The major challenge for the federal government in the budget was to maintain its commitment to progressive social and economic policies in the face of criticism from the right for its supposedly profligate fiscal policies and unwise promises to make the tax system more progressive. The government was also urged to trim its sails in the face of pending tax cuts in the United States.
The major challenge for the federal government in the budget expected this month is to maintain its commitment to progressive social and economic policies in the context of a major shift to the political right in the United States.
Special tax treatment of dividend income costs a lot in terms of foregone government revenues, mainly benefits the very affluent, and thus merits serious re-consideration as part of the federal government's current review of tax expenditures.
Progressive tax reform to promote both greater distributional fairness and increased fiscal capacity to fund social programs and public services should be squarely on the agenda for the 2017 federal budget. Indeed, with faltering growth, the federal Liberals will be hard-pressed to meet their commitments to new investments,while still ensuring a promised decline in the federal debt to GDP ratio, if they do not significantly increase revenues.