OTTAWA – Finance Minister Bill Morneau says he will deliver a fall economic update Tuesday to document the recent strong growth in the Canadian economy, but did not say whether it will include a plan to eliminate the federal deficit.
Morneau says the update will “affirm” plans to reverse course and cut the small business tax rate to nine per cent by 2019.
He says the update will also end tax advantages for “the wealthy few” — a plan that has landed the finance minister in a world of controversy.
He made the announcement in the House of Commons despite being under siege in recent weeks from opposition critics over the proposed changes, as well as allegations of conflict of interest involving his considerable financial assets.
Morneau and Prime Minister Justin Trudeau have subsequently tweaked the tax measures this week amid outrage from small business owners, doctors, farmers, fishers and even some Liberal backbench MPs.
The fiscal update comes as the Canadian economy is on a roll.
The Finance Department notes that real GDP growth reached a 4.5-per-cent pace in the second quarter, with a budget deficit for 2016-17 that was $11.6 billion lower than projected in the 2016 budget.
The government says real GDP has grown at an average rate of 3.7 per cent—the strongest four-quarter period of expansion since 2006 — and 400,000 new jobs have been created in the last two years.
In recent months, Morneau has tied Canada’s strong economic performance to his government’s strategy to run deficits, which helped it finance measures such as lower income-tax rates for middle earners and enhanced child benefits.
He also says Ottawa is sticking to a plan to invest more than $180 billion in infrastructure over the next 11 years, adding to annual, multibillion-dollar shortfalls across Ottawa’s five-year budgetary outlook — and perhaps beyond.
Opposition Conservatives have long been critical about the government’s plan to add to the federal debt to fund new measures, while some economists have urged Ottawa to limit fiscal uncertainty by mapping out a plan to return to balance.