Canada budget

[Fuzzness 2]

OTTAWA -- Seeking to appease a broad swathe of taxpayers, Finance Minister Jim Flaherty has crammed the federal Conservatives' maiden budget full of personal and corporate tax reductions.

"There is more tax relief in this budget than in the last four budgets combined," Flaherty declared to the House of Commons on Tuesday, his Tory colleagues cheering.

As the minority Conservatives move to put their own stamp on Canada's finances with the first Tory budget in more than 13 years, their inaugural fiscal agenda delivers more than twice as much tax relief as new spending, with the sweeping measures valued at nearly $20 billion over the next two years.

Because of the unexpectedly strong performance of the economy over the past 12 months due to tax revenue from the booming resource sector, the Tories find themselves awash in cash, with the 2005-2006 federal surplus estimated at $8 billion on spending of $213 billion ($15 billion more than the Liberal economic update estimated in the fall of 2005).

Spending for the current fiscal year, 2006-07, is projected to rise to $223.6 billion.

The budget fulfills Prime Minister Stephen Harper's main campaign promises, with a much-anticipated reduction in the Goods and Services Tax and a $1,200 annual childcare allowance for each child under six in a family.

But a shift in priorities is reflected in the dearth of spending in the realms of arts and the environment, while spending on the military, law and order, and border infrastructure is underscored.

Top of Flaherty's fiscal agenda is the promised tax reductions, the centrepiece of which is Harper's controversial plan to cut the much-maligned GST by one percentage point.

The one-point rate reduction will also apply to the federal portion of the harmonized sales tax in New Brunswick, Nova Scotia and Newfoundland and Labrador.

But in an unexpected turn of events, the budget also reneges on the Tories' pledge to completely eliminate the Liberal's planned income-tax relief.

The Conservatives say they will follow through on the previous Liberal commitment to have the lowest income tax rate at 15 per cent from January 1, 2005 to June 30, 2006.

But Canadians in the lowest personal income tax bracket will see a slight difference in their take-home pay beginning July 1, when the rate will be bumped up to 15.5 per cent.

The aim of this exercise appears to be an attempt to meet Harper's campaign pledge to save more than $4 billion by eliminating Liberal income tax reductions.

But at the same time, the measure could be a way to avoid claims the Conservatives are raising income taxes to pay for their GST reduction.

The Conservatives have also introduced an unexpected tax credit on employment income of up to $500, effective July 1, 2006. The eligible amount will double to $1,000 as of January 1, 2007.

Other reductions include cutting the general corporate income tax rate from 21 per cent to 19 per cent by 2010; scrapping the corporate surtax for all corporations as of January 1, 2008; and eliminating federal capital tax as of January 1, 2006.

"Canadians pay too much tax," Flaherty said. "It's holding families back. It makes it harder for small businesses to create jobs and opportunities. It discourages innovation and investment. It is limiting our productivity."

Providing immediate and substantial tax relief for all Canadians "is a priority for this government," he said. "In this budget, we are providing 29 separate tax reductions in every area where the government collects revenue."

Spending

Meanwhile, defence will receive $1.1 billion ($5.3 billion over five years) to strengthen the Canadian Forces' "capacity to defend our national sovereignty and security."

The Tories pledge to crack down on crime in Harper's famous five priorities is reflected in the budget's plan to provide $161 million for 1,000 more RCMP officers and federal prosecutors, as well as another $37 million for the RCMP to expand training.

The fiscal agenda also promises unspecified funds to expand Canada's correctional facilities "to house the expected increase in inmates as a result of changes in sentencing rules."

Meanwhile, $20 million is promised to communities in a bid prevent youth crime and another $26 million for victims of crime.

Border security will see a significant cash injection, with $101 million to begin arming border officers and eliminating so-called work-alone posts, and another $202 million to implement a border strategy.

The budget also outlines, as promised, the Tories' child-care plan that will provide families with $100 a month for each child under six.

