One Comment About Taxation – The April 28, 2026 “Spring Economic Update” –  It’s Ugly

 

I spent the day of Canada’s Spring Economic Update standing in the Cathédrale Saint-Vincent in St. Malo, France, with my 82-year-old French mother and my sister. The cathedral holds the tomb of Jacques Cartier. A plaque over the tomb, in translation, reads: “Here rests Jacques Cartier, native of Saint-Malo and the first discoverer of Canada, who died in 1557.”

 

It was a moving moment. Cartier was an explorer who took genuine risk, with no certainty of return, to chart a new world. Canada’s origin story is one of risk-taking, exploration and the courage to build something that did not yet exist.

 

That night, I read the Update. The contrast was hard to ignore.

 

Mark Carney was elected on a promise of economic seriousness – the central banker who could face down Donald Trump and who would replace ideology with competence. The ridiculous “Elbows Up” branding worked. Like the classic story, The Pied Piper, many Canadians followed the tune.

 

The April 28 Update does not vindicate the marketing.

 

The headline number is a projected 2025-26 deficit of $66.9 billion – better than the $78.3 billion forecast in November’s budget, but only because of windfall revenues. The Update crows that this is the result of prudent fiscal management. It is not. A $66.9-billion deficit is history-making by any measure.

 

Worse, the Update leans heavily on the deceptive accounting trick: the artificial split between “capital” and “operating” budgets. Under this framing, the government will “balance operating spending with revenues by 2028-29” – never mind that it will still run deficits of $53 billion to $63 billion every year through 2030-31. Bondholders do not care which bucket Ottawa assigns the spending to. A deficit is a deficit. This is the kind of presentation that fools the financially illiterate.

 

The debt-to-GDP boast is similar. The Update trumpets Canada’s “10.2 per cent net debt-to-GDP ratio” against a G7 average of 101.8 per cent. That figure nets CPP and QPP assets against federal debt – assets that are not available to the government and thus this statistic is misleading to measure federal fiscal capacity.

 

Meanwhile, public debt charges will rise from $54 billion this year to $80.9 billion by 2030-31. Federal health transfers to the provinces will be $57.4 billion next year, rising to $67.5 billion by 2030-31. Within five years, we will be spending more servicing the debt than we transfer to the provinces for health care. This is fiscally irresponsible.

 

The tax measures are light with the highlight being that the $10-million capital gains exemption for Employee Ownership Trusts (“EOT”) will now be permanent. When proposed in 2023, the Parliamentary Budget Officer estimated that this would cost the government $23 million over four years, a pittance. The Update now estimates the cost to be $205 million over six. I don’t believe it. The EOT regime is structurally unattractive for most business owners. To qualify, the entrepreneur must give up control while remaining exposed to meaningful repayment risk through vendor financing – an asymmetry that will deter most rational sellers and thus the pick-up of this measure will be almost zero.

 

The Update also announces that the Canada Revenue Agency will prioritize advance income tax rulings for “large-scale, nation-building projects.” A two-tier ruling system based on political importance rather than fairness is not a feature of a serious tax administration.

 

There are two bright spots in the Update. The base Canada Pension Plan contribution rate will drop from 9.9 per cent to 9.5 per cent effective January 1, 2027. The fair question is how the base CPP actuarial buffer became large enough to support this cut – and whether the additional CPP layered on top beginning in 2019 deserves similar scrutiny.

 

The Update also streamlines the Disability Tax Credit process for individuals with certain long-lasting medical conditions – welcome and long-overdue.

 

There are still important missing aspects. The Liberal “Canada Strong” 2025 election platform promised an “expert review of the corporate tax system”. It was absent from the November 4, 2025 budget and is absent from the Update. Canada has not had a comprehensive tax review since the Royal Commission on Taxation in the 1960s. We are decades past due for the kind of Big Bang reform Jack Mintz and others have argued for, and a government that markets itself as economically serious would have launched the promised review by now.

 

Also missing: the 2025 election promise to resurrect the 1970s-era Multiple Unit Residential Building tax shelter – a policy I criticized at the time and which the historical record shows was not needle moving. It did not appear in November or here. Either the government conceded the policy was bad or ran out of fiscal room. Either way, a major housing-policy plank has disappeared without acknowledgment.

