It is widely argued that the rise of extreme income and wealth inequality, combined with the stagnation of wages of the middle-class and working class, have helped fuel the rise of right-wing populism and racism around the world. Many in the political centre, and not just the left, have called for robust policy measures to help create more equal societies and to counter the perception – and reality – that the economic system is rigged against ordinary working people.
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.
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.