How Canada’s COVID-19 Economic Aid Package Falls Short Compared to US’s

March 23, 2020 Updated: March 25, 2020
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Commentary

Look north and south of the 49th parallel and you will see two different responses to the pandemic caused by the CCP virus, commonly known as the novel coronavirus, which causes the disease COVID-19.

The American travel ban started with China at the end of January, then more countries were added. Until recently, Canada did not restrict travel from anywhere, but now it restricts travel from everywhere. And the Canadian relief response, though announced at roughly the same time as the American response, is less generous, more convoluted, and less prompt.

Once passed by Congress, the CARES Act will pump out $1 trillion. People who had employment or pension income between $2,500 and $99,999 during the entire year of 2018 will get a one-time cheque of $600–$1,200 in the mail. Uncle Sam will also send $500 for each child.

The U.S. government will provide up to $200 paid leave per day for employees at small businesses who are quarantined, have CCP virus symptoms, or are caring for a family member who does. Small businesses can get bridge loans of up to $10 million each, costing Washington roughly $300 billion. Large corporations will get temporary tax cuts. Important industries especially hard hit can get $208 billion in loans, including $58 billion for airlines. Strings are attached, including necessary repayment and no raises for executives for two years.

The Trump administration waived interest from federally provided student loans for two months, whereas Canada announced a six-month moratorium. In nearly every other respect, however, Canada’s program is inferior.

Canada’s COVID-19 Economic Response Plan earmarks $52 billion in direct support payments and $55 billion in tax deferrals. The $107 billion total equals $2,835 per person. The American package is $3,035 per person, or $4,310 in Canadian dollars. And Ottawa is creating more programs in the process.

In Canada, a special Canada Emergency Response Benefit (CERB) will provide $2,000 a month for up to four months to unemployed workers who don’t qualify for employment insurance. They also qualify if they are quarantined or have to take care of a family member. The CERB will be made available in April through a secure web portal and a toll-free number.

Extra help will come to some families, but not until May. At the cost of $5.5 billion, 12 million low- and modest-income households will get an extra GST credit of nearly $400 for single individuals and $600 for couples. Over 3.5 million families with children “who may require additional support” will get an extra $300 per child through the Canada Child Benefit. Recipients will receive these benefits automatically at a $2 billion cost to taxpayers.

Small employers, non-profits, and charities will also get a temporary wage subsidy for three months. It would be equal to 10 percent of renumeration paid during that period, up to $1,375 per employee and $25,000 per employer. Businesses get the money by not remitting payroll deductions.

Personal income taxes don’t have to be paid until June 1. Canada Mortgage and Housing Corporation (CHMC) will ease the burden for lenders with a variety of means. Banks will offer payment deferrals of up to six months for mortgages and a chance for relief on other credit products. Businesses of all sizes can defer until Aug. 31 payment of any taxes they might owe between now and then, and the Canada Revenue Agency will take four weeks off from ongoing audits.

A new Business Credit Availability Program will offer more than $10 billion to small- and medium-sized businesses through the Business Development Bank and Export Development Canada. Bank regulations will be loosened to let them lend $300 billion more.

Other measures include:

  • An Indigenous Community Support Fund of $305 million
  • Reducing minimum withdrawals for Registered Retirement Income Funds by 25 percent (since it’s a bad time to cash out)
  • $157.5 million to the Reaching Home initiative to address homelessness
  • $50 million to women’s shelters and sexual assault centres
  • A new Insured Mortgage Program so CHMC can buy $50 billion of insured mortgage pools

The complicated Canadian plan will needlessly sacrifice benefits through higher compliance costs and new government programs. Yes, Americans usually pay more for out-of-pocket health expenses. However, there are provisions for that in the CARES Act and the $8.3 billion previously earmarked for the outbreak on March 4.

Ottawa’s revised economic response plan announced on March 25 is $20 billion more generous than its initial one. However, it gives the federal government the authority to raise taxes over the next six months without parliamentary approval. Canadians who already pay higher taxes than Americans will wait longer for economic relief, get less of it, and have more reason to worry.

The Epoch Times refers to the novel coronavirus, which causes the disease COVID-19, as the CCP virus because the Chinese Communist Party’s coverup and mismanagement allowed the virus to spread throughout China and create a global pandemic.