March 24, 2017 / Published 11:00 AM EST / Rob Mann, Staff Writer
The 2017 Canadian Federal budget, and what it means to you
Prime Minister Trudeau announced the new 2017 Canadian Federal budget this week, and Canadians are talking about what it means to them. It’s effectively a follow-up to the 2016 budget, with the more comprehensive 2017 Federal budget set to debut later this year. Here’s a summary of the new budget items, and how they could impact you. (Prefer visuals? There's an infographic at the end, just for you.)
New parents, rejoice!
For many Canadians, parental leave and daycare funding are the biggest updates. New parents can now choose between taking an 18-month leave with 33% of their weekly earnings, or the current 12-month option with 55% of their earnings. Expecting mothers can now also claim Employment Insurance (EI) 12 weeks prior to their due date, up from the current 8 weeks.
What does this mean for you? Well, many new parents may opt for the 18-month option, due to the high cost of daycare. If everybody did this, it could lower demand for daycare, opening up more spots for children and potentially lowering costs due to decreased demand for services.
In addition to parental leave, the government will set aside $7 billion over 10 years for Early Childhood Education (ECE) programs, waive the $1,000 processing fee for foreign nanny work permits, and amend EI to introduce a new caregiver benefit to help families deal with serious illness and injuries.
Public transit credits take the backseat
At first glance, it’s easy to ignore the removal of the public transit credit. But for low-income Canadians who really benefit from (and may even rely on) that extra couple hundred dollars they get in their tax refund, this could really hurt. That’s groceries, new school supplies, or maybe even prescriptions that those Canadians now need to find extra money for.
Saturday Night’s alright for higher taxes
Tax on alcohol will increase 2%, while cigarettes will see an increase of 2.5%, costing an extra nickel on a case of beer, and a few cents on a pack of cigarettes. The bigger announcement is that Uber will now pay GST, the same that taxis currently pay. Ultimately, the Uber tax may drive more people to take transit at the end of the night
Better education for indigenous and First Nations communities
This may only directly impact a small group of Canadians, but it cannot be overstated how significant this is. The new budget includes a variety of educational programs for Indigenous youth and First Nations communities, with $40 million over 5 years to provide more than 12,000 indigenous students with access to post-secondary studies. The budget also provides $30 million per year to promote, preserve and expand Indigenous languages.
In addition to more accessible education, the budget also proposes $828.2 million for Indigenous health services, and $4 billion for housing, clean water, health facilities and community infrastructure. This is a huge step forward.
More affordable housing
Prime Minister Trudeau promised to set aside $11.2 billion over 11 years for the affordable housing fund. This is less than the $12.6 billion over 8 years that was promised last year, but for cities and towns who have been shouldering the full weight of affordable housing for their communities, this is an enormous help.
Stock Option Deduction Benefit, not deducted
This isn’t a new addition to the budget, but many Canadians are upset that the stock option deduction wasn’t removed, as the Liberal government initially promised. It’s an $840 million loophole that mainly benefits the top 10% of earners, but it is also in place to help startups entice talent by offering ownership shares to supplement salaries.
The truth of the matter is, this will likely be reviewed later this year once U.S. President Donald Trump announces the U.S. budget. Like it or not, we have to be competitive with the States for talent, and income is a top factor in that.
For more details and insight on the budget and how it could affect you, check out this BNN interview with Frances Donald, Manulife Asset Management Senior Economist.