The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
From The Toronto Star You have to hand it to Finance Minister Jim Flaherty. Politically he has put together a savvy budget that appears to do far more than it actually does. Working with a surplus of almost $13 billion for this fiscal year, Flaherty has put a whopping $10.2 billion toward debt reduction. But with the remaining $2.7 billion Ð a relatively modest outlay Ð he has created the impression that he is addressing the concerns of a large number of constituencies. At the same time, however, he has continued to follow the Conservative path of using tax breaks to eat away at the stream of future revenues that could have financed the real spending needs of the country in the coming years. The centrepiece of FlahertyÕs budget is a tax-free savings plan that would allow Canadians to shelter the income and capital gains of investments of up to $5,000 a year. While the plan looks a lot like the existing Registered Retirement Savings Plan that encourages savings for retirement, the one notable difference is that withdrawals from the new savings plan will be completely tax-free. That feature is sure not only to make the new scheme very popular with higher-income taxpayers, who can afford to sock away $5,000 every year, but also to make it extremely costly as time goes on. Flaherty estimates that the cost will rise to more than $3 billion Ð a major understatement inasmuch as that figure is based on the assumption that the economy wonÕt grow over the next 20 years. While Flaherty has buried the real cost of this major tax break, he has overstated the commitments he made on the spending side of the budget. For example, in announcing a welcome $250 million innovation fund to help OntarioÕs beleaguered auto sector, he glossed over the fact that the money is spread over the next five years. Likewise, in announcing that he is permanently extending the transfer of a portion of the federal gas tax to municipalities for investment in infrastructure, Flaherty glossed over an important detail: He is also freezing the gas tax transfer at the $2 billion level it is expected to reach next year. Flaherty deserves credit for providing more assistance to post-secondary students, investing more in research and development, and for leaving low-income seniors who work in their retirement years with more of the income they earn. But this extra assistance for low-income, working seniors raises the question of why Flaherty didnÕt also boost the extremely meagre supplement he introduced last year for Canadians working at poverty wages. That was the least he could have done to alleviate the wrenching poverty in which far too many Canadians must live. Instead, he has favoured those with money to spare to help them, as he said in his budget speech, Òset aside a bit of cash each month for a special project, to help their kids, or to simply treat themselves.Ó And as for Employment Insurance, a program that has come under fire for denying benefits, Flaherty offers only a new Crown corporation to oversee it. He could have done so much more Ð and without risking a deficit. Just think about how many affordable housing units he could have built with just a portion of the $10.2 billion surplus he used for debt reduction. Just think about how much more he could have done for urban transit. There is an additional $500 million in the budget for transit, but thatÕs spread across the whole country. Yes, it is a politically clever budget, one that is difficult for the Liberals to oppose. But, more importantly, it is a $10.2 billion lost opportunity. On so many fronts, Flaherty had the money to do so much more. Apparently low-income Canadians Ð the constituency that could have benefited from a more generous low-wage supplement, from more affordable housing, from improvements in EI benefits, from a commitment to better child care Ð donÕt count for much with a government that wants to make it easier for the better off to Òtreat themselves.Ó
