OTTAWA (Reuters) -Canada's Liberal government, which is trailing in the polls ahead of next year's election, unveiled C$6.3 billion ($4.5 billion) in proposed new spending measures on Thursday to help consumers deal with high prices.
Canadians have been struggling with high rental and mortgage costs, one of the primary reasons hurting Prime Minister Justin Trudeau's polling numbers.
In a statement, the office of the Prime Minister said Ottawa planned to send a C$250 rebate to 18.7 million Canadians early next year. It is also proposing to freeze sales taxes on essential goods from Dec. 14 to Feb. 15.
Both measures would require parliamentary approval and Trudeau's party heads a minority government.
"Our government can't set prices, but we can give Canadians, and especially working Canadians, more money back in their pocket," Trudeau said.
The new tax break would apply to prepared foods, restaurant meals, snacks, beer, wine, cider, children's clothing and toys, books and Christmas trees.
Polls show that the Liberals are on track to badly lose the next election, which must be held by late October 2025. They first took office in November 2015.
An Abacus Data survey published on Thursday showed the opposition Conservative party led by Pierre Poilievre would have a landslide victory, with a 43% vote share, if elections were to be held today.
Trudeau's party is tied with the New Democrats in second place with just 21% share of votes.
The new rebate would cost C$4.7 billion while the sales tax freeze would cost C$1.6 billion.
"Canada has one of the strongest balance sheets," Trudeau said when asked how the government would pay for the measures. "Lowest debt-to-GDP ratio in the G7 and decreasing. We have a strong fiscal position."
The measures announced on Thursday could help bump up Canada's GDP numbers in the coming months, economists said.
The measures would add "up to about 0.2% of GDP and could have a high fiscal multiplier, meaning it could translate into a noticeable boost to growth in the first half of next year," Royce Mendes, managing director and head of macro strategy at Desjardins wrote in a note.
($1 = 1.3942 Canadian dollars)
(Reporting by David Ljunggren and Promit MukherjeeEditing by Bill Berkrot and Christina Fincher)