Experts predict tax hikes in budget as Trudeau government stretches to pay for its promises

Economists and experts say they're expecting the federal government to raise taxes in Tuesday's budget to help offset billions of dollars in new spending already promised in the pre-budget announcements that have been landing almost daily since the end of March.

"I'm pretty confident they will raise revenues because they've squeezed themselves on their fiscal situation and they continue to commit to spending that is not sustainable," said Robert Asselin, senior vice president of policy at the Business Council of Canada and an adviser to Bill Morneau when he was finance minister.

Asselin said the government could also "reprofile" previous spending commitments by pushing the promised money further into the future, but that won't be enough to keep the deficit in check.

"If we get anything like the U.S. surprise, it would look rather scandalous that the government is looking to push a lot of money into the economy," said Karl Schamotta, chief market strategist with Corpay, a foreign exchange and payments company.

Prime Minister Justin Trudeau, right, meets with carpenters before speaking about a new housing policy at the CCAT training centre in Woodbridge, Ont., on Friday, April 12, 2024.

And with the Liberals sagging in the polls and struggling to get their message through to voters, many predict this federal budget will be less about the nation's finances and more about measures that could turn the government's political fortunes around.