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Not surprisingly, the Liberals’ fourth federal budget released Tuesday afternoon is the predicted pre-election spendathon targeting the two big voting blocks of Seniors and Millennials. You may wish to refresh this link from time to time, or check my Twitter feed at @JonChevreau. Also check out FP Live’s “Everything you need to know about Federal Budget 2019.”
One of the first reports out was the CBC: Liberals table a pre-election budget designed to ease Canadians’ anxieties. It said that Morneau’s fourth budget includes $22.8 billion in new spending. The 460-page document is titled Investing in the Middle Class. Not surprisingly, the CBC noted, there is no timeline for erasing the Deficit, projected to be $20 billion next year, then falling to $15 billion two years later, and then to $10 billion in 2023-24.
First-time home buyers can tap RRSPs for $35,000
As predicted, the Budget targets Millennials who are finding it hard to get a foot on the housing ladder. It boosts the amount of money that can be withdrawn from RRSPs for a first-time home purchase, from the previous $25,000 to $35,000 ($70,000 for couples). Low-income seniors will be able to keep more of the Guaranteed Income Supplement (GIS) if they opt to remain in the workforce and safeguards are being introduced to protect employer pensions in the event of bankruptcies.
Among other spending initiatives is ensuring access to high-speed Internet by 2030 across the country, $1.2 billon over three years to help First Nations children access health and social services, an additional $739 million over five years to repair water systems on First Nations reserves, and a federal purchase incentive of up to $5,000 for electric battery or hydrogen fuel cell vehicles with sticker prices below $45,000.
Little wiggle room in a Recession
The Financial Post’s Kevin Carmichael filed a piece headlined “Liberals leave themselves little wiggle room in the event of a recession.” And Andrew Coyne commented that “the federal budget is a testament to the pleasures of endless growth. Forget productivity, tax cuts or investment.” One of his colourful quips was this:
“I’ve said before that these are deficits of choice, rather than necessity. A better way to describe them might be deficits for show.”
The Globe noted that the $23-billion in new spending spans more than a hundred different areas, although the focus is on new home buyers and training programs for workers. Later this year there will be $1.25 billion (over 3 years) “First Time Home Buyer Incentive” managed by the Canada Mortgage and Housing Corporation. The Globe added that “CMHC would put up 10 per cent of the price of a newly constructed home and 5 per cent of an existing home, and share in the homeowner’s equity.” To qualify you must be a first-time home buyer with annual household income below $120,000.
8 ways personal finances will be affected: GIS, CPP & more
G&M personal finance columnist Rob Carrick listed 8 ways the budget will impact ordinary citizens’ finances. He noted that seniors receiving the GIS will be able to earn $5,000 without affecting benefits, up from $3,500, and that there will also be an additional 50% exemption of up to $10,000. Contributors to the Canada Pension Plan who are 70 and older and haven’t applied for benefits will be “proactively enrolled” starting next year. Carrick said Ottawa says about 40,000 people over 70 miss out on CPP benefits averaging $302 a month. He also writes that the tax break on stock options will be limited for employees of larger, mature companies (as opposed to startups), with annual caps of $200,000 on stock options eligible for preferential tax treatment.
Creation of Advanced Life Deferred Annuities
For those worried about outliving their money, on the longevity insurance front, the Globe says the budget “clears the way for the creation of advanced life deferred annuities that would kick in at the end of the year you turn 85.” Elsewhere in the paper, it said Ottawa is proposing to create a new department called the Canadian Drug Agency, to managed federal pharmacare. Also included is funding for a national strategy for high-cost drugs for rare diseases.
No cuts to tax rates but 5 smaller tax measures
In the FP, tax guru Jamie Golombek lists 5 ways the budget will let you save money on federal taxes. While there are no cuts to tax rates themselves, there are several small tax goodies. Of interest to media types and bloggers is a proposed temporary, non-refundable 15-per-cent tax credit for eligible digital news subscriptions. Golombek says this will allow you to claim up to $500 in costs paid towards eligible digital subscriptions in a taxation year, for a maximum tax credit of $75 annually: ” In the case of combined digital and newsprint subscriptions, you’ll be limited to claiming the cost of a stand-alone digital subscription. This temporary credit starts in 2020 and is scheduled to expire in 2024.” Other measures included the aforementioned automatic CPP enrolment at 70, the Home Buyers’ RRSP top-up, and a new boutique tax credit dubbed the Canada Training Credit.
Starting this year, Golombek says you’ll start to accumulate $250 annually in a notional government tracking account that can be accessed in future years to help cover the costs of training: “In order to accumulate the $250 for a particular tax year, you must file a tax return, be between 25 and 65 years old, be a resident of Canada and have (self-) employment income of $10,000 or more in the year. To ensure it’s not available for higher-income Canadians (who presumably can afford their own tuition), your net income must be less than the top of the third tax bracket ($147,667 in 2019) to qualify.”
Provinces will be stuck looking after aging Boomers
Personally — and I’m sure most Hub readers would concur — I’d have preferred to see genuine tax relief via downward adjustments to tax rates at the higher income brackets. Andrew Coyne’s column warned that “even if the business cycle has been abolished, and growth does persist, it will be much slower growth than we have known, now that the Baby Boomers are hitting their retirement years.” Coyne added that “That could be a huge problem for the provinces, who will have to pay to look after all those aging Boomers.”
Well, at least it gets SNC Lavalin out of the news for a day or two. But I suspect that won’t last, given the thinness of real substance in this budget.
It would help the middle class and seniors if the Liberals would insist the murky nexus of oversight actually enforced their own statutes
Because in the absence of an objection from these parties td direct will simply assume it’s terms of service are “correct”. Not compliant but correct.
So if osc iiroc obsi fcac and osfi simply assume someone has a handle on enforcing statutes and or insisting on redress for retail investors .td direct will assume that oversight have no concerns re it’s conduct
Meaning they are tacitly agreeing with the big bad banks breach of codes of conduct
As far as td direct is concerned since no objects have been raised
And td notes the industry is heavily regulated
But regulations no matter how many do self enforce.
So unless parties like osc insist industry respect it’s laws and codes of conduct why would any firm have an incentive to comply?
So if oversight has no will to enforce it’s legislation as a retail investor this is far far beyond my pay level as they say.
And promises by our politicians are simply talk nothing more and talk is a cheap way to buy votes.
How is this any different from the velvet glove treatment efforts by our PM and his officials re another large corporate entity?
I have lost faith in ” the system”