Business worries Justin Trudeau will hike taxes to pay for housing gambit
Prime Minister Justin Trudeau’s government is set to unveil an ambitious budget aimed at fixing housing affordability and helping young Canadians — but the big question is whether it will raise taxes to pay for it.
The government has already announced at least $46 billion, including $17 billion in loans, for measures that include boosting housing supply, supporting artificial intelligence development and increasing defence spending. But the cost of debt is growing, and Finance Minister Chrystia Freeland has promised to keep the deficits under control in the budget to be released Tuesday.
“They’ll have to raise taxes and push out a bunch of already committed spending from past budgets into future years,” Robert Asselin, a former Trudeau adviser who’s now with the Business Council of Canada, said in an interview. “What else can a government addicted to spending do when faced with exploding debt service costs?”
Most economists expect deficits to continue but not substantially worsen. Finance Minister Chrystia Freeland has promised to keep shortfalls around $40 billion for the current fiscal year and the next two. Starting in 2026-2027, she plans to cap deficits near one per cent of nominal gross domestic product.
Debt charges are already up 36 per cent from the previous fiscal year, totalling $39.2 billion from April 2023 to January. They’re expected to average over 10 per cent of revenue over the next few years, eating up potential spending room.
Both Trudeau and Freeland have said they won’t raise taxes on the middle class, but have not ruled out new taxes or hikes to existing levies on wealthy Canadians or businesses. It wouldn’t be a new strategy: in 2022, the government imposed a one-time 15 per cent windfall tax on
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