Some relief may be on the way for Canadians with student loansthanks to a new measure tabled Thursday in the federal government’s Fall Economic Statement (FES).
The elimination of interest on student loans is just one of the new measures outlined in the document, which addresses worrying global economic trends and aims to keep its “powder dry” with prudent spending.
“I am confident that we have taken the right approach in general and in this fall economic statement,” said the Minister of Finance and the Deputy Prime Minister. Chrystia Freeland Thursday.
“What we are announcing today is to strike a balance between the compassion and support needed for Canadians and fiscal responsibility.
Here are some of the other measures the government is proposing as economies around the world brace for continued uncertainty:
Canada Workers Benefit Advance Payments
Each year, three million of the lowest paid Canadians qualify for the Canada Workers Benefit, a refundable tax credit that is added to their income.
However, the benefit is usually paid through tax returns, which the government says in the FES means Canadians “have to wait until the end of the tax year to receive the assistance”.
Inflation will determine Canada’s economic fate, says Ottawa’s financial update
Starting in 2022-23, Canadian workers who qualified for this benefit the previous year will automatically receive advance payments based on their previous tax returns – a measure that is expected to cost around $4 billion over the next six years. .
“Any additional fee for the year would be provided when filing their tax return for the year,” the FES detailed.
Those eligible will receive “up to” $714 in total for single workers and up to $1,231 in total for families, according to the document.
Eliminate interest on student loans
During the COVID-19 pandemic, the government waived interest charges on student loans for two years – but that decision expires on March 31 next year.
From now on, all student loans and apprentice loans in Canada will be “permanently interest-free, including those currently in repayment, starting April 1, 2023”.
The move comes with a price tag of $2.7 billion over five years, then $556.3 million after that — and is expected to save the average student borrower $410 a year, according to the FES.
Sahir Khan, executive vice president of the Institute of Fiscal Studies and Democracy, said that while the decision as a whole will not have a “massive” impact, it “will matter to people who are (affected) by this news. measures”.
Freeland warns of tough times ahead in fall budget update
“This government is not trying to fight global inflation, but it is trying to make life easier for those who are somehow affected the most,” he suggested.
Hurricane Fiona devastated communities in Atlantic Canada, and while recovery efforts are “still ongoing” and damage costs are still being tallied, more federal funding is on the way.
The fall economic statement sets aside $1 billion in 2022-23 in anticipation of provincial requests for disaster financial assistance programs.
Nova Scotia prepares for challenges of rebuilding after Fiona’s destruction
Insured damage from the storm alone was estimated at around $660 million. The Insurance Bureau of Canada warned that most of the damage from the storm was in high-risk flood zones, where insurance coverage is not always available.
As a result, IBC said the government is expected to bear the majority of the costs of the disaster.
The government said in the economic statement that it plans to invest new funds to pivot the Canadian economy towards more sustainable jobs in a new era marked by climate change.
Measures include investing in a sustainable employment training centre, which would study changing skills needs so that workers can be trained for a ‘low-carbon economy’, creating a ‘flow sustainable jobs’ within the framework of the Union’s training and innovation program and the launch of the sustainable development programme. Jobs Secretariat, which is said to offer “up-to-date information” on opportunities as the government builds a “low-carbon economy”.
The government plans to commit $250 million over five years to this effort. It also aims to provide $60 million over three years to support existing territorial programming.
Green investor tax credit, job-focused measures
In an effort to attract investment to Canada’s borders, the government is proposing a refundable tax credit that will be “equal to 30% of the capital cost of investments,” the document states.
However, not all investments are eligible. The tax credit is reserved for companies that invest in green electricity generation systems, stationary electricity storage systems that do not use fossil fuels, low-carbon heating equipment and vehicles zero emissions.
The success of this measure will be in the hands of investors, warned Khan.
“You are trying to convince private investors to move their money into an area that (is) uncertain. So the government is trying to reduce the risk, but they have yet to come back,” Khan said.
“It brings the private sector to cooperate. All the federal government can do is prime the pump, but ultimately it will be the private sector that will drive this growth.
Fall Economic Statement: Canada will boost investment in clean energy industries
There is also more money for the National Research Council – $962.2 million “on a cash basis” over the next eight years, with an additional $121.1 million in the current year, and money to get young Canadians into the job market with $802.1 million in funding targeted at internships through the Youth Employment and Skills Strategy.
New protections for truckers
The government plans to try to crack down on employers who violate the Canada Labor Code, according to its proposed investment of $26.3 million in Employment and Social Development over the next five years.
The funds will be aimed at taking ‘stronger action’ against employers who fail to comply with the Canada Labor Code, after a number of employers were criticized for wrongly classifying their truck drivers as independent contractors – a measure that can allow employers to circumvent wage and benefits rules.
The government is proposing to impose a new tax on share buybacks, after companies buy back their own shares in a bid to restore value to existing shareholders.
Under the proposed rule, companies would have to pay a 2% corporate-level tax on the net worth of all types of share buybacks – a levy that would come into effect on January 1, 2024.
It’s one of the few “big moves” in an otherwise cautious statement, Khan said.
“This is really an attempt to get corporations to stop generating incremental returns for shareholders and to get that money – which otherwise might sit idle – into building factories (and) investing in R&D,” he said.
Launch of consultations on cryptography
Starting Thursday, the government announced that it had launched consultations with stakeholders on digital currencies – a move that had been promised in the 2022 budget.
The talks will explore “cryptocurrencies, stablecoins and central bank digital currencies” after online funds were used to “evade global sanctions and finance illegal activities, both in Canada and around the world” , said the FES.
The government has pledged to eventually undertake a comprehensive legislative review of the financial sector on the “digitalization of money” and “maintaining the stability and security of the financial sector”.