 

A small but telling detail: the Update – like the November 4, 2025 budget – has quietly adopted British spellings, like replacing “modernize” with “modernise” and “catalyze” with “catalyse”, throughout. When a government changes the spelling of its official documents without telling anyone, you start to wonder what else is being changed without discussion.

 

The broader fiscal picture is clear and ugly. I am hardly alone in saying so. Commentators who have been generally sympathetic to this government are now openly criticizing the Update. When the usual defenders are flinching, that tells you something about the substance.

 

Cartier’s Canada was built by risk-takers. A serious government’s job is to clear the path for them – through comprehensive tax reform, disciplined spending, and policies that attract capital and reward the entrepreneurs who actually build things.

 

A Pied Piper does the opposite. He plays a charming tune and asks only that people follow. The children who followed didn’t recognize the cliff until it was too late. Oh, wait – recognise. Forgive me. I’m still learning the new official language of Ottawa.

 

Canada wasn’t built by a marketing campaign – and it won’t be saved by one. Canadians need to stop following the music and start questioning it.

 

One Comment About Leadership – Leaders Are Editors, Not Authors

 

Early in my career, I thought leadership was about creating: strategy, ideas and momentum. Over time, I’ve come to a different conclusion: the best leaders are not great authors…they’re great editors.

 

Most organizations don’t suffer from a lack of ideas. They suffer from too many ideas, too many priorities and, ultimately, too much noise.

 

And increasingly, too many leaders are not even generating original ideas at all – they’re borrowing them. They borrow conviction from:

 

• the latest leadership book or podcast episode;
• a consultant’s slide deck;
• a conference they just attended; or
• whatever is trending on social media this week.

 

Then they bring those ideas back to their teams and layer them on top of everything else – with no editing, filtering or real ownership. The result? A pile of well-intentioned but disconnected initiatives that don’t fit the organization’s vision and reality.

 

That’s where real leadership comes in. Good leaders add value by editing:

 

• editing strategy down to what actually matters;
• editing priorities so teams can focus;
• editing out distractions that don’t move the needle; and
• editing people’s ideas – not to shut them down, but to sharpen them.

 

In other words, strong leaders subtract to keep their Team moving consistently towards the Vision.

 

Weak leaders add – especially when they lack conviction. It’s much easier to import someone else’s idea than to do the hard work of thinking it through, adapting it and, most importantly, deciding what not to do.

 

I see this all the time in professional service firms. There’s no shortage of smart people and good ideas. But without disciplined editing – and without genuine conviction – those ideas compete with each other –  and execution suffers.

 

The same applies in public policy. Governments rarely lack ideas. What they lack is the discipline to edit and the conviction to stick with a coherent approach. The result is complexity layered on top of complexity.

 

Leadership is not about doing more. It’s about deciding what not to do – and having the conviction to stand behind those decisions.

 

As Steve Jobs famously said, “I’m as proud of what we don’t do as I am of what we do.”

 

That’s editing.

 

Leaders, if you want to improve your effectiveness immediately, take a hard look at your current priorities. Cut them in half. Then ask yourself a tougher question: which of these do you actually believe in – and which ones have you simply borrowed?

 

What’s left is what matters. Everything else? Noise.

 

Eliminate the noise. Start editing.

 

One Comment About Economics / Politics  – The “Canada Strong Fund”: A Sovereign Wealth Fund Built on Borrowed Money

 

On April 27, 2026 – the day before the Spring Economic Update – Prime Minister Carney announced the creation of Canada’s first national sovereign wealth fund: the “Canada Strong Fund.”

 

In his usual fear-stoking style, the announcement opened up with the following statement: “The world is increasingly dangerous, divided, and uncertain. In response, Canada’s new government is focused on what we can control: building a stronger, more resilient, more independent Canadian economy.” 

 

Three problems in two sentences. The fear-mongering is tired. The “new government” line – a year into his mandate, while Carney pursues fiscal policies more disastrous than his predecessor’s – is increasingly insulting. And “independent Canadian economy” is his continuous attempt to convince voters we can disentangle ourselves from the U.S. Keep dreaming. I honestly don’t know many intelligent people who fall for this trope.

