Finance Minister Chrystia Freeland has tabled the federal government’s economic roadmap to lead Canada out of the depths of the pandemic. It’s another big-spending budget with measures aimed at putting Canada on a sustainable fiscal path, with a push to address affordability. Here are nine things you need to know about Budget 2022.

Fiscal anchors intact, but no path back to balance

The Trudeau Liberals are now forecasting a deficit of $52.8 billion in fiscal 2022-23, about $5 billion less than the $58.4 billion forecast in the Fall Economic Statement. The feds are projecting the deficit will decline over the course of the forecast horizon to $8.4 billion in fiscal 2026-27.

Ottawa also sees the key debt-to-GDP ratio falling from 45.1 per cent this year to 41.5 per cent at the end of the horizon. The feds have repeatedly pointed to a shallower deficit path and a declining debt-to-GDP ratio as key fiscal anchors to determine the sustainability of Canada’s finances.

Revenue boon gives wiggle room on spending

The overall improvement in the domestic economy and subsequent boost to revenue has given the feds the opportunity to both boost spending and keep those key fiscal anchors in decline. Overall, the government estimates it will generate about $15.4 billion more this fiscal year than previously anticipated, helping to pay for the estimated $7.4 billion worth of new spending announced in Budget 2022. Overall, the federal government is projecting income tax revenues will be an average of $10.5 billion a year higher than earlier forecast due to an improving outlook for corporate profitability and the labour market.

A smaller tax hike on the big banks

The federal Liberals sent shockwaves down Bay Street when they announced a campaign pledge to increase taxes on the big banks’ and insurers’ profits over $1 billion by three percentage points to 18 per cent. Well, it looks like Ottawa looked to meet the banks in the middle, announcing a 1.5 per cent surtax on profits over $100 million, a move that may lessen the financial blow but would impact more institutions.

The feds also outlined another campaign promise to implement the so-called Canada Recovery Benefit, detailing a one-time 15 per cent tax on taxable income at the big banks and insurers over $1 billion in the 2021 tax year. The two measures are forecast to raise $6.1 billion over the next five years, far short of the $10.8 billion forecast under the old plan.

Creating a carbon capture tax credit

As part of the government’s plan to get to a net-zero carbon emissions economy by 2050, the feds are launching a new Carbon Capture, Utilization and Storage tax credit to encourage companies to ramp up investment sooner rather than later. From 2022 through 2030, the credit would range from 37.5 per cent on equipment for transportation and storage of captured carbon to 60 per cent on investments in equipment to actually pull those emissions from the air. However, in a bid to get companies to move quickly on investing in carbon capture, the refundable credit will be slashed in half starting in 2031. The credit is expected to cost $2.6 billion over the next five years, and $1.5 billion annually thereafter.

A boost for first-time homebuyers

The feds are looking to introduce a new savings vehicle for Canadians wanting to build up a down payment for their first home. Ottawa announced plans to introduce a Tax-Free First Home Savings Account, where starting in 2023, prospective buyers can deposit up to $8,000 a year tax-free to a maximum total of $40,000 to save for a home. The savings account proposed acts essentially as a hybrid between an RRSP and a TFSA – like an RRSP, deposits would be tax-deductible; but withdrawals, including investment income, would be tax-free like a TFSA. That measure is expected to cost $725 million over the next five years.

Dental care gets underway

The Liberals are making good on a key promise made to secure the support of the New Democrats, proposing $5.3 billion of funding for dental care over the next five years, and costing $1.7 billion a year thereafter. The dental care plan will start with coverage for Canadians under the age of 12 in 2022, before expanding to minors under the age of 18, seniors and Canadians living with disabilities next year. Full implementation across demographics is expected by 2025, though the program is restricted to families with an income of less than $90,000 a year.

Beefing up defence spending

Budget 2022 is earmarking more than $8 billion over the next five years for increasing Canada’s defence budget, including $6.1 billion to meet Canada’s defence priorities, including continental defences and commitments to our allies. Canada is also increasing spending on the National Cyber Security Strategy, with $875.2 million over five years to enhance Canada’s ability to deal with rapidly evolving cyber security threats. Defence spending had become a hot topic in the wake of Russia’s invasion of Ukraine, prompting questions over whether Canada would eventually meet the two per cent of GDP spending target set out by NATO.

Creating a Canada Growth Fund

The feds are seeking to close a funding gap to get Canada to a net-zero carbon emissions economy by launching a Canada Growth Fund. The goal is to attract private capital to invest in key industries for the new economy.

Initially, Canada will capitalize that fund with $15 billion over the next five years, in hopes of attracting three dollars of private capital for each public dollar invested. Ottawa forecast Canada will need between $125 billion and $140 billion worth of investment per year to build a net-zero economy by 2050, far more than the $15 billion to $25 billion invested in the climate transition today.

Big bucks for zero-emission vehicles

The government is extending incentives to get Canadians to give up their gas-guzzlers and switch to zero-emission vehicles. The feds are earmarking $1.7 billion over the next five years for Transport Canada to extend its zero-emission vehicles program, and will expand the program’s eligibility to support the purchase of a wider range of vehicles. Ottawa is also planning to spend an additional $500 million on building out Canada’s zero-emissions vehicle charging and refueling network.