Budget 2024: Here’s what to look for

Article content

Over the years, it has become common for the Prime Minister’s Office — or some other connected government office — to strategically leak content to friendly journalists or, as on full display this year, have an extended period of announcements that are designed to try to make the government look good for political purposes.

Budget secrecy was sacrosanct when I first started paying attention to federal budgets and becoming interested in them (because of their importance to Canadian society and economics) decades ago. And for good reasons. Such secrecy was — and still is — important to ensure that no particular taxpayer or group has an advantage over someone by being in receipt of otherwise secret information.

Article content

Article content

Today, however, such secrecy appears to be only reserved for very obvious information. The rest is leaked or tested in various polls or used as an extended period of political announcements. I find that disappointing and an overall insult to the intelligence of Canadians and to the sacrosanctity of budget secrecy.

Having said that, what do we know will be in the budget on Tuesday? Well, given the government has rightfully been beaten up over housing shortages and increased rents, we know housing will feature prominently. It needs to be in order to try to recover from the political damage this file has cost them.

Late last week, the government released its housing plan via a document entitled Solving the Housing Crisis: Canada’s Housing Plan. The document opens by blaming the housing challenges on governments of decades past “at every level and of varying partisan stripes (who) chose not to invest in building homes. They failed to understand the need to build homes for future generations of Canadians.”

Yeah, right. Let’s ignore some of the obvious causes of our housing challenges, such as unchecked immigration, increased inflation because of out-of-control spending and a shortage of skilled labour. Without dealing with those foundational issues head on, housing challenges will continue.

Article content

Article content

The document is very short on details about how to deal with such foundational issues, but instead throws a lot of money at various initiatives, tinkers with some existing tax rules (expanding the Home Buyers’ Plan and accelerating tax depreciation for certain apartment builds) and promises to build what appears to me to be a very unrealistic number of new homes in addition to those that were already planned to be built.

Beyond the endless political spending announcements of the past couple of weeks, are there any other bits of secret tax information we can expect? Well, we don’t know since that is obviously secret. Nevertheless, I would expect to get details about any amendments to the Alternative Minimum Tax changes that were previously announced since their poor policy design will have a devastating impact on charitable donations and charities.

I’ll be looking to see if there are any personal tax increases — directly or indirectly. I doubt there will be, but wouldn’t be surprised to see some continued backdoor attacks on high-income earners — this has become somewhat routine with this particular government in recent years.

Article content

Will there be corporate tax increases or an “excess profits tax” (perhaps targeted against grocers in order to appease the NDP)? I sure hope not. Corporate tax increases would not be good overall for Canada’s competitiveness and would be a step in the wrong direction to help improve its lagging productivity. An excess profits tax is simply poor policy and sends a dangerous message to investors who have choices about where to place their investment dollars.

Will the capital gains inclusion rate increase from its existing 50 per cent inclusion rate? My guess is no, and that would be a good thing.

Will there be new personal tax credits introduced? I’m guessing yes. This government — like past governments — likely can’t help but be attracted to the easiness of introducing such credits to try to appease their voter base and attract new voters, even though such credits add complexity and unnecessary administration to the income tax system.

I’ll be looking for all of the above. But more importantly, I’ll be looking at how much the public-debt charges are expected to increase. Such yearly debt charges are approaching how much Canada annually collects in GST revenues. That is an ungodly amount of money and puts our future generations’ prosperity at risk.

Article content

I know it’s likely too much to ask for, but for once I’d love to see a federal budget that adheres to the basic principles of what a budget is: a plan that accurately predicts the amount of revenues and expenditures so as to ensure it adequately plans for the future and helps the government live within its means for the benefit of who it serves: all Canadians.

The budget plan should ensure our future generations’ financial future and prosperity are not put at risk. I’ll be assessing that risk, once again, on budget day.

Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimmoody.

_____________________________________________________________

If you like this story, sign up for the FP Investor Newsletter.

_____________________________________________________________

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.

Article content