Minority Tories on a fishing trip
Every budget has its telltale line, that one, seemingly innocuous passage that gives the game away. While the rest of the budget labours mightily to obscure and deceive, in a flash it reveals what in fact the government is up to.
This year's telling moment occurs on page 76. I won't quote the whole thing; the section heading is enough. It reads: "Improving the Tax Treatment of Capital Gains for Fishers."
Never mind the strong odour of special treatment, the finicky micro-meddling with the tax code, the pandering to targeted interest groups: I am trying to imagine Stephen Harper saying the word "fishers." I think he could manage it, just, though not without a spasm of effort to keep his lip from curling. It is not a word that one usually associates with Conservatives; indeed, until now it was largely confined to the CBC.
It is a word, however, that one could imagine the federal Liberals using. And if there is one overwhelming message from this budget, it is that nothing has changed. This is a budget any Liberal finance minister could have brought down. Could and, in parts, did.
Oh sure, there's a lot of talk about "frameworks" and "principles," the better to distinguish the Conservative approach from Martinite ad hockery. And of course there is the usual bumf about "Focusing on Priorities" (that's actually the title). But in fact this budget, like its predecessors, has dozens of priorities -- capital gains for fishers, indeed -- and while it does set out some fine-sounding principles, it instantly breaks them.
Item: the budget proclaims its devotion to curbing runaway Liberal spending, complete with a promised "new approach to expenditure management" (how many times have we heard that before?).
Yet what is the actual Conservative spending plan? To spend more than the Liberals did -- more even than they planned to.
You think I jest. Look it up: Program spending for 2005-06, the fiscal year just ended, was first budgeted at $161.3-billion. By last November's Economic Update, that had risen to $163.7-billion. Six months later, the Tories have wrestled that down to ... $165.4-billion.
The same holds for the current fiscal year. Program spending, as of November: $170.7-billion. As of the Liberal election platform, $172.8-billion. As of this budget: $174.8-billion. And next year as well: Conservative spending will exceed the update's projection by nearly $5-billion. Bear that in mind in the coming days, as you listen to the screams of the wounded.
Item: the budget is also devoted to clarity and transparency. And indeed there are some praiseworthy reforms in how the government reports its figures. Those murky off-budget "foundations" the Liberals used to hide billions of dollars of your money have at last been brought back on to the government's books. And the practice of netting tax credits against both revenues and spending -- thus understating the true size of both, to the tune of billions of dollars every year -- has been ended. Henceforth, the figures will be gross. (Insert obvious joke here.)
But if those are the principles, then why did the government play the old Liberal game of fiscal time travel, stuffing billions in future spending -- a clutch of "trust funds," for post-secondary education, affordable housing and other provincial desiderata -- into last year's budget? Why, other than the usual Liberal reason: to buy off the NDP. And if tax credits should indeed be counted as spending, why do the Conservatives persist in pretending their own lengthy list of tax credits -- for tradesmen's tools, for transit passes, for students' textbooks, for children's sports, on and on -- are actually tax cuts?
Item: one of the budget's main themes is the need to disentangle federal and provincial finances, a confusing web of transfers that have blurred accountability, increased dependence and perpetuated conflict. Over and over, the budget speaks of the need to return federal spending to "core federal responsibilities." So what does it propose to spend on? Health care. Education. Child care. City transit, for heaven's sake.
I could go on. The same government that endlessly invokes "parental choice" in defence of its child care plan -- the famous $100 a month -- promises in the next breath to spend $250-million creating "spaces" ie. ignoring parents' choices. To say nothing of the Children's Fitness Tax Credit, a supreme example of nanny-knows-best statism.
And the same government that boasts of its tax-cutting prowess is, in at least one case, however it may try to disguise it, raising taxes. Not overall: the Tories have taken great care to ensure that every demographic group pays less in taxes than it did under the Liberals. But it takes quite remarkable liberties with the language to pretend that a rise in the bottom rate of income tax, from 15% on June 30 to 15.5% on July 1, is actually a tax cut.
That's hardly a catastrophe. But when you consider the Tories were working off a "planning surplus" (the surplus, before this year's budget measures) of almost $18-billion this year, it's simply extraordinary that they would not be in a position to cut income tax rates, and sharply. Instead, they're raising them.
Why can't they afford to cut your income taxes? Because the money's already been committed -- to the provinces, to the lucky beneficiaries of their "targeted tax measures," and of course, to cutting the GST. This is the single worst wrong turn in the budget: given Canada's plummeting household savings rates, given our heavy reliance on income taxes, given our urgent need to raise productivity, the very last thing we should be doing is cutting consumption taxes.
To cut the GST by a single point will cost the government $5-billion in revenues next year. So make it $10-billion for the two. The same money could have: cut the top rate of income tax from 29% to 25% ($3.9-billion); cut the 26% second rate to 22% ($3.4-billion); and cut the bottom rate to 15% ($2.7-billion). Which plan would do more for incentives to work, save and invest? Which would send the stronger signal abroad of our intent to compete for talent and capital?
Mustn't grumble. There are some useful things in this budget. The $3-billion per annum pledge to debt reduction, coupled with a suggestion that any unexpected surpluses above that be diverted into the Canada Pension Plan, promises to put an end to the sort of year-end splurges in which this budget itself indulges. The proposed Employment Tax Credit is defensible as a recognition of the costs workers incur to earn income, analogous to the deductions allowed investors, even if one suspects it was thrown in to make good on the Tories' "no taxpayer will pay more" claim. And the dividend and corporate tax cuts are surely welcome from a productivity standpoint.
