Fall Federal Budget: Will Spending Be Cut?

Canada has historically presented an annual budget since Confederation in 1867, even through periods like World Wars and the Great Depression, but we have recently experienced the longest period without a full federal budget in our history. By the time the next one is brought down, expected in October 2025, it will have been 18 months since the controversial April 2024 budget which introduced the doomed capital gains inclusion rate hikes. What can we expect?

It was a controversial move that contributed to the resignation of Canada’s Finance Minister:  a GST/HST Holiday and a proposed $250 Working Canadian’s Rebate for those who filed a 2023 tax return, had a net income under $150,000, and also contributed to the CPP.  Was it a good idea? The future of the Working Canadian’s Rebate remains uncertain, as it was noticeably absent from the government’s December 16 Economic statement, and that’s okay by Knowledge Bureau Report readers:  85% answered no to going ahead with this poorly-received program.  Here’s what our readers said:

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December 16, 2024.   Amidst the drama of the resignation of the Finance Minister, the Fall Economic Report itself was shocking in it’s revelation of a projected $61.9 Billion dollar deficit for the year 2023-2024 and another $48.3 billion for 2024-2025, with  no end of deficit spending in sight for the rest of this decade.  This will generate public debt charges that grow from $47.3 billion in 2023-2024 to $69.4 Billion in 2029-2030.  These are swoon-worthy numbers that do not take into account the potential economic fallout of threatened tariffs from the U.S. and the effect this might have on nominal GDP, the indicator of growth (or loss) of tax revenues going forward.  Subscribe to KBR now to get the full report, and check out a summary of the tax measures below.

Winnipeg, which already has one of the highest residential tax rates in Canada,  is the latest city to propose a property tax increase this week.  At 5.95%, this is the largest increase in 34 years and is expected to raise $44.4 million dollars.  What is behind these tax increases, and why, when taken together with the convergence of other layers of tax, is tax reform so urgent in Canada today?

Will seniors be receiving a raise in early 2025?  Unfortunately, not, at least for the first quarter.  Adjustments to the benefits are based on the Consumer Price Index (CPI), OAS and GIS benefits will not be increasing for the January to March 2025 quarter.