Canada’s $343.2B deficit due to the pandemic
Canada’s $343.2B deficit due to the pandemic
The Canadian Federal Government revealed that the federal deficit is projected to hit $343.2 billion in fiscal year 2020-2021, mainly due to the massive economic aid and stimulus plans in response to the ongoing COVID-19 pandemic.
The deficit projection is up – 10 times more — from the latest pre-pandemic economic update in December 2019, which pegged the deficit at $28.1 billion in 2020-21.
Finance Minsiter Bill Morneau, who presented the financial snapshot revealing the huge deficit for the first time at the Hosue of Commons July 8, had this to say to media after his presentation, as reported by a CTV news report:
“We faced an enormous shock to our system,” Morneau said, “It’s hard to know where we will be in a month, two months, or six months. What we know for sure, is that if Canadians work together, we can continue on what we’ve seen as a month-by-month improvement of our situation, and our economic outcomes will be related to our success working together on our on our health challenges.”
Prime Minister Justin Trudeau, meanwhile, speaking to media before the snapshot was revealed, defended this extraordinary borrowing, saying rather that the people going into debt during these difficult times, the Canadian government decided to assume the debt for the emergency period.
“When the pandemic first hit, a lot of people lost their jobs overnight. They didn’t know how they were going to feed their families, or pay their bills. Faced with this unprecedented challenge our government had two options: We could sit back and let Canadians fend for themselves… or we could swiftly and substantially choose to support Canadians. We chose to support Canadians,” Trudeau said.
The opposition was quick to criticize this massive spending at the House of Commons session July 8, where Finance Minister Bill Morneau revealed the financial snapshot showing the deficit projection:
Outgoing Conservative Leader Andrew Scheer criticized the government for lacking a plan to deal with the huge deficit and get Canada’s economy back on good standing.
“Coming out of the pandemic, every single country on the planet will be desperately competing for the same opportunities and the same investments, so where is the prime minister’s plan to set us apart?” Scheer said.
NDP Leader Jagmeet Singh is asking the federal government to look to offshore tax havens as a source of additional revenue to help solve the huge debt and deficit, as well as impose higher taxes on the wealthy to raise revenue.
“Let’s ask the wealthiest to bear the brunt of the pandemic, not the families and the working people who are struggling to get by,” Singh said.
Green Party Parliamentary Leader Elizabeth May asked the government to act on the promised aid for people with disabilities which has not yet been implemented despite its promise many weeks ago.
Canada Emergency Response Benefit
• Announced: March 25, 2020
• What: A taxable benefit of $2,000 monthly for up to 24 weeks for workers who have lost their jobs or can’t find work from COVID-19.
• PBO costing for 2020/21: $71.3 billion
• Modification(s): This package was extended from 16 to 24 weeks, increasing its projected value.
Canada Emergency Wage Subsidy
• Announced: March 27, 2020
• What: A 75 per cent wage subsidy program for qualifying businesses for up to 24 weeks to prevent employee layoffs.
• PBO costing for 2020/21: $56 billion
• Modification(s): This package was extended from 12 to 24 weeks, increasing its projected value. The government increased the subsidy from 10 to 75 per cent.
Canada Emergency Business Account:
• Announced: April 9, 2020
• What: An interest-free loan of up to $40,000 for small businesses and not-for-profits.
• PBO costing for 2020/21: $9.335 billion
• Modification(s): The eligibility of this program was expanded – lowering the payroll cut off point from between $50,000 and $1 million to between $20,000 and $1.5 million.
Canada Student Emergency Benefit:
• Announced: April 22, 2020
• What: A taxable benefit of $1,250 for students and $2,000 for students with dependents or a disability.
• PBO costing for 2020/21: $5.9 billion
• Modification(s): The amount paid out to students with a disability or child was increased from $1,750 to $2,000.
(PRESS RELEASE)
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