The Federal Budget on Tuesday was a modest $4 billion boost to the country’s economy that could prove a welcome boost for the economy as it heads into the fall, according to data released by Statistics Canada.
The latest update to the government’s long-term fiscal forecast is that GDP growth is expected to grow by 2.2 per cent in 2018, 0.6 per cent this year and 0.5 per cent next year.
That’s still well below the 1.8 per cent growth forecast in September but a good showing from a budget that’s seen the economy grow more slowly than expected in recent months.
The government says it’s confident the tax credit will be renewed and that the economy will rebound after the end of the fiscal year in October.
“In addition to the anticipated economic growth, this Budget reflects our long-standing commitment to provide assistance to Canadians, especially the lower-income, in order to encourage them to work and to invest in the future,” Finance Minister Bill Morneau said in a statement.
The tax credit is expected back in effect for all Canadians by the end (or in the case of provinces, by the beginning of 2019) of 2019.
The finance department says the latest figures show the tax credits were used to help 1.5 million Canadians in the last fiscal year.
The budget also announced a series of measures aimed at helping the economy: the $2.5 billion boost in public infrastructure spending; a $1.3 billion increase in corporate taxes; and a $2 billion boost for rural transit.
The biggest change, however, was the addition of a small cash infusion of $1 billion from the federal treasury.
It’s not yet clear how the government will spend the money, with the federal finance department forecasting the government would have to take it out of the public purse by the middle of 2019 to pay for it.
The Finance Department also announced the creation of a new “family tax credit” that would apply to low-income earners earning between $36,400 and $56,600 and would be available to them from 1 July 2019.
For those earning less than $36.400, the credit would apply for an additional three months from 1 March 2019.
It would be paid from income tax payouts and would not include any federal transfer payments.
For those earning between about $56.600 and $64,600, the tax benefit would apply, with a maximum $2,000 limit.
It will be paid to a single person earning between the ages of 65 and 74.