Federal budget: a “grocery discount” and targeted measures on the menu | Federal Budget 2023
Minister Freeland will also announce significant investments in the green energy sector.< p class="sc-v64krj-0 dlqbmr">Finance Minister Chrystia Freeland
The federal budget to be unveiled by Finance Minister Chrystia Freeland on Tuesday will include a “grocery discount” for low-income families to help them cope with inflation.
Just over $2 billion will be allocated with this measure, which will benefit 11 million Canadian households, according to information obtained by CBC from a government source. This assistance will take the form of a one-time payment and will be distributed as a GST credit.
This grocery discount will not be based on individual food expenditures, and the government will not require recipients to use the amount for groceries, the source explained.
“This is a targeted measure that will not fuel inflation. »
—A government source
This was one of the main objectives of the federal government with its 2023 budget: Not to add fuel to the fire of inflation, said Ms. Freeland last week during the a visit to Quebec.
We will have targeted measures in the budget to help the less fortunate and, at the same time, we will have a responsible policy on the tax side, said the Minister of Finances.
The grocery discount is part of the measures aimed at easing the burden of those who are hardest hit by current economic pressures.
A single person without children could receive up to $234. A couple with two children could get up to $467, while a senior could get $225. The timing of these payments is not yet determined.
With its next budget, Ottawa also intends to tackle hidden costs for certain goods and services, such as cell phones, Internet and tickets to shows and events. The cooperation of the provinces will, however, be necessary in this file.
Among the other planned assistance measures, there is the increase in the limit on withdrawals from the registered savings education (RESP) for post-secondary education. The limit would increase from $5,000 to $8,000 to reflect the rising cost of college and university education.
The federal budget will include significant investments in the renewable energy sector. It will notably include a tax credit for the production of “clean technology” amounting to up to 30% of the capital investment in equipment.
Several provinces, including Quebec, have adopted a green hydrogen strategy.
This measure will benefit, among other things, the sector of critical minerals, whose production Ottawa wants to accelerate. The federal government wants this tax credit to serve as an incentive to promote the development of this type of energy, which is in growing demand in the United States.
The Clean Hydrogen Investment Tax Credit, announced last fall in the federal economic statement, will also take shape in the budget. Companies that invest in this sector, while increasing the wages of their employees, will be the ones to benefit the most from this credit, according to information obtained by CBC from a government source.
There are similar incentives for unionized workers in the United States. We want to reproduce them, in part, said this source. She said Ottawa consulted with unions over the past two months in developing the measure.
The federal government plans to return to a balanced budget in 2028, as announced in its last economic statement.
Investments in the energy transition were among the main expectations for the federal budget as Canada tries to stay competitive with the United States in renewable energy production.
The Curbing Inflation Act, which was passed by Congress in August, allowed the US government to inject nearly US$400 billion into critical minerals, batteries, electric vehicles , electricity and hydrogen.
Ottawa has also pledged a lot of money for health care. Indeed, the federal government recently signed 10-year funding agreements with the provinces on health transfers. These expenditures should be accounted for in the federal budget.
The current economic context and the increase in the cost of living have also created expectations towards the federal government and a need for measures affordability.
The federal government will have to spend with some caution, however, given the uncertain economic outlook. Indeed, experts believe that Canada could enter a recession this year, as high interest rates increasingly weigh on the economy.
< em>With information from Karina Roman, CBC News, and The Canadian Press