'Not much room to increase spending without increasing taxes': PBO
CTV
The federal government has a small margin to increase spending in the upcoming budget without raising taxes, if it plans to stay within the fiscal anchors outlined in the fall economic update, according to Parliamentary Budget Officer Yves Giroux.
The federal government has a small margin to increase spending in the upcoming budget without raising taxes, if it plans to stay within the fiscal anchors outlined in the fall economic update, according to Parliamentary Budget Officer Yves Giroux.
Giroux told CTV’s Question Period host Vassy Kapelos, in an interview airing Sunday, that if the federal government wants to meet those fiscal guardrails, including keeping the deficit at less than one per cent of GDP from 2026 onward, it’s running out of room for new spending.
“But even before the budget, we estimate that the deficit for that year will be at 0.8 per cent of GDP, so that leaves very little room for additional expenditures without increasing taxes,” Giroux said. “It's probably $6 or $7 billion in room to manoeuver in 2026-27, based on their current fiscal track.”
“Of course, if the government decides to reduce expenditures in some areas, or increase taxes, it will improve its room, but as things currently stand, there's not that much room to increase spending without increasing taxes,” he added.
Finance Minister Chrystia Freeland announced this week she is set to unveil the federal budget on April 16.
According to Freeland, the budget will "unlock pathways to a good middle class life for the next generation," while also sticking to fiscal anchors she outlined in the fall economic update.
The federal government has not signalled plans to increase taxes, but has announced efforts to find more than $15 billion in savings across departments over the next five years, including an effort to reduce spending by $14.1 billion before 2028, and $4.1 billion annually in the following years.