The plan also promises $250 million to support the creation of 25,000 additional child-care spaces each year beginning 2007/2008. However, this allowance will replace the $5-billion arrangement the Liberals had negotiated with the provinces to build a national child-care program, a move that is sure to draw fire from Opposition MPs.

While the government previously said it would increase farm aid by $500 million a year for five years, Flaherty announced an extra $1 billion in farm aid for this year.

"This additional investment will help farmers as we transition to new income stabilization and disaster relief programming," he said.

Other highlights of the federal budget plan include:

Commitment of $3 billion a year in debt paydown (National debt now stands at $483.4 billion and the debt charges in 2006/2007 are $34.8 billion)

Elimination of capital gains tax on listed stocks donated to charity, effective immediately

Tax credit of up to $2,000 for employers who hire apprentices

New $1000 grant for first- and second-year apprentices

Reducing the Right of Permanent Residence Fee from $975 to $490, effective immediately

Increasing immigration settlement funding by $307 million

Fitness tax credit for up to $500 in eligible fees for physical fitness programs for each child under age 16

New tax credit for textbooks, which is to provide a tax reduction of about $80 per year for a typical full-time post-secondary student

Elimination of current $3,000 limit on amount of scholarship, bursary and fellowship income a post-secondary student can get without paying federal income tax

New $500 tax deduction for tradespeople, for costs in excess of $1,000 for tools they must acquire as condition of employment

Tax credit on cost of monthly public transit passes, or passes of longer duration, effective July 1, 2006

Increase to $2,000 the maximum amount eligibility for pension income credit, effective 2006

The budget proposes $460 million ($1 billion over five years) to further improve Canada's pandemic preparedness

The agenda also includes $19 million per year to Public Safety and Emergency Preparedness Canada

Up to $320 million in 2005-2006 to fight polio, tuberculosis, malaria and HIV/AIDS and to help low-income countries cope with natural disasters or sharp rises in commodity prices

$5.5 billion for the Wait Times Reduction Transfer, including a six per cent rise in health care transfers this year and next

$52 million yearly to the Canadian Strategy for Cancer Control

"Conservatives believe health care is already well funded -- it just needs to be reformed," CTV's Ottawa Bureau Chief Robert Fife told CTV.ca.

While it was widely expected that the Conservatives will aim to moderate spending by $22.5 billion over five years, the budget's summary statement of transactions shows that program expenses are up nearly $10 billion from the Liberal agenda.

However, it is expected that there will be more details on the anticipated spending cuts when the supplementary estimates come out in the fall.

Notably absent is funding to arts and culture, but for the $50 million promised to the Canada Council for the Arts.

Further, there is no mention of the Liberals' $10 billion commitment to implement the international Kyoto accord, which aims to reduce the greenhouse gases that cause climate change.

Also missing from the fiscal agenda is the 10-year, $5.1 billion federal-provincial deal to help aboriginal people signed in Kelowna, B.C. last year under the former Liberals.

However, natives will receive $450 million in 2006-2007 and 2007-2008 in areas of priority that include education; advancing socio-economic conditions for women, children and families; and improving the water supply and housing on reserves.

Harper's Conservatives are also dipping into last year's budget surplus for $3.3 billion, which is going to the provinces for spending on post-secondary education, affordable housing, public transit, northern housing and off-reserve aboriginal housing.

CTV's Chief Political Correspondent Craig Oliver called the budget an "instant gratification" document that caters to just about every demographic.

Oliver told CTV.ca that unlike budgets in the past, the tax relief in the Tory fiscal agenda was immediate for taxpayers.

"But the important thing politically is, you cannot find an individual or group untouched by this budget, right in their pocketbook," Oliver said.

ok i admit i didnt read all of that, but.... 20 billion dollars in tax cuts over two years and they expect an 8 billion dollar surplus? what arent they saying?

[almaty 19]

hmmmmmmmmmmm ..voodoo economics

[Ban Hammer 13,333]

someone in canada read the book on reaganomics