OTTAWA, Nov. 5 (Xinhua) -- The Canadian Finance Ministry on Thursday unveiled Budget 2026, introducing a suite of measures, including significant tax cuts, to kickstart an "investment supercycle" aimed at strengthening economic sovereignty and global competitiveness.
Themed "Masters of our destiny," the budget outlines plans to mobilize 400 billion Canadian dollars (about 285 billion U.S. dollars) in capital investments over six years to attract global capital and boost productivity.
A centerpiece of the plan is a "productivity mega deduction," alongside other major tax reforms, that will cut the marginal effective tax rate on new business investment from 13 percent to 6.4 percent, the lowest among major world economies. The measure will allow businesses of all sizes to fully deduct the cost of most new investments.
To strengthen Canada's position as a global energy powerhouse, the federal government plans to invest 50 billion Canadian dollars to double the country's electricity grid capacity by 2050, while increasing investment in nuclear energy and critical minerals.
In defense, targeted investments under a defense industrial strategy and a defense drone program are expected to raise military spending to 4 percent of GDP within this decade and to 5 percent by 2035.
The budget also allocates more than 50 billion Canadian dollars over 10 years to advance reconciliation with Indigenous peoples and ensure stable, long-term funding for core Indigenous programs.
On the fiscal front, the federal government projects a deficit of 62.3 billion Canadian dollars for the 2026-2027 fiscal year, with annual deficits expected to remain above 50 billion Canadian dollars in each of the following four years. However, the budget pledges to balance day-to-day operating spending with revenues by 2027-2028, a year ahead of schedule, while keeping the debt-to-GDP ratio on a declining path.
In addition, the budget includes 22 billion Canadian dollars in new affordability measures and sets out a 10-year plan to end homelessness. (1 Canadian dollar = 0.71 U.S. dollars) ■
