Canadian finance chief Morneau has work cut out

The Canadian economy is shining. Justin Trudeau, Canada's Prime Minister, continues to ride high in polls. The country's economic growth is at the top of the G7 nations. The only sliver of worry is present in Bill Morneau, the Canadian finance minister. His party colleagues are uneasy at the minister's insistence to push through changes in the tax structure. The finance head also wants more risk to be shared by lenders at a time the housing market remains decidedly choppy. An excellent economic growth means Canada must take crucial decisions on how to utilize the extra money which have come through rising revenue collections. Morneau has a lot of things to do.

Trim deficit and housing

It was much different during the start of the fiscal season. Morneau himself projected a C$28.5 billion deficit. The immensely successful Canadian economic engine will trim the sum. The deficit, however,  could be as projected if Canadian Government takes the decision to spend more.

The housing market in Canada is choppy to say it mildly. It is one of the major economic pillars of Canada. Important Canadian policymakers are trying their best to avoid sharp corrections. The country's benchmark home price dropped 1.5 percent during July compared to June. Toronto lead the pack in price drops. The booming economy of the country means that expectations are high of Stephen Poloz, the Governor of Bank of Canada, raising rates in September for second time in 2017. This move will inhibit housing demand. The Trust Companies Association of Canada, which represents mid-sized and small trusts, and banks sent a letter to Morneau which stated the proposals made by the government could negatively disrupt the market and also inhibit consumers' finance access.

Tax reforms

For the finance minister, controversy is afoot. In July, Morneau made the announcement that the Canadian Government would tighten its rules to stop individuals enjoying higher incomes from using a few certain tax avoidance tactics. His actions are being opposed by political opponents. The latter says that Canadian tax policies are attacking small businesses. Many professionals, including those in the medical profession are actively arguing against such taxation policies. They say that it would push talented professionals away from the country. The Canadian Medical Association and Chamber of Commerce have concurred with the negative fallout of such a plan. Morneau will meet professionals and small business owners to discuss this issue during the second week of September in Vancouver.

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