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.

Those announcements add up to more than $38 billion in commitments over a number of years. Because $17 billion of those commitments involve loan-based programs, about $21 billion could hit the government's bottom line directly.

And that figure doesn't include other new budget measures that haven't yet been announced.

Finance Minister Chrystia Freeland has said the deficit will not increase in this year's budget. Canada's economy has so far avoided recession, but growth is still slow. That leaves the government with no option but to increase revenues to pay for new spending while keeping the deficit steady.

«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. He is also a former adviser to Prime Minister Justin Trudeau and former prime minister Paul Martin.

Freeland has said repeatedly the government will not raise taxes on the middle class.

«The problem for them is either a surtax on big corporations or a wealth tax sounds very good, but in practice they're terrible. They don't work,» said Asselin.

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. And it would worsen