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This article originally appeared on The Lawyer’s Daily website published by LexisNexis Canada Inc. on March 26, 2019.

On March 19, 2019, the Liberal government tabled a highly political and targeted budget, as it prepares for the next elections.

In essence, Trudeau played to his party’s strengths by allocating incentives to certain portions of the population, such as the farmers of Quebec and Ontario, millennials and seniors.

Dairy and chicken farmers affected by trade deals will greatly benefit from this budget. In essence, the government will set aside $3.65 billion to help dairy, egg and poultry farmers who are negatively impacted because of trade deals with other countries, which make it easier for foreign producers to enter the Canadian market. Many of the farmers who will benefit from this live in Ontario and Quebec.

In terms of measures geared mostly towards millennials, the budget increases the first-time home buyers’ RRSP withdrawal from $25,000 to $35,000, lowers the interest rate on student loans and introduces an incentive of up to $5,000 for the purchase of zero-emission vehicles.

For those 25 to 65 years old, there is a job training or re-training program which gives rise to a tax credit of up to $250. The government understands that we have an aging population and that there will be a shortage in the workforce.

The budget also introduces pharmacare, although the implementation of pharmacare is delayed by least three years and will require the collaboration of the provinces. Therefore, while pharmacare seems to be a good idea, we shall wait and see if and how this is implemented and by which government should the Liberals not get re-elected.

From an economic perspective, unfortunately, the budget does not provide for any measures to reduce income tax rates for either individuals or corporations. As the United States has recently drastically cut their corporate tax and as countries in Europe are reducing their tax rates, Canada becomes less competitive for businesses and entrepreneurs.

The fact that there are no tax cutting measures in this budget will not help close the competitive gap between Canada and other countries. As an example, residents of Texas or Florida are taxed at a rate of approximately 37 per cent while residents of Quebec and Ontario pay close to 54 per cent.

The budget also introduces measures to increase taxes on stock-options whereby options in excess of $200,000 will be fully taxed (rather than only half being taxed). This increase is applicable to options granted by “large corporations” (this term is not defined yet) and is not applicable to “fast growing companies” (this term is also not defined). This measure, while it may sound good to the population, will certainly not help attract highly skilled executives to Canada.

Finally, this budget may help the Liberals get re-elected, but, unfortunately, it does not address the fact that Canada will continue to have trouble competing with other countries. Also, the deficit, which had been projected to decrease, has actually increased, which does not bode well in light of the fact that the Bank of Canada has recently stated that it expects slower economic growth for Canada in the short term.

Alexandre Dufresne is a lawyer with Spiegel Sohmer. His practice in tax includes tax planning, cryptocurrency and tax litigation.