Business
Federal tax policy in 2025 will not be kind to Canadians
From the Fraser Institute
By Matthew Lau
Federal tax policy was not kind to Canadians in 2024, and that shouldn’t be a surprise. It wasn’t kind to Canadians in 2023, 2022 or any year since 2016 when the Trudeau government established a new income tax bracket of 33 per cent, pushing the combined federal and provincial top tax rate over 50 per cent in many provinces.
To recap 2024 tax policy changes, the federal government began the year with its sixth consecutive Canada Pension Plan tax hike. In 2018, before the government’s CPP “enhancements” (to use the government’s phrase), for a worker earning $85,000, the combined employer and employee CPP tax was $5,188. In 2024 the same worker’s tax bill was $8,111—or about 56 per cent higher including the government’s new “CPP2” tax.
Unfortunately, things will only get worse for Canadians in 2025. The CPP tax bill for the Canadian earning $85,000 will rise to $8,860 in 2025, bringing the total nominal tax increase to 71 per cent through the government’s seven annual CPP “enhancements.”
In addition to making the CPP tax more expensive yearly, the federal government also has been increasing the carbon tax each year. In April 2024, the Trudeau government increased the carbon tax to $80 per tonne from $65 per tonne, and like the CPP tax, the carbon tax will become more expensive yet again in 2025, rising another $15 per tonne to $95.
Another big tax change in 2024 was the capital gains tax hike announced in June. The Trudeau government claimed it was increasing taxes only on “0.13 per cent of Canadians in any given year”—a statistic that’s both misleading and incomplete. First, 0.13 per cent of Canadians “in any given year” are a different group than the 0.13 per cent of Canadians in the previous or following years, so many more than 0.13 per cent of Canadians will directly pay the tax.
Second, the tax hike also affects corporations, of which millions of Canadians are owners or part-owners (even excluding their ownership of publicly traded companies’ shares). Overall, economist Jack Mintz estimated that through their ownership of private corporations (based on 2021 data) about 4.74 million Canadians would be affected by the higher tax rate, or 15.8 per cent of tax filers. In other words, about 100 times more Canadians than the Trudeau government suggested.
And in reality, just about all Canadians will be made worse off by the tax hike because almost everyone will effectively be subject to the higher capital gains tax rate through their exposure to publicly traded corporations including through public pension plans.
Worse, because capital gains taxes are taxes on investment, the certain effect of the tax hike will be to reduce business investment. Unfortunately as multiple economic analyses have shown, business investment in Canada has already been extremely weak in the past decade, falling further behind the United States and other developed economies, and contributing to Canada’s productivity and economic stagnation crisis. The capital gains tax hike will make this even worse.
Finally, the Trudeau government ended 2024 with a so-called sales tax “holiday” for two months, which imposes severe administrative and logistical nightmares onto business owners (in a survey of small businesses, most opposed the change and 75 per cent said it would be costly and complicated to implement), and will do nothing to increase productivity or improve economic incentives.
Quite the opposite; government deficits fund the tax “holiday,” which will increase the future tax burden—something that will further reduce economic productivity in the future. Federal tax policy clearly was not kind to Canadians in 2024. Unfortunately, 2025 is looking no better.
Business
Essential goods shouldn’t be taxed
From the Canadian Taxpayers Federation
By Jay Goldberg
The Trudeau government’s two-month GST holiday on certain items has been called many things.
Former finance minister Chrystia Freeland resignation letter suggests she thinks it’s a “gimmick.”
Conservative Leader Pierre Poilievre has called it a “tax trick.”
But here’s a more fundamental question: If the government thinks Canadians needs a sales tax holiday on certain items, why are those basics taxed in the first place?
Items like car seats, diapers, and pre-prepared foods are all taxed by the feds. They’re all also subject to the federal government’s sales tax holiday, which Prime Minister Justin Trudeau says was triggered because Canadians are having a hard time making ends meet.
“Our government can’t set prices, but we can give Canadians, and especially working Canadians, more money back in their pocket,” said Trudeau at his GST holiday announcement.
At least Trudeau seems to know it’s bad for governments to set prices. But the government does raise prices by adding sales tax on top of goods Canadians have to buy.
And you don’t need to be a parent to know that car seats and diapers are among the most essential goods on a parent’s shopping list.
Take a car seat. A mid-tier car seat costs around $250. The federal sales tax, which is currently at five per cent, adds $12.50 to the final cost of that car seat.
Parents across the country are no doubt asking why things like car seats and diapers were taxed by the feds in November, will be taxed again by the feds in March, but aren’t being taxed right now.
