Anticipation Grows as Federal Budget Looms
As the federal budget announcement draws near, tax increases are the talk of the town among economists and the business community in Calgary. The city’s corporate sector is particularly apprehensive, following Finance Minister Chrystia Freeland’s recent tour that hinted at new fiscal measures to support housing and national defense initiatives.
Lindsay Tedds, a University of Calgary economist, pointed out the inevitability of revenue hikes to meet the government’s spending plans without breaching the promised deficit cap of $40.1 billion. Tedds suggested that an increase in the capital gains inclusion rate could be a plausible solution, potentially generating up to $8 billion annually.
However, Mike Holden, chief economist at the Business Council of Alberta, cautioned against any tax hikes during an economic slowdown. Despite this, the possibility of a windfall tax on sectors like oil and gas and grocery chains is causing unease. Such a tax could target companies with sudden, above-average profits, although its revenue potential might be marginal.
Deborah Yedlin, president and CEO of the Calgary Chamber of Commerce, criticized the idea of a windfall tax, arguing that it would stifle innovation and investment. The oil and gas industry, which has seen record profits recently, could be significantly impacted by such a tax.
The federal government also faces decisions on corporate tax rates. With the U.S. contemplating changes to its corporate tax structure, Canada may hesitate to make any major adjustments. Nonetheless, Tedds noted that the government could either spread out smaller tax measures or focus on significant ones like a GST hike or adjusting capital gains taxes to bridge the budgetary gap.
Amid these discussions, Meaghon Reid, Executive Director of Vibrant Communities Calgary, emphasized the need for concrete timelines for housing projects to address the city’s rising home and rent prices. Reid also highlighted the importance of maintaining affordability measures to combat poverty and food insecurity.
With various speculations and concerns in the air, Calgary’s business leaders and advocacy groups are keenly awaiting the details of Tuesday’s federal budget, which will reveal how the government plans to balance its ambitious spending against fiscal constraints.
