{"id":405779,"date":"2020-08-18T18:37:14","date_gmt":"2020-08-18T22:37:14","guid":{"rendered":"https:\/\/www.investmentexecutive.com\/?p=405779"},"modified":"2020-08-18T19:09:35","modified_gmt":"2020-08-18T23:09:35","slug":"where-is-tax-and-fiscal-policy-headed-under-freeland","status":"publish","type":"post","link":"https:\/\/www.investmentexecutive.com\/news\/industry-news\/where-is-tax-and-fiscal-policy-headed-under-freeland\/","title":{"rendered":"Where is tax and fiscal policy headed under Freeland?"},"content":{"rendered":"

Wealth management insiders say they’re hopeful new Finance Minister\u00a0Chrystia Freeland\u00a0will provide Canadians with\u00a0greater clarity about the\u00a0direction of the Liberals’ fiscal and tax policy as the government steers its way through the economic difficulties caused by the Covid-19 pandemic.<\/p>\n

\u201cThere\u2019s a need to really reset the existing framework,\u201d says Ian Russell, president and CEO of the Investment Industry Association of Canada in Toronto.<\/p>\n

\u201cWe haven\u2019t had a [federal]\u00a0budget, we never had a coherent fiscal plan [under Morneau], and there\u2019s now a deficit of $343 billion.\u201d<\/p>\n

Jamie Golombek, managing director of tax and estate planning at CIBC, says a budget is necessary to hold government accountable. “I think it\u2019s irresponsible not to have a budget for 18 months basically.\u201d<\/p>\n

The federal budget was scheduled for release in March but postponed due to the pandemic. While the government issued its economic and fiscal “snapshot” in early July, it hasn\u2019t produced a formal\u00a0budget since March 2019.<\/p>\n

Prime Minister Justin Trudeau\u00a0named\u00a0Freeland to the role of finance minister,\u00a0the first woman in Canadian history to hold the position, on Tuesday, while\u00a0asking her to\u00a0retain her deputy prime minister role and relinquish\u00a0her role as minister of intergovernmental affairs. Trudeau also asked Governor General Julie Payette to prorogue Parliament<\/a>, with his government returning to deliver a throne speech on Sept. 23.<\/p>\n

Elliot Hughes, senior advisor with Ottawa-based Summa Strategies Canada Inc.\u00a0and former deputy director of tax policy for former finance minister Bill Morneau, says that\u00a0it \u201cmakes sense for the government\u00a0to do a full reset in response to the pandemic and the ensuing economic crisis.\u201d<\/p>\n

Freeland\u00a0\u201chas\u00a0shown over and over that she\u2019s a very competent minister\u201d in the various cabinet roles she\u2019s held, he added.<\/p>\n

Hughes says that Bay Street should find in Freeland\u00a0“a strong supporter of business and the business community in Canada\u201d \u2014 notwithstanding her 2012 book Plutocrats: The Rise of the New Global Super Rich and the Fall of Everyone Else<\/em>.<\/p>\n

\u201cShe has spent time over the last several months engaging with business leaders across the country because of her role as deputy [prime] minister and having been involved in coming up with the [Covid-19] restart agreement with provincial leaders,”\u00a0Hughes says.<\/p>\n

“I think the business community will be surprised at how open and welcoming she\u2019ll be in the finance minister role.”<\/p>\n

Russell applauds the decision to name Freeland as Morneau\u2019s replacement.\u00a0\u201c[She] is imaginative,\u00a0energetic and more responsive to a wider range of solutions and\u00a0will have a strong capacity to articulate and will have a lot of influence with the prime minister and the cabinet.\u201d<\/p>\n

While Morneau did a good job at keeping Canadian\u00a0employment levels high prior to Covid-19, Russell says, his policy-making was otherwise\u00a0\u201cuninspired\u201d and did little to promote growth.<\/p>\n

\u201cHe\u00a0dented confidence with the bumbling of taxation of small businesses, and all of the talk about infrastructure spending never amounted to much,\u201d Russell says.<\/p>\n

John Nicola,\u00a0wealth manager and CEO of Nicola Wealth in Vancouver,\u00a0says that he\u00a0believes\u00a0there\u2019s a risk, with Morneau\u2019s departure, that the Liberals, under Finance Minister\u00a0Freeland,\u00a0will\u00a0choose to turn the taps on big progressive spending programs. If it were to happen, however,\u00a0he doesn\u2019t think such spending is\u00a0likely to be paid for with big tax increases, which would be unpopular politically.<\/p>\n

\u201cAt the end of the day, there\u2019s a\u00a0lot to be said for continuing to print and dole out money and keep everything balanced, and not massively rock the boat,\u00a0especially when you\u2019re [a minority government]\u00a0on a precarious edge,\u201d Nicola says.<\/p>\n

Golombek agrees that the government will be limited in terms of its ability to hike tax rates.<\/p>\n

\u201cCertainly on the personal side, tax rates\u00a0are already very high\u00a0—\u00a0over 50% [combined federal-provincial rates]\u00a0in most of Canada\u00a0—\u00a0and they kick in at a relatively low dollar amount.\u201d He also sees a wealth tax as administratively difficult to implement, and unlikely to happen.<\/p>\n

However, there may be a greater likelihood the government would raise the capital gains inclusion rate: \u201cIt\u00a0has certainly been talked about for five years now, ever\u00a0since the Liberals have been in government, as they have been really focused on increasing taxes on upper income and wealthy Canadians.”<\/p>\n","protected":false},"excerpt":{"rendered":"

Industry experts weigh in on the federal government’s new finance minister<\/p>\n","protected":false},"author":176168,"featured_media":389948,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1,2318,2312],"tags":[3225,2812,57731],"yst_prominent_words":[6729,66274,66208,39287,22340,12567,11570,11568,11017,10631,10164,8753,8001,5845,5186,5152,2263,2170,2116,1830],"acf":[],"_links":{"self":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/405779"}],"collection":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/users\/176168"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/comments?post=405779"}],"version-history":[{"count":4,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/405779\/revisions"}],"predecessor-version":[{"id":405790,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/405779\/revisions\/405790"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/media\/389948"}],"wp:attachment":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/media?parent=405779"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/categories?post=405779"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/tags?post=405779"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/yst_prominent_words?post=405779"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}