Tuesday, October 30, 2007

Tax cuts for everybody!

(crossposted to CanadaEast)

I wonder how many hits this page will be getting over the next 24 hours?

Finance Minister Jim Flaherty announced some substantial tax cuts today. Unlike what is usually the case with tax cuts, these will actually add up to something meaningful. A guy or gal earning $40,000 will get $225 extra back next year when they file their 2007 taxes. That isn't chump change.

At the same time, the GST will drop to 5% (and presumably the HST will fall to 13%, thought the provincial Liberals may hold it higher as was recently recommended by an economist).

Corporate taxes will also go down and, most importantly to me, a subtantial payment will be made on the federal debt. Overall, I am pleased with this. If I were prime minister, I think I would have not done the GST thing and instead paid down more debt - that was the purpose of the GST afterall - and maybe saved a bit more for contingencies. However, I am not writing this to get into the merits of the announcement; I want to write about the politics of it.

So, what does this mean? I think it reinforces my prediction that there will be an election in December.

How so? The Tories have now blown their goodies that would ordinarily be spent in a pre-election budget. They clearly are aiming for an early vote. The Liberals are unlikely, however, to cooperate by voting non-confidence. Therefore, I suspect any Liberal attempt to tinker with these changes or slow them down in committee will be met with an election call by Harper on the grounds that the Liberals are obstructing the agenda and preventing the implementation of the GST cut by the promised date of January 1.

I hope all you candidates out there saved your toques from the 2006 campaign!

3 comments:

Peter Kincaid said...

Has it felt any worse to be a federal Liberal in this country? With Bob and Doug McKenzie's French cousin at the helm, we now have to watch Harper's new fascination in flopping around his spineless opponent. Harper can't get him to fight so Harper consoles himself in embarrassing Stéphane into being a lackey. The way things are going, one wonders if Harper will introduce legislation next week trying to bann gay marriages again. We've had Prime Ministers who have gone down as national embarrassments but we know have a prime minister wannabe who seems to be outdoing them while in opposition.

The Liberals are heading to getting really clobbered in the next election just on credibility and leadership alone. Self preservation is clearly the only principle that counts. I think there is only one hope for the Liberals to stay out of political hinterland. That is for the party to go find out if someone like McKenna is looking for a full time job - if you know what I mean.

Peter

NB taxpayer said...

So, what does this mean? I think it reinforces my prediction that there will be an election in December.

How so? The Tories have now blown their goodies that would ordinarily be spent in a pre-election budget. They clearly are aiming for an early vote.


Not really. I think the conservative government still has the fiscal room to go further. From the Globe and Mail:

"The Conservative government, apparently swimming in more cash than even the most optimistic economist had predicted, will fulfill a campaign promise to cut the GST and introduce income tax cuts that will be felt when Canadians file their taxes for the current year.

The multi-billion dollar package of tax relief announced Tuesday by Finance Minister Jim Flaherty is intended to appeal to voters as Parliament prepares for a potential spring election. Even after the tax cuts, which will amount to more than $10-billion in the current fiscal year, there will be a projected surplus of $11.6-billion."


In other words, they are still holding on to $12 billion of our hard-earned money. Money they should give back to taxpayers in the form of a tax cut. They are hardly out of goodies.

Peter Kincaid said...

The Conservatives want an election this year but Stéphane knows he will be out of a job if there is one. So we won't have an election this year.

Stéphane is hoping a downturn in the economy will make enough people mad at the Conservatives next year and vote for him. Stéphane wants time. Many are now hoping that the Conservatives have spent all their election goodies but, as nb taxpayer points out, they have not. I don't think people are also picking up on the right wing's point that there is about 26 billion in government fat to cut. So from Harper's point of view he's got a lot of popularity points he can still buy with taxpayers dollars.

Peter