Who should get fed and who should be ignored when the federal budget comes out next week

My parents’ hobby farm when I was a kid had about five head of cattle, and feeding time taught me more about human nature than any economics course I took later. The biggest and loudest shoved to the front of the trough; the quiet ones often went without. None ever asked who paid for the feed.

My wife and I keep chickens on our hobby farm: rattle the bucket and every hen comes running like you’re their best friend.

The federal government rattles the bucket every year and calls it pre-budget consultations. Cue the line: industry groups, advocates, charities, unions and lobbyists, each certain the budget should feed them first. This year, the Finance Committee’s line was the longest in years.

On Nov. 5, two days after the United States midterm elections, Finance Minister François-Philippe Champagne will table the new budget, and we’ll find out who gets fed and who’s left at the back of the trough.

The House of Commons finance committee received 1,351 written briefs and heard from 90 witnesses. That’s on top of the Department of Finance’s summer tour: 23 cities, 44 roundtables, 56 bilateral meetings, more than 18,000 online survey responses and nearly 2,000 written submissions.

Not every brief wants the same thing. Most want a bigger share of the feed: a new credit, a richer program or a carve-out for their members. A handful asked the government to fix the barn instead. Guess which kind usually wins.

In September, the committee boiled those briefs down to 130 recommendations. By my count, at least 15 would create, expand or extend a tax credit or similar incentive. Recommendation 102 calls for a “permanent refundable home improvement tax credit,” while Recommendation 105 wants a “resiliency tax credit” for electricity infrastructure.

Oh brother.

Recommendation 118 asks the government to “undertake a comprehensive review of Canada’s tax system.” The same report that wants the whole system reviewed also wants at least 15 new or richer tax breaks bolted onto it. Every one of those adds complexity and compliance costs and narrows the base, which keeps rates higher for everyone else.

Don’t count on the review. The corporate tax review the Liberals promised in 2025 died, replaced by consultations. Asking 1,351 groups what they want isn’t a review; it’s a wish list.

What a real rebuild looks like came last week with the C.D. Howe Institute’s 2026 Shadow Budget, which would cut the federal brackets to three from five, drop the 26 per cent rate to 20.5 per cent and the 29 per cent and 33 per cent rates to 26 per cent.

If no province raised its top rate, the combined top rate would fall below 50 per cent everywhere. A new simplified credit would lift the tax-free threshold above $26,000 for filers who give up most other deductions and credits; most, especially lower earners, would come out ahead.

The general corporate rate would drop to 11 per cent, paid for mainly by scrapping the small business deduction and narrow credits, while a three-point GST increase covers the income tax shortfall. A higher GST won’t be popular, but serious reform never is. The budget would balance by 2030/31, helped by about $42 billion a year in spending cuts.

I’m not against any of it. I’d go further: a much larger lifetime capital gains exemption to compete with the U.S. qualified small business stock rules, full elimination of the alternative minimum tax and a broad rollover so capital gains can be reinvested before tax.

But C.D. Howe gets the core right: rates and base move together and the whole system is on the table at once.

Here’s what I’ll be watching for from the government. Comprehensive reform means an independent review with a mandate and a deadline, personal and corporate systems tackled together and rate cuts paired with a broader base and fewer credits, not more.

What I fear we’ll get instead is a handful of sexy new tax measures stitched onto the patchwork quilt that is our tax system and branded as reform. That isn’t reform; it’s more complexity.

I’m not a fan of budget leaks, but they’ve become routine and they’ve already started. Apparently, the government is considering cutting the small business tax rate, now nine per cent, and employment insurance premiums for smaller firms.

That’s no needle mover. It would widen the gap with the 15 per cent general rate, a gap the C.D. Howe plan closes by scrapping the small business deduction. The playbook rhymes with the late 1970s: spend, borrow and hand out targeted tax breaks.

I’ll also be watching the whole deficit, not the slice the government wants watched. Its split between operating and capital budgets lets it call the books balanced while borrowing continues. The test is simple: how much of any improvement comes from real spending restraint and how much from relabelling?

Strip away the branding and a budget is a simple thing: a plan for spending other people’s money. Being responsible with it is the whole job. As C.D. Howe said, “responsible fiscal policy means paying the bills for spending as they come due.”

This government isn’t paying them. On C.D. Howe’s status quo projections, which adjust the spring update for weaker growth, deficits will run between $76 billion and $81 billion a year from 2026/27 through 2030/31. Net debt climbs to $1.73 trillion, or 45 per cent of gross domestic product, up from 31 per cent before COVID-19. Debt charges will reach $83 billion that year.

Interest buys nothing. Every borrowed dollar is a bill handed to our children and grandchildren, who never got a vote.

Real reform takes courage. Patches take a press release.

My parents paid for every bag of feed our cattle ever ate, and my wife and I pay for every scoop our chickens get. This government puts the feed on our kids’ credit card. Let’s see who eats next week.

Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, co-host of Canadian Tax Matters, a former chair of the Canadian Tax Foundation 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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