The Trudeau government’s latest round of upcoming tax hikes will hit Canadians hard with higher payroll, carbon and alcohol taxes
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New year, same plan from Prime Minister Justin Trudeau: take more money from Canadians.
In 2025, the Trudeau government will reduce Canadians’ take-home pay by increasing mandatory Canada Pension Plan and Employment Insurance contributions, costing workers up to an additional $403 annually. Federal payroll taxes will cost a worker making $81,200 or more a total of $5,507 in 2025. Their employer will also be forced to pay $5,938.
At the same time, the Trudeau government is adding to financial pressures by raising the carbon and alcohol taxes, further driving up the cost of living. On Apr. 1, Trudeau will again crank up his carbon tax to 21 cents per litre of gasoline, 25 cents per litre of diesel and 18 cents per cubic metre of natural gas.
The Trudeau government claims “families are going to be better off” with its carbon tax and rebates. But the government’s own non-partisan, independent budget watchdog shows the government is using magic math.
According to the Parliamentary Budget Officer, the carbon tax will cost the average family up to $477 more than the rebates they get back in 2025.
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The government also charges its sales tax on top of the carbon tax. This carbon tax-on-tax will cost Canadians $500 million in 2025. And the government doesn’t even pretend to rebate that money back.
You could be forgiven if Trudeau’s tax hikes drive you to drink. But Trudeau will be reaching deeper into your pockets when you pick up that case of Canadian, a bottle of Pinot or Mickey of rum.
On Apr. 1, Trudeau will again hike alcohol taxes by two per cent, costing taxpayers about $40 million. And even that downplays the impact of Trudeau’s booze tax binge.
In 2017, Trudeau imposed an alcohol escalator tax that automatically increases excise taxes on beer, wine, and spirits every year without a vote in Parliament. According to Beer Canada, the tax has cost taxpayers more than $900 million since its enactment.
And don’t forget about the tax hikes Trudeau imposed following his most recent budget.
University of Calgary economist Jack Mintz estimates “1.26 million Canadians (almost five per cent of taxpayers) will be affected by the increase in the capital gain tax on individuals, half of whom earn less than $117,000 per year.”
Mintz also estimates that because of the capital gains tax increase, “Canada’s capital stock will fall by $127 billion; employment would decline by 414,000; GDP will fall by almost $90 billion; and real per capita GDP will decline by three per cent.”
In June 2024, the government also imposed an online streaming tax and a digital services tax.
The online streaming tax requires “online streaming services to contribute five per cent of their Canadian revenues to support the Canadian broadcasting system”. It will cost “an estimated $200 million per year.”
The digital services tax targets large companies operating online marketplaces, social media platforms and businesses earning revenue from online advertising, such as Amazon, Google, Facebook, Uber and Airbnb.
Canadians should expect to pay more to stream their favourite music and shop online because of these new taxes.
“As Canada’s affordability crisis remains a significant challenge, the government needs to avoid adding to this burden,” Graham Davies, President and CEO of the Digital Media Association, warned about the online streaming tax.
“An economic impact assessment of the French digital services tax shows that about 55 per cent of the total tax burden will be passed on to consumers, 40 per cent to online vendors and only five per cent borne by the digital companies targeted by the new tax,” according to the Tax Foundation.
Instead of taking more money from Canadians’ pockets, Trudeau should take a look at his polling numbers and reflect on why Canadians are fed up. Then he should cut taxes.
Franco Terrazzano is the Federal Director of the Canadian Taxpayers Federation.
Explore more on Taxes, Federal taxes, Federal debt and deficit, Cost of living, Trudeau government
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