After skipping last year without tabling a formal budget, the Canadian government has finally delivered its much-anticipated budget for the coming year with the weight of both a pandemic year behind and a year ahead that still remain very unclear. Similar to the Democrats in the United States, the Liberals are promising massive spending to boost the economy, and will expand or introduce a wide array of progressive social programs. This huge spend will be financed by unprecedented levels of government debt in the coming years, and increased efforts to tax luxury items and increase many so-called “sin” taxes.
The government is going to increase program spending by $101.4 billion as they hope to see the country, and particularly certain demographic groups through the increasingly stubborn pandemic.
Here are a few key spending, and taxing, plans that may impact you:
Taxes on luxury items, vacant properties, smoking & vaping products
While most of the spending in the new budget will be covered by going into debt, there are several new taxing measures coming into play.
Canada hasn’t been the cheapest place to buy a carton of cigarettes for a long time, and new excise taxes will add $4 to the price of each carton. Vaping products will also be taxed at a higher rate.
Beer, wine and liquor, often a favourite target for governments, were spared this time around, perhaps acknowledging the difficulties the industry has faced with government mandated closures of bars, restaurants, events and festivals.
It’s been seen in other countries, with mixed results, but Canada has introduced a hefty “luxury tax” on new cars and private aircraft costing over $100,000, and boats costing over $250,000. The tax generally is 10%, so a million dollar yacht will generate the standard 13% sales tax, and the new luxury tax of 10% works out to an additional $100,000 for a total of $230,000 or 23%. Ouch.
With the massive audience shift from traditional cable and radio to streaming services (almost all based in the US) the Canadian government is slapping a 3% tax on the revenue of big streaming services such as Netflix, Amazon Prime and Spotify, expected to bring in billions for the government. But don’t be surprised if these services raise their prices to cover this added expense. As they say: customers always pay in the end.
Lastly, there is an attempt in the budget to address outrageously high residential property prices in many parts of Canada, and a related shortage of affordable housing. Much of this is due to unprecedented numbers of immigrants (including many financially well-backed ones) coming into Canada, and the related situation of the significant parking of money in Canadian property by foreign nationals. The Canadian government will now tax anyone who is not currently a resident of Canada that owns a property (e.g. house, condo) that is deemed “underused” or vacant. The annual tax is 1% of the property’s value.
$15 minimum wage, extended emergency and sick day benefits, support for women entrepreneurs
While it doesn’t apply to all workers, all federally regulated industries must now pay a minimum wage of $15 per hour, putting pressure on provincial regulated industries to do the same.
Lovingly known as CRB by many, the Canada Recovery Benefit providing recipients $1000 every two weeks will be extended by 12 weeks, allowing for a total of 50 weeks of being on the government’s payroll for hanging out at home (obviously because they also temporarily shut down or restricted the company you would normally work for). This program is officially set to end Sept 25.
If there ever was a time to be a #BossLady in Canada it’s now. The budget includes an added $147 million commitment to invest in women looking to start and build their business through the existing Women Entrepreneurship Strategy and two related initiatives designed to improve access training, mentorship and financing. This is in addition to a more general push to improve female participation in the economy.