It's a budget that Dion couldn't afford to vote against
There's not much new in Flaherty's budget but it gives the Liberals little to oppose
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by L. IAN MacDONALD
The Gazette, Wednesday, February 27, 2008
Rather than buying a new pair of shoes for the traditional photo before yesterday's budget, Finance Minister Jim Flaherty got an old pair resoled at an Ottawa shoe-repair shop.
It was a substantive, as well as a symbolic, gesture. All the stuff that was in the October financial update? The personal and corporate tax cuts, the debt reduction and so on? Flaherty just reannounced them in the budget.
In the first three pages of the Budget in Brief paper alone, there are no fewer than seven references to the "October 2007 economic statement," including $12 billion in tax relief this year and "broad-based relief" of $60 billion in personal and corporate tax cuts over the next five years, not to mention paying down $10 billion in debt this year.
All these numbers are moving in the right direction, as part of Canada's virtuous cycle, which is the envy of the industrialized world. Federal spending as a percentage of GDP will decline from 15.3 per cent to 15.1 per cent in the next fiscal year. The federal debt as a percentage of output will decline from 29.9 to 28.7 per cent, and public debt charges will decline from 2.2 to 2.0 per cent.
And here's a really important number: Public debt charges, interest on the federal debt, will decline from $33.1 billion this fiscal year to $31.5 billion in 2008-09. This brings in the tax-back guarantee - interest saved on debt reduction is returned to the taxpayer.
There's nothing new in this, although it's all good.
But with Ottawa's continuing abundance of good fortune, Flaherty managed to scare up an additional $1.5 billion in new program spending next year, even though program spending as a percentage of output is declining by one-tenth of a percentage point to 13.1 per cent.
So there's money for student loans and scholarships, money for aboriginal communities, money for cities, money for health and safety, money for the provinces to hire more cops, money for the environment.
And there's one interesting innovation - the establishment of a Tax Free Savings Account, in which Canadians can deposit up to $5,000 a year, with unfilled amounts carried forward, with "no lifetime limit and no tax on investment income earned, including capital gains."
Sounds like a plan.
Who can vote against it? Certainly not the Liberals in next week's budget vote, as Stéphane Dion indicated yesterday.
These TFSAs will actually be set up with after tax dollars - in other words, the taxes will already have been paid. It's just that any earnings on investments will be tax exempt. It could be the biggest thing since RRSPs. It's extremely empowering.
Cost to the government in the next year? Zero. Down the road, who knows? That won't be Stephen Harper's problem.
Meantime, the government advises in a budget brochure: "The TFSA can be used any way you like - for example, to buy a new car, pay for an emergency, finance a child's wedding or bankroll a dream family vacation."
Bankroll a dream family vacation? This is not Financespeak. It's the sort of pitch they make on the cable channels. Call 1-888, for your dream vacation. It won't cost you anything. And it won't cost the government anything. It's a win-win.
This budget measure alone was probably enough to take an early election off the table.
The budget just didn't give anything the Liberals could vote against?
Not a $450-million commitment over three years to fight AIDS, tuberculosis and malaria. Who would oppose AIDS funding?
Not $25 million for the 2010 Olympic and Paralympic torch relays. Who can be against the Vancouver Olympics?
Not $330 million over two years "to improve access to safe drinking water for First Nations." Anybody got a problem with that?
Not $250 million in the environment envelope to research carbon capture and storage. Some companies in the oil patch are already world leaders in this important area of environmental innovation.
Not $350 million for a new Canada Student Grant Program beginning next year. No one can be against that so long as, in Quebec's case, the constitutional jurisdiction of the provinces is respected through transfer payments.
Not $25 million to establish awards for doctoral students named for Georges Vanier.
What did this all add up to?