Ian Peach: Federal budget has some good moves, but lacking imagination

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Federal Finance Minister Chrystia Freeland tabled the 2024 federal budget on Tuesday. It is a budget that, to my mind, does some important things to advance tax fairness, but it shows a lack of imagination in addressing social inequality and productivity. While it will do some good, the Liberals missed an opportunity to change Canadian public policy for a generation, as their predecessors in the 1960s had done through programs like the Canada Pension Plan and Medicare.

The most important thing this budget does to advance tax fairness for working people is reducing the unfair tax benefit provided for capital gains, compared to earned income, at least for those whose capital gains are more than $250,000 per year. This change will do a lot to level the taxation playing field between those who make most of their wealth out of owning property that appreciates in value, even if they do nothing to make our economy more productive, and those who earn incomes by working to create the goods and services that benefit us all.

The beneficial tax treatment of capital gains has always benefitted the rentier class and disadvantaged the working class. Their labour is actually both the key to the productivity increases that increase a society’s wealth and the key to a functioning market economy. It is workers who are at the end of the supply chains that make the economy go around, by buying the retail goods that everyone in the supply chain makes money from creating and selling.

The idea this budget is “unlocking the door to the middle class for millions of younger Canadians,” as Freeland described it, though, seems a bit overblown. I am disappointed the effort to bring more people into a middle-class existence is driven by a number of “boutique” expenditures and tax benefits, rather than through a comprehensive plan to boost the incomes of Canadians most in need of an income that will provide them with the flexibility and autonomy to fully participate in the economy and society.

The critics suggest that the budget missed the opportunity to enhance productivity. What experiments across the world have shown is that the most efficient way to enhance productivity, while giving people the autonomy that allows them to build their self-respect and social value, is through a universal basic income, or guaranteed annual income. This would provide everyone with a base income level that would allow them to pursue opportunities and put them in a position to contribute to the economy, their communities, and society at large.

While the new Canada Disability Benefit will provide something of a basic income support for low-income, working-age Canadians with disabilities, the government should have made its basic income support universal. Mind you, as with the national dental care plan and the “pharmacare” plan, this government has demonstrated a consistent disinterest in establishing universal programs. This is really disappointing, in part because research has shown that universal social programs, accompanied by a progressive and comprehensive tax system to fairly provide government with the funds to pay for such programs, build social cohesion and a shared commitment among citizens to defend one’s fellow citizens and the society in which we all live.

All in all, then, this federal budget demonstrates some good, and even important, public policy decisions. It is just unfortunate the federal government focussed on micro-solutions for symptoms of social inequality, rather than taking the bold and dramatic step of establishing a real solution to the underlying problem of social inequality. That could have had a positive impact on our economy and society for generations. It is an opportunity missed.

Ian Peach has worked in senior positions in federal, provincial, and territorial governments, at universities across Canada, in non-governmental organizations, and as a public policy consultant.