 

Standing in front of steam locomotives at the Canada Science and Technology Museum, he tried to invoke the building of the Canadian Pacific Railway in the late 1800s and the spirit of nation-building. The fund will be seeded with $25 billion over three years, will hold equity stakes (unlike the Canada Infrastructure Bank, which makes loans), and will offer a “retail investment product” so Canadians can buy in directly. Carney called it “a people’s fund. It will be your fund.”

 

I have been thinking about this announcement carefully because a couple of smart people I respect are praising it. So before I criticize it, let me say what is potentially good about the idea: a properly designed sovereign wealth fund can be a useful vehicle, especially if it consolidates existing federal Crown corporations and government investment programs into a single, professionally managed entity with arm’s-length governance. The concept is not the problem.

 

The problem is the source of the money. Sovereign wealth funds, by definition, exist to deploy surplus national wealth. Norway – the example Carney himself cited – built its US$1.7 trillion fund from oil revenues over 30+ years of running fiscal surpluses. Norway did not borrow to seed its fund. It saved.

 

Canada has no surplus. The same Spring Economic Update that announced the Canada Strong Fund projects a $66.9 billion deficit for 2025-26 and continued deficits of $53-65 billion every year through 2030-31. The $25 billion seed money will, by definition, be debt-financed. As noted by Scotiabank economist Derek Holt in his research note: “countries with such funds are usually net savers, while Canada is running deficits.”

 

What this really amounts to is leverage. The federal government will borrow at federal bond rates and invest the proceeds in Canadian projects and companies, hoping to earn enough above its borrowing cost to justify the bet. That is not wealth management. That is leveraged speculation with public money on projects the government itself selects.

 

The “people’s fund” framing does not survive scrutiny either. Canadians already own that $25 billion – it is their tax money or borrowed against their future tax money. Selling them a “retail investment product” so they can buy back into something their taxes already funded is financial theatre, not economic ownership.

 

The deeper concern is governance. A government-controlled equity fund will face enormous political pressure on which Canadian companies and projects get capital. Even with arm’s-length structuring, the temptation to direct investment toward politically favored sectors, regions, or constituencies will be constant. We have seen this story play out with the Canada Infrastructure Bank, which has been widely criticized as slow, underperforming, and politically captured. The Canada Strong Fund is the same model with equity stakes instead of loans.

 

Canada needs serious capital formation. It does not need another government-controlled equity vehicle, financed with borrowed money, operating alongside the underperforming Canada Infrastructure Bank, and dressed up in the rhetoric of nation-building.

 

The Canadian Pacific Railway was built with private capital and government backed guarantees. Norway’s sovereign wealth fund was built with saved oil revenues. The Canada Strong Fund is being built with borrowed money – and a press conference at a museum.

 

Bonus Comment – From Antoine de Saint-Exupéry – French Aviator and Writer – About the Importance of Subtracting

 

“Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.”

 

Totally agree. Leaders, what do you need to “take away”?

 

I hope today’s newsletter has been thought-provoking for you.

 

As many of you know, I’m passionate about helping people make better decisions – whether in tax, leadership, or business. If you’d like to go deeper on those topics, my recently released book, Making Life Less Taxing (Version 2), is now available and expands on many of the practical ideas I’ve written about over the years.

 

I’m also putting the finishing touches on my next book, Leadership Compounds: How Small Decisions Build Culture, Credibility, and Legacy. It explores a simple but powerful idea: leadership isn’t about grand gestures – it’s about the small, consistent decisions that compound over time.

 

For those interested in a more hands-on approach, I’ll soon be announcing a bespoke consulting initiative – The Acorn Growth Program – designed to help leaders and organizations grow intentionally, one small (but important) decision at a time. Feel free to reach out to me directly for more information.

 

And if you’re not already on my mailing list, feel free to sign up for my In the Mood Network newsletters to receive more content. No fluff – just practical insights on tax, leadership, and economic policy.

 

Thanks for reading. As always, I welcome your thoughts and feedback.

 

Amazon Books

Apple Books