permanent positions in 2016, 2017 or 2017.
The Liberals said they will increase the Canada Student Grants for low-income students to $3,000 per year for full-time students and $1,800 for part-time students.
The Liberal party said it will make sure that Canadian Controlled Private Corporation status “is not used to reduce income tax obligation for high-income earners rather than supporting small businesses.”
A University of Ottawa study estimates that some $500 million a year is lost as high-income individuals use CCPC status as an income splitting tool.
There are now some worries that the government will restrict the ability of some professionals to use income splitting with a spouse or partner or adult children.
During the elections, the Liberals promised to limit the benefits of the 50 per cent employee stocl option deductions. They said they would place a $100,000 cap on annual eligible stock option gains. Recently, there have been news reports that Finance Minister Bill Morneau might postpone or drop such a change.
Investors want to know if the Liberals will increase the capital gains inclusion rate from 50 per cent to 66 per cent or even more.
Staying the course
The Liberals are aiming for a pretty aggressive increase in the deficit, but many economists are aching to find out just how big the deficit will be and where the government will spend the money on.
“…I will be paying close attention paying close attention to where the end point of the Conservative’s baseline compares to where the Liberals plan to be in five years,” he said.
Trevor Tombe of the University of Calgary wonders if the federal government will be able to respond to calls for help from provinces like Alberta and Newfoundland that have budget challenges that will remain difficult for some time.
“In our federation, the fiscal challenges of one government can affect the others,” he told MacLean’s. “Will the feds respond? And if so, how?”