A recent report by Statistics Canada has highlighted the impact of higher interest rates on income inequality in Canada, with the largest gap since 2015 being recorded. The report found that the increase in interest rates disproportionately affected low-income households, while high-income households saw gains in savings and investments. This led to a widening gap between the highest and lowest income brackets, the largest in eight years. The findings come in the wake of the federal government’s 2024 budget, which aims to address issues of income inequality through changes to how capital gains are taxed.
The federal budget proposes a change in how capital gains are taxed, with the wealthiest Canadians expected to pay tax on a larger share of their realized profits. This change is part of the government’s efforts to tackle income inequality and would come into effect in June 2024. Despite the proposed budget, economist David Macdonald expresses concerns about the increasing cost of living and its impact on Canadians’ ability to make ends meet. He describes the budget as focused on addressing the housing affordability crisis with long-term measures that may take several years to yield results.
The 2024 budget, described as a “go big or go home” housing budget by Macdonald, emphasizes long-term solutions to the housing affordability crisis. It is projected to result in significant new rental constructions in the future, with benefits expected to be seen in the years to come. The budget also signals a belief in the government’s ability to solve problems through increased spending and taxation, aiming to address key issues facing Canadians and support economic growth.
Despite the government’s focus on addressing income inequality and housing affordability, criticisms have been raised by opposition parties and experts. Conservative Party leader Pierre Poilievre criticized the budget deficits and linked them to the rising cost of living, while also addressing concerns about inflation. Food prices, a key affordability issue, remain high, with grocers facing pressure to stabilize prices. The 2024 budget did not directly address food prices but did unveil a national school food program aimed at tackling food insecurity among children.
The national school food program, a demand made by the federal NDP and included in the budget, aims to provide $1 billion over the next five years to support children in need. This program has been lauded as a critical step in addressing food insecurity among Canadian children, with one in four living in food insecure homes. While the government has taken steps to address food insecurity, challenges persist in the form of rising food prices and the reluctance of grocers to sign a proposed code of conduct. The budget also reflects a larger belief in the government’s role in supporting its citizens through increased spending and taxation.
