Liberals project $39.8B deficit, aim for ‘generational fairness’
Party has watched their voting base among young people evaporate
The 2024 federal budget will provide “generational fairness” to younger Canadians by raising taxes on those who have already capitalized on Canada’s economic strengths, Finance Minister Chrystia Freeland said Tuesday as she tabled the document in the House of Commons.
The budget comes as the Liberals have watched their once-healthy voting base among young people evaporate in favour of the Conservatives, largely as younger Canadians feel like the economic decks are stacked against them.
Freeland denied Tuesday that her latest budget is mainly a political exercise — but nonetheless acknowledged that for anyone under 40 in Canada, it’s “just harder to establish yourself” than it was for the generations that came before.
“It really isn’t fair what they are struggling with right now,” Freeland told a news conference earlier in the day prior to her budget speech in the House.
To try to fix that problem, the budget is promising $8.5 billion in new spending over the next five years to build millions of new homes and nearly $2.6 billion to enhance student aid and grant programs and open up new job opportunities.
“We are acting today to ensure fairness for every generation,” Freeland said.
Overall the budget projected spending will rise to $535 billion in 2024-25, compared with $497.5 billion in 2023-24. The deficit is projected at $39.8 billion, compared with $40 billion last year.
There is $11.5 billion in new spending this year and $53 billion over the next five years.
Freeland said she is maintaining the fiscal anchors she set for the government, keeping the deficit below $40 billion and to less than one per cent of GDP starting in 202627.
She is paying for some of that with better-than-expected economic growth, but also with targeted changes to the capital gains tax which is to raise more than $19 billion over the next five years.
Currently Canadians only pay tax es on 50 per cent of the money they make from capital gains, which refers mainly to profits made from selling an asset like a stock.
Freeland is adjusting that to 66 per cent for all capital gains made by corporations and trusts, and for those that exceed $250,000 for individuals.
She said the change should affect 0.13 per cent of Canadians who have an average annual income of $1.4 million.
Freeland said she believes all Canadians want young people to succeed.
Also in the federal budget, the government announced plans to free up underutilized Canada Post and National Defence properties in order to build housing at a pace and scale “not seen in generations” and help younger Canadians get into the real estate market.
The goal is creating a supply of 3.87 million new homes by 2031.
In health, the Liberals expect a new bid to curb smoking rates in the federal budget will generate $1.7 billion in new revenue for the government.
The government plans to increase the excise tax on a carton of cigarettes by $5.49 starting Wednesday, which the Liberals expect will bring in $1.36 billion over five years.
The increased cash flow coincides with the launch of a new $1.5-billion drug plan to offer universal coverage for contraceptive and diabetes medications.
Here are some key numbers from budget:
$535 billion Total government spending for the 2024-25 financial year.
$39.8 billion The total deficit, just shy of the $40-billion projection in the fall economic statement.
$11.5 billion The amount of new spending this year.
$8.5 billion What’s being spent to spur new housing.
3.87 million The number of new homes the government says its housing plan will get built by 2031.
$2.6 billion What the Liberals say will go towards “generational fairness” to ease education costs and create new job opportunities for younger Canadians.
$19.4 billion The amount of revenue Ottawa expects to get from five years of targeted changes to capital gains taxes.
$1.5 billion The five-year cost of universal coverage of contraceptives and diabetes medicine and supplies over the next five years.
$1.7 billion What Ottawa thinks it will get in five years from an increase to the excise tax rates for tobacco products.