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Treasury Secretary Chrystia Freeland will update her midyear budget in her House of Representatives on Thursday. This is focused on promoting investment in Canada‘s clean energy industry in response to the new US tax stimulus signed last summer.
The government has already outperformed expectations financially as inflation and a stronger economic recovery have boosted tax revenues.
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Will Ottawa Declare a Recession? What to Expect from the Federal Reserve’s Fall Economic Statement?
But after years of expensive COVID-19 relief packages, Freeland is in a budget position that it says is justified by the government’s need to reduce its budget deficit and prepare for a possible economic recession in 2023. retreating. Rachel Bendayan, a Liberal Montreal MP and parliamentary secretary to the Assistant Secretary of the Treasury, said: “Clearly I don’t mean to criticize the Secretary of the Treasury, but this is a statement of economic collapse that will ensure fiscal accountability.” said.
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Freeland is not expected to do more to help Canadians weather the cost of living crisis. $100 million, provided dental benefits for most children under the age of 12, and provided a one-time $500 addition to state retirement benefits for low-income individuals.
Ottawa prepares to release economic outlook for the coming months
This GST support will be felt from Friday when the funds reach the bank accounts of his 11 million lower and middle income households. The bill to create a dental and housing benefit top-up is still in the Senate. The government suggests rather small mini-budgets focused on targeted investments rather than large-scale new programs.
This includes a sanction against corporate stock buybacks to encourage companies to invest in their businesses and to introduce new or improved tax incentives to support the growth of clean energy, including hydrogen. Includes new taxes. Read on:
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Both are part of the Inflation Reduction Act negotiated by President Joe Biden and signed into law in August. Industry insiders have repeatedly warned the government that Canada needs to match the United States.
The legislation includes nearly $400 billion in tax incentives, grants and loan guarantees for clean energy sectors such as power generation, electric vehicles and battery manufacturing.
Also included is his 1% tax on corporate stock buybacks, which his Freeland expects to be reflected in today’s update. This is well below the unexpected tax that NDP Ottawa plans to impose on businesses they say are getting rich at the expense of Canadian families.
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Matt Poirier, senior director of policy and government relations for Canadian Manufacturers and Exporters, told a House of Commons committee Tuesday the U.S. Inflation Reduction Act comes with red flashing warning lights all over it for Canada`s manufacturing sector.
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Poirier said Canada`s response in the fall economic statement needs to include matching programs on this side of the border, or “at least signal to industry that the fix is on the way.”
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Innovation Minister Francois-Philippe Champagne said Wednesday the government is on top of it.
“We will remain competitive,” Champagne told reporters following the Liberal caucus meeting. “We know that the Inflation Reduction Act in the United States and the CHIPS act is a catalyst for us to do more.”
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The CHIPS Act, which he also signed in August, provides him with $280 billion to boost domestic semiconductor research and manufacturing.
Liberals have been criticized for allowing pandemic spending to drag on longer than necessary, potentially accelerating inflation. At the same time, Canada’s strong economic recovery from the COVID-19 recession is due in part to its fiscal response.
The Conservatives have accused the Liberals of overspending, but the Liberals have also shown signs of concern. Thunder Bay _ Rainy River MP Marcus Powlowski says spending isn’t ‘restrained’ but funds Ottawa has provided to help those held back by COVID-19 19 need to spiral out of control said. Case. ”
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Still, Powlowski said now is a different time, with interest rates rising and the cost of debt rising.
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“There are more ways to be thrifty,” he said.
Former Congressional Budget Officer Kevin Page said he expects the fall economic statement to be a traditional mid-year update, but said it could also be an opportunity for Ottawa to review its targets and spending rules.
“It is important that monetary and fiscal policies work in tandem,” Page said in his email.
Freeland has repeatedly said that while the Bank of Canada will try to curb inflation by raising interest rates, the federal government will focus on fiscal restraint. Read on:
Fall Economic Statement Including Proposed Company Share Repurchase Tax: Source
Since March, he has raised the key interest rate six consecutive times from 0.25% to 3.75%. The central bank also signaled that interest rates would need to be raised to raise inflation to his 2% target.
The good news for the federal government is that its finances have improved significantly over the past year. The same inflation that forced Canadians to pay for food, gas and heating helped boost government tax revenues.
Federal funding is also benefiting from Canada’s strong economic recovery from the COVID-19 pandemic and strong corporate earnings. © 2022 The Canadian Press
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