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The next time a fall economic statement is released, I suggest releasing it at a time less likely to resemble a winter update. With the official start of winter just four days away, the drama surrounding the release felt like a full-blown blizzard.

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It started early Monday morning with Chrystia Freeland resigning as finance minister in not just a simple resignation, but a full-on, burn-the-house-down public resignation letter released on her X account. The public rebuke of Prime Minister Justin Trudeau and the Prime Minister’s Office (PMO) will be the stuff for history books.

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The day continued with numerous rumours about Trudeau’s possible resignation; a prorogue of Parliament; who would present the fall economic statement (FES); that the FES presentation was cancelled … but, whoops, it’s back on again … whoops, it will just be tabled with no presentation; the appointment of a new finance minister; a number of Liberal MPs calling for the prime minister’s resignation; and a Liberal caucus meeting to discuss the current chaos.

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Many expected Freeland to be shuffled out, but it appears the strategic mistake Trudeau made was telling her three days in advance of her presenting the FES that she was to be shuffled out. It appears the resignation caught the PMO unprepared for such a possibility since all signals pointed to the purported appointment of Mark Carney to the finance portfolio shortly after the release of the FES.

Alas, after the resignation and related drama, it was loyal foot soldier Dominic Leblanc who was appointed to this thankless position. If this government survives, he had better get used to the unelected and ruthless officials of the PMO meddling big time. The last couple of finance ministers ultimately couldn’t bear it.

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Such great drama and chaos, but certainly not of the good kind. Without a doubt, the vast majority of Canadians are craving positive change and stability, especially in light of how the next regime in the United States is threatening crippling tariffs and other measures that will affect our country’s competitiveness. The chaos on Monday will certainly do nothing to satisfy such cravings unless we get an early election.

Drama aside, the FES did not have many tax measures, and the obvious highlight in the overly long and vacuous update was the $61.9-billion deficit projection for the current fiscal year, which exceeded the original estimates by about $20 billion. This is without analyzing some of the games that were likely played to get to this number.

Large deficits are also projected for the next six years. Unbelievable. However, as this government has regularly shown, such projections are likely not worth the paper they are printed on.

Three sentences in Chapter 3 struck me when I was reading the FES documents: “Canadians rightfully expect their government to be responsible with tax dollars. In Budget 2023 and the 2023 fall economic statement, the government announced a total of $15.8 billion in savings over five years, starting in 2023-24, and $4.8 billion every year thereafter. These savings are being refocused towards the priorities that matter most to Canadians today, including health care, housing and an economic growth plan and industrial strategy that create well-paying jobs for workers.”

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OK, let’s be serious: the government is crowing about being frugal for a total amount of $15.8 billion. But this year’s current deficit will exceed its original estimate by more than $20 billion.

This crowing is nonsensical. It reminds me of the famous Seinfeld episode, where Jerry makes a reservation for a car rental, but no cars are available when he goes to pick it up. “You know how to take the reservation, but you don’t know how to hold the reservation. And that’s really the most important part of the reservation,” he says to the car rental clerk.

Ditto for this current government. It knows how to make economic estimates, but it doesn’t know how to stick to the estimates. And that’s really the most important part.

Regarding taxes, here are some of the highlights:

• No changes to the capital gains inclusion rate proposal. If the government survives, it will try to get this into a bill when Parliament next convenes. In the meantime, it will be a tricky time for taxpayers to comply with these proposals.
• No mention about the previously announced $250 cash handout (vote-buying bribe).
• No proactive tax measures to deal with the incoming new U.S. regime, which will most certainly provide tax and economic challenges for Canada.
• A commitment to implement automatic tax filing for low-income Canadians in 2025. The devil is obviously in the details, but I generally like this commitment.
• A proposal to make the Canada Disability Benefit tax free.
• A proposal to expand a very narrow capital gains deferral on the disposition and reacquisition of certain replacement shares. This is a very rarely used tax provision and it’s very doubtful these proposed changes will change that.
• Proposed changes to reporting by non-profit organizations. The implementation details are important, but any improvement or enforcement in this area is a step in the right direction.
• And, as usual, a bunch of “green” initiatives that are not worth commenting on.

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To quickly summarize, the 2024 FES will be remembered much more for its pre-release political drama and huge blown deficit estimate, not for its content. Like Leonard Cohen said in his 1992 song The Future, “The blizzard of the world has crossed the threshold and it’s overturned the order of the soul.”

The current political drama needs to be quickly replaced with good common sense and steady leadership for the benefit of all Canadians’ souls. Tax souls included.

Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody. 

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