No one has to wait for Canada to become completely broke:
If you make $73,200 or more, you’ll be paying an extra $347 in payroll taxes in 2024, for a total tax bill of $5,104.
Your employer will also be forced to fork over $5,524 in the new year.
The federal government is imposing a new tax called “CPP2.” The original CPP taxes your income at 6% up to $68,500. The new CPP2 expands that threshold and taxes additional income at 4% up to $73,200.
(Sidebar: how is that for middle-class?)
Trudeau likes to claim he’s “working to make life more affordable.” But he’s also hiking a tax that directly makes life more expensive — the carbon tax.
The carbon tax increases the price of gasoline, diesel and home heating fuels, which is a big deal in our vast, cold country. The carbon tax also makes groceries more expensive, as it increases costs for the farmers who grow our food and the truckers who deliver it.
The carbon tax will cost the average family up to $911 in 2024 even after the rebates, according to the Parliamentary Budget Officer.
The feds are also scheming up a digital services tax. This new tax targets social media platforms, companies operating digital marketplaces, and businesses earning revenue from online advertising, such as Amazon, Google, Facebook, Uber and Airbnb.
Consumers should expect to pay higher prices because of the tax. When faced with the 3% DST in France, Amazon increased its commission charge to French vendors by the same amount.
You could be forgiven if all these tax hikes drive you to drink.
But when you pick up that case of Blue, a bottle of Pinot or a mickey of rum, Trudeau will be taking an extra 4.7% from you through his alcohol tax hikes.
Next year’s federal alcohol tax hike is expected to cost taxpayers almost $100 million.
Taxes in Canada already account for about half of the price of beer, 65% of the price of wine and more than three-quarters of the price of spirits.
(Sidebar: put those warning labels on alcohol bottles instead.)
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“It’s a tough time to be a small business owner” may be the understatement of the year just ending. Speak to any business owner in your community and they will tell you that over the past 12 months, nearly every line item in their budget has gone up: food, fuel, rent, insurance, utilities, not to mention the challenges created by labour shortages, supply chain issues and lingering pandemic debt.
To make matters even worse, only about half of small businesses are back to pre-pandemic sales levels. Many owners say customers have been slow to return and are spending less on average when they do. Data from the latest Canadian Federation of Independent Business (CFIB) monthly business barometer indicates both that insufficient domestic demand is limiting business’ ability to grow and that business owners are not optimistic things will get better anytime soon.
The new year will bring new challenges as Ottawa piles on four major tax hikes.
As of Jan. 1, changes to both the Canada Pension Plan (CPP) and Employment Insurance (EI) premiums will increase payroll taxes by up to $348 for workers and $366 per employee for employers. As a result of these increases, an employer paying the maximum CPP/EI contributions will pay up to $5,524 per employee. To say nothing of the other payroll taxes, such as workers’ compensation premiums, that business owners must pay, or the payroll levies for education or health care that they face in several provinces.
Then on April 1, the carbon tax rises from $65 per tonne to $80, while the alcohol excise tax is automatically adjusted for inflation. Assuming Ottawa doesn’t legislate a freeze or cap, the increase will be about 3.5 per cent.
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Oxford believes the recession started in Canada in the third quarter of 2023 and will continue until the second quarter of 2024, resulting in a 1.1 per cent peak to trough decline in gross domestic product.
(Sidebar: a decline in gross domestic product, you say.)
Economic activity will continue to contract through the mid-year as mounting mortgage renewals push up debt service costs, forcing consumers to pull back on spending.
The housing correction, now in its fifth quarter in a row, will continue as highly indebted households are forced to deleverage. Oxford predicts another 5 to 10 per cent drop in home prices by mid 2024, bringing the overall correction to a 22 per cent decline from the peak in February 2022.
Businesses will struggle during the first half of the year as profits are hit by reduced demand and tighter credit conditions depress capital investment and hiring plans. At the same time a slowdown in the United States will hurt Canadian exports which are not expected to return to pre-recession levels until 2025, they said.
The second theme that Oxford identifies is population growth. With another 1.5 million new arrivals expected over the next two years, the labour supply will grow but the boost to actual economic activity will be gradual. Thus supply will continue to outpace job growth, driving the unemployment rate up to 7.5 per cent by the third quarter of 2024.
