Prime Minister Justin Trudeau signalled this month’s federal budget will include new spending aimed at easing cost-of-living concerns, after NDP Leader Jagmeet Singh called for an extension of a temporary GST rebate boost for low-income Canadians.
Mr. Trudeau was asked at a Wednesday news conference in Clarenville, N.L., whether the budget would include the GST rebate extension.
“We recognize huge pressures around affordability,” Mr. Trudeau replied, listing the six-month GST measure, along with dental care and housing supports as examples of previous government moves on that front.
“In our budget, we’re going to be putting forward measures that will directly help Canadians: measures around affordability, measures around continuing to deliver on improvements in health care that Canadians are so urgently needing and measures that will continue to create great jobs for Canadians right across the country.”
The Prime Minister’s comments about an affordability component in the 2023 budget adds an additional area of new spending to the list of what Finance Minister Chrystia Freeland has previously signalled.
The federal government approved a six-month doubling of the GST credit via a one-time payment last year. The temporary plan took effect in November, meaning it is set to expire in May. Mr. Singh said to The Canadian Press this week that he told Mr. Trudeau the measure should be extended in the budget, which will be tabled on March 28.
The GST/HST credit is a quarterly payment aimed at helping lower-income households offset the cost of federal sales taxes.
The Liberals and the NDP have a supply-and-confidence agreement, in which the NDP will vote to keep the minority Liberal government in power until 2025 provided in exchange for action on a list of NDP policy priorities. The GST rebate increase is not part of the written agreement, but Mr. Singh said the deal gives his party leverage to push for such action.
Private sector economists who recently met with Ms. Freeland ahead of the budget have stressed the importance of fiscal responsibility. Some have also questioned whether new direct payments to individuals is the right policy in the current economic and fiscal environment.
Randall Bartlett, senior director of Canadian economics with Desjardins, said many provincial governments have already approved a range of direct payments for individuals in response to affordability concerns during a time of high inflation.
“I’m not sure that this is the right time to do that,” Mr. Bartlett told The Globe, when asked if the budget should include an extension of the GST credit increase or a similar measure aimed at low-income Canadians. “If they do it, it should be minimal. … Because we don’t want them to be making the Bank of Canada’s job harder than it needs to be and provinces are already spending considerably on supporting households.”
The Liberal-NDP deal does include an income-tested dental care program. In line with the deal, an interim plan was put in place last year for children under 12. The deal calls for this to be expanded in 2023 to cover youth under 18, as well as seniors and persons living with disability, which would be a form of new direct support for low-income households if it is included in the budget as expected.
The government’s existing program to double the GST credit payment carried a fiscal cost of $2.5-billion.
Ms. Freeland has said in recent weeks that the budget will include new spending on health care based on last month’s announcement of increased transfers to provinces and territories, as well as new spending on green incentives to compete with recently announced tax breaks and programs in the United States aimed at reducing greenhouse gas emissions.
She has said she doesn’t want fiscal policy to run counter to the Bank of Canada’s efforts to cool inflation through higher interest rates.
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