Canadian Prime Minister Justin Trudeau pledged to cut the federal sales tax on new rental apartment construction and to demand that grocery store executives restore price stability as part of a suite of measures aimed at making life more affordable.
(Bloomberg) — Canadian Prime Minister Justin Trudeau pledged to cut the federal sales tax on new rental apartment construction and to demand that grocery store executives restore price stability as part of a suite of measures aimed at making life more affordable.
Trudeau also promised to amend competition law to remove provisions allowing companies to argue that cost savings outweigh negative impacts on competition, as well as extend a repayment deadline for the government’s pandemic-era small-business loans until next year.
He unveiled the measures on Thursday at the end of a retreat with members of his Liberal caucus ahead of the start of the fall legislative session next week. His government has been sinking in the polls amid rising frustration over the country’s high cost of living, especially for housing.
“We will all be relentless in our efforts and use every tool in our toolbox to meet this generational challenge,” Trudeau said. “Every community across Canada needs to build more homes faster so we can lower the cost of housing for everyone.”
Several provinces, including Ontario, British Columbia and Newfoundland, swiftly welcomed the removal of the federal tax on rental construction and promised to remove their provincial tax as well. The Canadian Home Builders’ Association said the move would help revive projects that have been derailed by high interest rates.
Trudeau decried grocers for making record profits while Canadians struggle to put food on the table, pushing food-bank use to new heights. Earlier Thursday, Empire Co. shares rose after the company, which runs the Sobeys, Safeway and other supermarket chains, reported first-quarter earnings that surpassed analysts’ expectations.
Industry Minister Francois-Philippe Champagne will summon grocery-store executives to Ottawa next week to deliver a plan to address the rising cost of food, the prime minister said. The plan from the five largest grocers — including Empire, Loblaw Cos., Metro Inc., Walmart Inc. and Costco Wholesale Corp. — is expected by Oct. 9, Trudeau said in the announcement shortly before markets closed.
“If the plan doesn’t provide real relief for the middle class and people working hard to join it, then we will take further action,” he said. “We are not ruling anything out, including tax measures.”
Several grocery executives denied profiteering in testimony to a parliamentary committee earlier this year. The Retail Council of Canada said in a statement on Thursday that rising food prices were due to higher costs being passed on from food producers and manufacturers.
A Loblaw spokesperson said the company understands Canadians are struggling with the high cost of living. “Beyond the steps we’ve already taken to help, we are always open to discussions about what more can be done across the industry,” Catherine Thomas said in an emailed statement.
Trudeau also announced steps that he said would enhance competition across the economy, with a focus on the grocery sector. He said his government will amend competition law to remove the so-called efficiencies defense, which allows a merger to go ahead if cost savings outweigh negative impacts on competition.
Competition Commissioner Matthew Boswell has been trying to convince the government to get rid of this element of the law. There was some discussion of it during Boswell’s ultimately unsuccessful court battle to block the merger of Rogers Communications Inc. and Shaw Communications Inc., but the companies ultimately didn’t need to invoke the defense.
As for pandemic loans for small businesses, lobbying groups including the Canadian Federation of Independent Business have been pushing for the government to extend the repayment deadline. CFIB said Thursday that it was still disappointed as the government has failed to address the most critical issue – the loss of a C$20,000 ($14,803) forgivable portion for those unable to repay the loans by the end of the year.
–With assistance from Stephanie Hughes and Derek Decloet.
(Updates with additional measures starting in second paragraph.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.