Feds will keep asking for more to bolster middle class: Morneau

“It is not lost on me that, for many in this room, our plan has asked more from you,” said Finance Minister Bill Morneau during a post-budget speech on Friday in Toronto.

Still, Morneau delivered a clear message to Toronto’s business community: the government will continue to ask for more as they focus on doing “more for the middle class and those working to join it.”

Morneau said the middle class is comprised of “nearly 9 million Canadians,” and he shared a story about how a taxi driver recently thanked him on behalf of his family; the man and his wife have three young children, and now receive more help via the Canada Child Benefit. (The benefit is estimated to cost taxpayers $22.4 billion in 2017-18, an increase of $4.3 billion over the previous child benefit system.)

The government has taken aim at associated corporations and billed-basis accounting, for example. Going forward, there will be a review of the current tax code with a particular focus on high-income strategies.

During a post-speech Q&A, Advisor.ca asked Morneau about this pending review. In response, the finance minister reiterated the budget’s note that the tax system should operate “as fairly and effectively moving forward,” citing there will be particular focus on the “increased number of private corporations” that are using complex tax strategies.

As the budget states, Morneau said the government’s concerned with “at least” three items; those are income sprinkling, the use of passive investments in a private corporation and the conversion of dividends to capital gains. Morneau said a report will be released soon but couldn’t provide a date, and mentioned that report will provide more on which of those items is the main focus.

Read: How Finance might curb tax advantages for private corps

Morneau also fielded questions about the hot housing market, parental leave and the KeyStone XL pipeline, which is one way to get the “best price for our products” and capitalize on our natural resources strength.

Regarding housing, he said there are no new measures on the way to cool markets, given steps taken to increase down payments and bolster mortgage stress testing have been effective. But he’ll be monitoring the sector.

For highlights from Morneau’s speech, read Federal Budget 2017: More for the Middle.

Katie Keir

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Katie is special projects editor for Advisor.ca and has worked with the team since 2010. In 2012, she was named Best New Journalist by the Canadian Business Media Awards. Reach her at katie@newcom.ca.