Weekly Digest – 04 April 2025
Impact of Consumer Tax Cuts on Canada’s Emissions
With the federal consumer carbon tax now eliminated, gas and home heating costs are expected to drop—but questions remain about the impact on Canada’s emissions. Introduced in 2019, the tax aimed to reduce fossil fuel use by raising prices while returning most revenues through quarterly rebates. Studies show it contributed to emissions reductions, but the industrial carbon tax was three times more effective. Experts say removing the consumer tax won’t necessarily increase emissions—if other climate policies remain strong. Proposed replacements, such as green subsidies for EVs and energy-efficient products, could help but may cost more and be less efficient than carbon pricing. Maintaining industrial carbon pricing and enforcing building and fuel standards will be key. Canada’s emissions are currently declining, but experts warn ongoing policy support is essential to meet climate targets without the carbon tax in place.
.https://www.cbc.ca/news/science/carbon-tax-climate-1.7499218
Rising Cost of Living Leaves 85% of Canadians Living Paycheque to Paycheque
A new H&R Block Canada survey reveals that most Canadians are struggling financially, with 85% saying living paycheque to paycheque feels like the new norm—up from 60% in 2024. On average, Canadians are only saving 7% of their income, far below the recommended 20%. Rising costs, especially food (up to 5% in 2025), stagnant wages, and the ongoing trade war with the U.S. are compounding pressure. Though the federal minimum wage rose to $17.75/hour, it lags behind inflation. Over half of respondents said their income can’t keep up with expenses, and 74% worry they’re not saving enough. Nearly half rely on credit for major purchases, and 56% fear unexpected costs could push them into debt. With 46% unable to save for retirement or a home, many Canadians feel long-term financial goals are slipping out of reach.
.https://dailyhive.com/canada/cost-of-living-canadians-paycheque
Canadian Mortgage Arrears Rise to Highest Level Since 2021
Despite rate cuts and efforts to stimulate growth, Canadian mortgage arrears are rising. According to the Canadian Bankers Association (CBA), the mortgage arrears rate climbed to 0.22% in January 2025—up over 50% from mid-2022 and the highest since March 2021. Though still below pre-2020 levels, the sharp increase signals growing financial strain. Arrears often reflect liquidity issues more than household weakness—when markets are hot, struggling borrowers can quickly sell. Now, with slowing home sales, high interest rates, and trade tensions, liquidity is drying up. Notably, this trend began before the trade war. Despite banks being urged to support borrowers, arrears continue to rise. However, CBA data excludes riskier lenders like credit unions and private lenders, meaning the real situation may be worse. The rapid rise in arrears suggests mounting pressure on Canadian households and the housing market.
.https://betterdwelling.com/canadian-mortgage-arrears-climbs-to-the-highest-rate-since-2021/
Rising Employment Costs Prompt Firms to Consider Job Cuts
UK businesses are bracing for higher employment costs as National Insurance Contributions and the National Minimum Wage rise in April. A CIPD survey shows over a third of firms plan to cut jobs or slow hiring, while 42% intend to raise prices. Confidence among small businesses has hit a decade-low, with the Federation of Small Business warning of likely contractions in early 2025. Many firms are also scaling back investment plans. The government defends the tax hikes as necessary to fund public services and stabilize the economy. However, business groups warn these changes could slow economic growth and drive up inflation. Employers like Next acknowledge they must bear more costs, while others fear job losses and store closures. Inflation remains above the Bank of England’s 2% target, and price pressures from rising labour costs could delay a full recovery.
.https://www.bbc.com/news/articles/ckg7gewqevqo
The Impact of Bridge Benefits on Other Retirement Income Withdrawals
Bridge benefits are a key feature of many defined-benefit (DB) pension plans, offering extra monthly income to retirees under age 65 until they begin receiving CPP and OAS. Paid by the pension fund, bridge benefits help “bridge” the income gap, but they end at 65 and can reduce overall pension payments later. Financial planners advise coordinating bridge benefits with CPP and OAS timing. Delaying CPP to 65 or 70 can smooth income levels post-65 and maximize long-term benefits, but taking CPP early may suit those with lower savings or health concerns. However, early CPP can push retirees into higher tax brackets when combined with bridge payments. Retiring at 65 avoids the bridge but can increase pensionable earnings. Managing the transition from bridge benefits to CPP/OAS often requires financial projections to ensure income stability and optimize long-term retirement outcomes.