This week federal budget will close the chapter on Trudeau’s Liberal governments supposed inclusive growth agenda, although early signs are showing that it’s actually emphasis will not be on growth, but instead inclusion.
Last month during his speech at the World Economic Forum the prime minister said they would work on fixing the gender gap in order to boost economic performance. Trudeau said that a study by the McKinsey Global Institute stated that $150 billion dollars could be added to the Canadian economy over the next 8 years if there were more women in the workforce.
$150 Billion
While this sounds great in theory, encouraging more women to work won’t happen unless you also give them the skills to enter more male dominated fields. There are already so many programs that offer women the chance to get into these types of fields though, that giving $150 billion dollars towards developing new programs, when the current ones obviously aren’t working, is another bad fiscal dissection when the deficit is so high. Lebrarls are facing huge challenges as growth in the country is continuing to slow down.
Spend Less Money
Instead of throwing more money around trying to fix the budget and the economy, Justin Trudeau and his liberal government needs to focus on spending less money. For example, program spending has been on the rise at an average of 6% since Justin Trudeau became minister. In order to keep the debt to GDP level going down, program spending needs to fall at least 3 percent. If you take inflation into consideration, that means that for this budget they should only be increasing spending on programs by 1 percent. If they continue to spend like they have in the past, the Canadian government is coming very, very close to breaking its one remaining fiscal anchor.
Lowering the Corporate Tax Rate
The new federal budget does also not address lowering the corporate tax rate, which many tax experts have urged the Canadian government to do. Right now the United States has a tax rate that is two points lower than Canada, which is undermining Canada’s competitiveness. Since Canadian companies are now facing higher taxes on investments, sales, carbon emissions and personal income, many will probably be following in the footsteps of Steve Williams, the chief executive of Suncor Energy who said that his company will start to lower its spending because Canada is not as competitive as the United States.
Trudeau, who is well aware of the situation and what big companies in Canada are saying, has said he completely rules out the idea of corporate tax cuts in this budget. His views are more that of an environmental and social activist than of a prime minister. If the government wants to focus on being an inclusive government then they need to focus on both the inclusion and growth, not just one or the other.
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