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I believe it's called welfare:
The concept of providing all Canadians with free money to alleviate poverty has been gaining traction on social media, as a Universal Basic Income (UBI) bill works its way through Parliament.Bill S-233, which would require the development of a framework for a Guaranteed Livable Income, is currently being reviewed by the Standing Senate Committee on National Finance, while an equivalent private members’ bill has been tabled in the House. It is rare for private members’ bills to become legislation, unless they get the backing of the government.The first place in Canada to engage with the concept of UBI was the province of Manitoba, which launched a “Mincome” project that provided payouts to lower-income households from 1974 to 1979, in parts of Winnipeg and Dauphin. The administrators said the experiment led to a decline in hospitalizations, but the program was ended after the government cited issues with unsustainable rising costs. ...According to an April 2021 report from Parliamentary Budget Officer (PBO) Yves Giroux, a national UBI program would initially cost $85 billion a year in 2021–22 and rise to $93 billion by 2025–26. The report used the parameters of Ontario’s UBI scheme, which gave individuals and couples at least $16,989 and $24,027 of income per year, respectively, as well as an additional $6,000 per year for people with disabilities.Based on the models used, the PBO’s report said a UBI program would reduce poverty rates in Canada by almost half while having low impacts on the country’s labour supply. The incentive and disincentive aspects of the scheme used in the modelling were based on academic literature.However, Mr. Giroux told senators in October 2023 that implementing such a scheme would come at the cost of the middle class.“Obviously, if you want to create a program of this scale at zero cost, you need losers. Yet the losers would mostly be found in the top 60% of income earners, which I believe includes a good portion of the middle class,” he said.
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According to Charlebois, one of the authors of the Canada Food Price report, a joint effort involving research teams at Dalhousie, the University of Guelph and the University of Saskatchewan, 2023 was a rough year for sugar cane crops in Latin and South America because of poor growing conditions.
Holiday bakers have already noticed as sugar prices — particularly for brown sugar — have surged, leaping as much as 15 per cent since early November.
Another surge in chocolate prices has added a double dose of depression for those with a sweet tooth.
Ghana and Ivory Coast, two of the world’s biggest cocoa producers, were hit hard by black pod, a disease that turned the fruit on cocoa trees black, severely limiting production. It was caused by El Niño weather conditions, resulting in unusually warm and wet conditions in west Africa.
Accordingly, cocoa futures are at a 45-year high on world markets and there probably won’t be any relief from high prices for shoppers. Dark chocolate, in particular, won’t come cheap.
“Expect chocolate to be more expensive for the holidays, for Valentine’s Day and Easter,” Charlebois said.
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Finance Minister Chrystia Freeland in a legal notice Christmas Eve proposed to allow pawnbrokers to charge 60 percent interest on loans. Freeland had promised reforms to 1980 usury laws to protect “the most vulnerable people in our communities.”**
In addition, more public servants switched jobs, resigned or were investigated than at any time during the Trudeau government’s mandate, new statistics from the Public Service Commission of Canada show.
The commission’s annual report, tabled last month in Parliament, says the size of the federal public service reached 274,219 employees at the end of the most recent fiscal year on March 31, 2023, as defined by the Public Service Employment Act. That was up 6.5 per cent year over year and 40.4 per cent higher than the end of the 2014-15 fiscal year.
That’s consistent with figures published by the Treasury Board of Canada Secretariat last year showing that total public-service employment, including departments and agencies not included in the PSC count, increased over the same period by 39 per cent, to 357,247 people, also a record.
According to the commission, the government hired 71,200 external employees during the 2022-23 fiscal year, nearly 10 per cent more than during the previous year. A PSC staffing data website shows that 59.3 per cent of external hires and internal promotions that year were done through non-advertised processes.
That share of total hiring and promotion activities done without advertised postings has climbed every year since 2014-15 when it was just 21.7 per cent.
The growing size of the public service has been accompanied by higher spending, notably a 30.9-per-cent jump in personnel expenditures in 2021-22 from two years earlier, the Office of the Parliamentary Budget Officer said in a 2023 report. Government-wide spending on professional and special services also grew by 14.7 per cent per year on average over the two years, reaching $17.5-billion in 2021-22, the PBO found.
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Mr. Craig of SecondStreet said staff shortages are aggravated by poor working conditions in government hospitals.
"When we talk to nurses in Ontario who choose to work across the border in Michigan, they'll tell you things like, 'Well, I like working in Michigan because I can work a nine-to-five job, have that stability,'" he said. "They can plan their lives around it, rather than having rotating shift work or being offered part-time positions and having to constantly pick up shifts randomly here and there to make a living."While many fear private facilities could drain qualified staff from public hospitals, Mr. Craig believes an increase in private-care options could help."We went to Sweden this year to talk with people over there about how their health-care system works. One of the people who's been involved in reforms for years noted that when you have more employers in health care, you end up with more employees," he said.Canadians are already travelling out-of-country to get private treatment, Mr. Craig noted. Adding more private options while continuing the public system in Canada could be a good solution, he said.Ontario, for example, is increasingly allowing patients to use their provincial health card to get publicly funded surgeries at private clinics. Saskatchewan has also had success with this model, he said.Mr. Craig cited the recent case of cancer patient Allison Ducluzeau in British Columbia. Doctors gave her a couple of months to live, saying they couldn't help her. She was offered medical assistance in dying (MAID), she told Global News.
She then sought care in the United States and is now recovering well. She has been trying to get reimbursement from the B.C. government for the care she received across the border.
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