But then, those were originally Ralph Goodale's cuts, weren't they? As I said, a Liberal could have written this budget.
This year's telling moment occurs on page 76. I won't quote the whole thing; the section heading is enough. It reads: "Improving the Tax Treatment of Capital Gains for Fishers."
Never mind the strong odour of special treatment, the finicky micro-meddling with the tax code, the pandering to targeted interest groups: I am trying to imagine Stephen Harper saying the word "fishers." I think he could manage it, just, though not without a spasm of effort to keep his lip from curling. It is not a word that one usually associates with Conservatives; indeed, until now it was largely confined to the CBC.
It is a word, however, that one could imagine the federal Liberals using. And if there is one overwhelming message from this budget, it is that nothing has changed. This is a budget any Liberal finance minister could have brought down. Could and, in parts, did.
Oh sure, there's a lot of talk about "frameworks" and "principles," the better to distinguish the Conservative approach from Martinite ad hockery. And of course there is the usual bumf about "Focusing on Priorities" (that's actually the title). But in fact this budget, like its predecessors, has dozens of priorities -- capital gains for fishers, indeed -- and while it does set out some fine-sounding principles, it instantly breaks them.
Item: the budget proclaims its devotion to curbing runaway Liberal spending, complete with a promised "new approach to expenditure management" (how many times have we heard that before?).
Yet what is the actual Conservative spending plan? To spend more than the Liberals did -- more even than they planned to.
You think I jest. Look it up: Program spending for 2005-06, the fiscal year just ended, was first budgeted at $161.3-billion. By last November's Economic Update, that had risen to $163.7-billion. Six months later, the Tories have wrestled that down to ... $165.4-billion.
The same holds for the current fiscal year. Program spending, as of November: $170.7-billion. As of the Liberal election platform, $172.8-billion. As of this budget: $174.8-billion. And next year as well: Conservative spending will exceed the update's projection by nearly $5-billion. Bear that in mind in the coming days, as you listen to the screams of the wounded.
Item: the budget is also devoted to clarity and transparency. And indeed there are some praiseworthy reforms in how the government reports its figures. Those murky off-budget "foundations" the Liberals used to hide billions of dollars of your money have at last been brought back on to the government's books. And the practice of netting tax credits against both revenues and spending -- thus understating the true size of both, to the tune of billions of dollars every year -- has been ended. Henceforth, the figures will be gross. (Insert obvious joke here.)
But if those are the principles, then why did the government play the old Liberal game of fiscal time travel, stuffing billions in future spending -- a clutch of "trust funds," for post-secondary education, affordable housing and other provincial desiderata -- into last year's budget? Why, other than the usual Liberal reason: to buy off the NDP. And if tax credits should indeed be counted as spending, why do the Conservatives persist in pretending their own lengthy list of tax credits -- for tradesmen's tools, for transit passes, for students' textbooks, for children's sports, on and on -- are actually tax cuts?
Item: one of the budget's main themes is the need to disentangle federal and provincial finances, a confusing web of transfers that have blurred accountability, increased dependence and perpetuated conflict. Over and over, the budget speaks of the need to return federal spending to "core federal responsibilities." So what does it propose to spend on? Health care. Education. Child care. City transit, for heaven's sake.
I could go on. The same government that endlessly invokes "parental choice" in defence of its child care plan -- the famous $100 a month -- promises in the next breath to spend $250-million creating "spaces" ie. ignoring parents' choices. To say nothing of the Children's Fitness Tax Credit, a supreme example of nanny-knows-best statism.
And the same government that boasts of its tax-cutting prowess is, in at least one case, however it may try to disguise it, raising taxes. Not overall: the Tories have taken great care to ensure that every demographic group pays less in taxes than it did under the Liberals. But it takes quite remarkable liberties with the language to pretend that a rise in the bottom rate of income tax, from 15% on June 30 to 15.5% on July 1, is actually a tax cut.
That's hardly a catastrophe. But when you consider the Tories were working off a "planning surplus" (the surplus, before this year's budget measures) of almost $18-billion this year, it's simply extraordinary that they would not be in a position to cut income tax rates, and sharply. Instead, they're raising them.
Why can't they afford to cut your income taxes? Because the money's already been committed -- to the provinces, to the lucky beneficiaries of their "targeted tax measures," and of course, to cutting the GST. This is the single worst wrong turn in the budget: given Canada's plummeting household savings rates, given our heavy reliance on income taxes, given our urgent need to raise productivity, the very last thing we should be doing is cutting consumption taxes.
To cut the GST by a single point will cost the government $5-billion in revenues next year. So make it $10-billion for the two. The same money could have: cut the top rate of income tax from 29% to 25% ($3.9-billion); cut the 26% second rate to 22% ($3.4-billion); and cut the bottom rate to 15% ($2.7-billion). Which plan would do more for incentives to work, save and invest? Which would send the stronger signal abroad of our intent to compete for talent and capital?
Mustn't grumble. There are some useful things in this budget. The $3-billion per annum pledge to debt reduction, coupled with a suggestion that any unexpected surpluses above that be diverted into the Canada Pension Plan, promises to put an end to the sort of year-end splurges in which this budget itself indulges. The proposed Employment Tax Credit is defensible as a recognition of the costs workers incur to earn income, analogous to the deductions allowed investors, even if one suspects it was thrown in to make good on the Tories' "no taxpayer will pay more" claim. And the dividend and corporate tax cuts are surely welcome from a productivity standpoint.
But then, those were originally Ralph Goodale's cuts, weren't they? As I said, a Liberal could have written this budget.
5/03/2006
