This post summarizes recent developments in the Fiscal Monitor data to help Canadians better understand recent developments in federal public finances. In addition, we use the monthly data to construct projections for total federal revenue, expenses and the budget balance by the end of the fiscal year. Read this articleThe federal Fiscal Monitor data for November 2022
Proponents focus on the average fiscal cost of program spending when the interest rate on government debt is less than the economy’s growth rate. They ignore the potentially large marginal fiscal cost of deficit-financed increases in spending that arise when a higher public debt increases interest rates on government debt and lowers growth rates. Read this articleNo ‘free lunch’ with debt-financed government spending
The Biden administration has announced plans for student loan forgiveness. It would make little sense for Canada to follow suit. That would disproportionately benefit borrowers in the upper half of the income distribution. Read this articleCanada does not need a U.S.-style student loan forgiveness plan
The recently approved project could significantly improve Newfoundland and Labrador’s long-run fiscal prospects. Read this articleBay du Nord: A fiscal game-changer for Newfoundland and Labrador?
The federal equalization program and per-capita block grants such as the Canada Health Transfer and Canada Social Transfer have their critics. But equalization helps to prevent outmigration from “have-not” provinces, and block grants in effect substitute federal taxes for less efficient provincial ones. Read this articleEvaluation of federal transfers to the provinces
While only preliminary details about the FHSA have been released at this stage, some important policy issues arise from what we know so far. Read this articleAn early look at the new federal Tax-Free First Home Savings Account
A new tool from Finances of the Nation helps make sense of the long-term fiscal future of Canada’s federal government. Under several reasonable scenarios, the government’s finances are sound. But under others, concerns around long-run sustainability may mount. Read this articleA new tool to understand Canada’s fiscal sustainability
The CWB increases supports lower-income workers, and recent enhancements have made it more generous. The change also allows for the addition of new beneficiaries, which is particularly important for dual-earning couples. However, the reform also increased the effective tax on earned income for some workers, and therefore potentially lowers the incentive to work. This is especially notable for couples with children where two spouses work. Read this articleDoes the Canada Workers Benefit enhancement achieve its purpose?
A vaccine tax is less coercive and more socially efficient than a vaccine mandate. We estimate that a tax of $1,500 per vaccination or booster per year is needed to effectively encourage opponents to get their shots. This amount is large enough to be salient to vaccine-hesitant, yet small compared to penalties imposed on daily smokers and heavy drinkers – where the economic case for penalties is far weaker than it is for COVID-19. Read this articleThe case for a vaccine tax
The current tax preference for capital gains costs $35 billion annually – with high-income families accruing most of the benefit. The recent passage of Bill C-208 exacerbates these issues. To fix these problems, the inclusion rate for capital gains should rise to 80 per cent from the current 50 per cent. Read this articleWhy won’t Canada increase taxes on capital gains of the wealthiest families?
