Trudeau unveils $4.5B in tax cuts, rebates backed by NDP

(Bloomberg) — Prime Minister Justin Trudeau announced a C$6.3 billion ($4.5 billion) package that includes temporary relief from the federal sales tax and a one-time C$250 refund to more than 18 million Canadians. Yuan.

The plan has the support of the New Democrats, an opposition party that withdrew from a power-sharing agreement with the Trudeau government earlier this year. The agreement on the tax and rebate package strengthens the government’s stability in parliament and reduces the likelihood of early elections.

The measures are also aimed at rebuilding support for Trudeau’s Liberal Party, which currently lags far behind its Conservative rivals. Opinion polls show concerns about the cost of living and housing costs are dragging down the Prime Minister’s approval ratings.

“Our government can’t set prices, but we can give Canadians, especially working-class Canadians, more money back in their pockets,” Trudeau said in a press release.

Starting on December 14, the government will eliminate the federal goods and services tax, known as the Goods and Services Tax, on a range of goods until February 15, the news release said. These include take-out meals, restaurant bills, snacks, alcohol, children’s clothing and toys, books, newspapers, puzzles and Christmas trees.

The total cost of the temporary elimination of the GST is C$1.6 billion, the release said.

The tax relief doesn’t go as far as NDP Leader Jagmeet Singh has called for, who wants to see the GST eliminated on home heating and other monthly bills. But he said his party would support the bill in parliament.

“The NDP will vote for this measure because working people desperately need relief and we are proud to once again provide assistance to them,” Singh said in a statement. “Then we will fight to permanently eliminate daily essentials and every GST on monthly bills, as we have promised.”

The more expensive measure is tax rebate checks, which will be sent out in the spring to working Canadians who earned less than $150,000 in 2023. The government said as many as 18.7 million Canadians are eligible for tax refunds, which brings the transfer to C$4.7 billion.

An NDP vote on the affordability package would, at least temporarily, break a parliamentary deadlock that has lasted two months as Pierre Plièvre’s Conservatives blocked the progress of all legislation through procedural maneuvers.

But Singh told reporters his party would only support ending the day’s deadlock in order to pass the affordability package, which could mean parliament would then return to deadlock.

Poliyev blasted the government’s announcement as meaningless given the sharp rise in housing costs and food inflation over the past few years, as well as the national carbon tax imposed by Trudeau.

“No one believes in Justin Trudeau and Jagmeet Singh because they have plunged our people into poverty and made their lives worse,” said Poliyev, who reiterated his call for an election on a carbon tax.

The plan will raise questions about the cost to the federal treasury. Canada’s budget watchdog has warned that the Trudeau government is breaching its self-imposed fiscal guardrails.

Parliamentary budget officer Yves Giroux projected the federal government’s deficit in 2023-24 to be C$46.8 billion ($33.5 billion), higher than the C$40 billion forecast by Finance Minister Chrystia Freeland in her April budget. The government has yet to release final figures for the last fiscal year.

–With assistance from Monique Mulima and Eric Herzberg.

(Updated with comments from Jagmeet Singh and Pierre Poilievre.)

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