This article provides a detailed summary of Canada’s 2017 federal budget. This lesson plan seeks to explore the budget creation process and the potential effects this budget will have on the Canadian economy for the 2017 fiscal year.

Getting Started

Appropriate Subject Area(s):

Economics, federal budget

Key Questions to Explore:

  • How does the Canadian budget process work?
  • What is the government seeking to achieve with its 2017-18 budget proposal?
  • What effects will tax cuts in the U.S. have on Canada’s fiscal policy?
  • What is income splitting?
  • What types of corporate loopholes did Mr. Morneau’s budget proposals close?

New Terminology:

Tax loopholes, sin tax, income splitting.

  • Tax loopholes: these provide legal means for individuals to avoid or reduce their taxes payable. Examples of tax loopholes include: stock option deductions, small business deductions, investment income, corporate meals and entertainment deductions, and the use of tax havens.
  • Sin tax: these are taxes added to goods and services deemed harmful or undesirable, such as alcohol, tobacco, sugar and gambling. Sin taxes typically generate enormous amounts of revenue for the government while also discouraging individuals from consuming potentially harmful goods and services.
  • Income tax splitting: this is a tax-planning technique designed to shift income from a taxpayer paying a high rate of tax to another person within a family unit paying tax at a lower rate.

Materials Needed:

Study and Discussion Activity

Introduction to lesson and task:

Each year the minister of finance presents federal budget proposals before the House of Commons. The budget is then voted on by members. Budgets typically identify planned government spending, expected government revenue and a forecast of economic conditions in the upcoming year.

The budget put forth by the current minister of finance on March 22, 2017 seeks to achieve the following things: create job training opportunities, increase social housing, improve child care benefits, and increase investments in infrastructure and innovation. There are also increased taxes in place to discourage alcohol and cigarette consumption.

The prospect of potential tax cuts in the U.S. possibly discouraged the Canadian government from implementing some of its major tax pledges, as doing so could have negatively impacted the Canadian economy’s ability to attract and retain workers.

It is important to explain the importance of the federal budget to your students and the effects federal budgets have on the Canadian economy and personal and business income taxes.

Action (lesson plan and task):

  • Ask your students to explain why federal budgets are important.
  • Ask your students to state the goals of the 2017-18 budget the government recently put forth.
  • Ask your students to explain why the finance minister deferred tax hikes on wealthier Canadians.
  • Ask your students to define tax loopholes.
  • Ask your students to explain the potential effects U.S. fiscal (taxes and spending levels) and trade policies could have on the Canadian economy.
  • Ask your students to state some corporate tax loopholes this plan closed.
  • Ask your students to explain the effects tax hikes could have on alcohol and tobacco consumption.
  • Ask your students to explain why the Canadian government decide to eliminate tax credits on public transit and increase taxes on Uber. (Hint: To raise money for investments in the expansion of public transit infrastructure.)
  • Ask your students to state the benefits of extending maternal benefits and parental benefits. (creates a conducive working environment for women)

Consolidation of Learning:

  • Ask your students to research income splitting and state why the government is looking to eliminate certain income splitting loopholes.
Success and Additional Learning

Success Criteria:

  • After completing this lesson plan, students should have a solid understanding of the budget process and the broader impacts it could have on the Canadian economy.

Confirming Activity:

  • Ask students to look more deeply into the Canadian budget process.

Here is a broad overview:

Budgets are created with input from various departments of government including but not limited the following departments: Health, Transportation, Foreign Affairs, Dept. of Defence, Canada Revenue Authority etc. The various departments of government submit their planned estimates for the year ahead to the Treasury Board secretariat, and they also provide objectives they hope to achieve. The secretariat then combines them and compiles an initial proposed budget. This is then passed on to the cabinet and prime minister’s office, which adjust budgets based on economic, social and political factors. The minister of finance then delivers the budget speech.