What justification can the government possibly give to parents on Feb. 16, 2025 – the day this sales tax holiday ends – for once again taxing things like car seats and diapers?
The same goes for pre-prepared meals. Many Canadians buy pre-prepared food at grocery stores to bring to work for lunch or to eat on the go. Why are the ingredients for that pre-prepared meal not taxed but the final meal is? And why take the tax off a grocery store deli sandwich now but not a few months from now?
There’s even more of an argument to be made on this front because many provinces don’t tax a lot of the items that are part of the feds’ sales tax holiday.
Take Ontario as an example.
Canada’s most populous province doesn’t tax things like books, children’s clothing, car seats, and diapers. Some pre-prepared foods aren’t taxed either.
If provinces don’t tax these items, why do the feds?
The Trudeau government took inspiration from the NDP when it comes to the GST break. It ought to also take inspiration from the party’s call to make relief permanent.
Trudeau’s GST announcement came just days after NDP Leader Jagmeet Singh called for the permanent removal of the federal sales tax on items like pre-prepared meals, diapers, and car seats. Singh’s proposal actually went much further, and included ending the GST on home heating, as well as internet and phone bills.
In touting his proposal, Singh argued that “those taxes never should have been there in the first place.”
Singh is right. Essential goods shouldn’t be subject to the GST. Period.
Just days after Singh’s announcement, Trudeau played copycat with one of his own.
But a two-month reprieve pales in comparison to permanent relief.
If the Trudeau government wants to deliver real relief to struggling Canadian families, essential items that most provinces already don’t tax, such as diapers, car seats, and pre-prepared meals, should be permanently exempt from the GST.
Permanent sales tax relief is more than doable. The feds could deliver on it without hiking the deficit by taking a sledgehammer to the more than $40 billion a year they hand out in corporate welfare.
Anything less than a permanent sales tax break simply won’t cut it when it comes to cutting costs for Canadians.
Business
US Expands Biometric Technology in Airports Despite Privacy Concerns
Biometric systems promise efficiency at airports, but concerns over data security and transparency persist.
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Biometric technology is being rolled out at US airports at an unprecedented pace, with plans to extend these systems to hundreds more locations in the coming years. The Transportation Security Administration (TSA) is driving a significant push toward facial recognition and other biometric tools, claiming improved efficiency and security. However, the expansion has sparked growing concerns, with privacy advocates and lawmakers voicing concerns about data security, transparency, and the potential for misuse of such technology.
US Customs and Border Protection (CBP) has already implemented its Biometric Facial Comparison system at 238 airports, including 14 international locations. This includes all CBP Preclearance sites and several major departure hubs. CBP says its Biometric Exit program is rapidly gaining traction, with new airport partners joining monthly and positive feedback reported from passengers.
Meanwhile, the TSA has equipped nearly 84 airports with its next-generation Credential Authentication Technology (CAT-2) scanners, which incorporate facial recognition. This rollout is part of a broader effort to bring biometrics to over 400 airports nationwide. These advancements are detailed in a TSA fact sheet aimed at building public awareness of the initiative.
Opposition and Privacy Concerns
Despite assurances from TSA and CBP, critics remain skeptical. Some lawmakers, led by Senator Jeff Merkley, argue that the TSA has yet to justify the need for biometric systems when previous technologies already authenticated IDs effectively. Privacy advocates warn that the widespread use of facial recognition could set a dangerous precedent, normalizing surveillance and threatening individual freedoms.
The debate is closely tied to the federal REAL ID Act, introduced two decades ago to standardize identification requirements for air travel. As of now, many states have failed to fully implement REAL ID standards, and only a portion of Americans have acquired compliant credentials. Reports indicate that fewer than half of Ohio residents and just 32 percent of Kentuckians have updated their IDs, even as the May 7, 2025, deadline approaches.
Biometric Adoption on the Global Stage
Beyond the US, biometric systems are gaining momentum worldwide. India’s Digi Yatra program has attracted 9 million active users, adding 30,000 new downloads daily. The program processes millions of flights while emphasizing privacy by storing data on users’ mobile devices rather than centralized databases. Plans are underway to expand the program further, including international pilots scheduled for mid-2025.
While biometric technology offers alleged benefits, such as faster boarding and enhanced security, it also poses serious risks. Privacy advocates caution against unchecked implementation, especially since, one day, this form of check-in is likely to be mandatory.
The TSA’s aggressive push for biometrics places the United States at the forefront of this global shift.
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