Wednesday, May 03, 2006

Federal budget 2006

A lot of the reaction to the budget has centred on the politics of it - this surprised me as I was not aware that there were apolitical budgets but with an election possible whenever Gilles Duceppe gets tired of propping up Harper this one has some extra edge.

The Tory fiddling with taxes and bands target middle income households with hockey playing kids and stay home parents where the provider gets the suburban commuter train - the base which the Libs have eaten into during the Chretien-Martin years. Indeed, with his attendance at his kids hockey practices Harper has claimed kinship to that base in a way previous Tory grandees would find very difficult.

Those who expected the Tories to do more for the poor are obviously expecting the sun to rise up at midnight - the poor don't vote Tory. Neither do city folk or aboriginals. I imagine a lot of it is proforma - the minute the election results starting looking Blue everyone knew what was going to happen next.

The transit pass is an incentive for middle income people to take transit at weekends - it doesn't help the poor as they probably can't pay monthly and even if they did they wouldn't pay tax to get a refund. However, the alternative as floated in the campaign would have been crazy (rebating individual fares). I will discuss separately the assertion by the likes of Howard Moscoe that the credit means no new money for TTC. GO Transit users appear to be the real winner - their passes are more expensive and will attract higher refunds, and unlike TTC pass buyers come out ahead on a Monday-Friday basis and will be further ahead now.

Then there's the new Canada Employment Credit - at first I thought based on the media coverage that it was something you claimed based on expenses but it's just another personal allowance, something Irish readers would be familiar with as the PAYE allowance since it related only to income from employment.

Cutting the Landing Fee for immigrants seems nice but that money could have gone toward improving the entry process. With 800K people in the queue and 250K processed annually it doesn't sound like the fee is a disincentive. Instead making all immigrant related expenses tax deductible would be a good idea, too late for me though on both counts.

The left wing will scorn any of the extra military spending (and the new B.C. base is in an odd location which speaks more to porkbarrel than policy from what I hear) but in some ways the uptick is surprisingly small and does not cover much of what was promised during the campaign. I suspect Flaherty realised that surrending all of the income tax cuts would be suicide and something had to give - HMCS Chicoutimi (the submarine which had an onboard fire) has had its refit pushed back to 2012 and the word is that the Navy were told they had to do without something and this seems to be it.

Lastly, the wringing of hands over the debt puzzles me. In Ireland we took exactly the course Harper is doing - reduce tax, go for growth. Manage the debt figure as such and concentrate on increasing economic activity to make the debt a smaller part of the overall picture, especially during low-ish interest rates. Alberta has paid off its debts but as the people are finding out, this has been at a cost - no improvement in services at a time when they have an net inward migration and meanwhile Ralph is throwing cheques at them.

Overall - a bit of a curate's egg - good in parts but retaining enough smell to be offputting.
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