First Impressions of the Budget

Late yesterday, I made some guesses about the content of the CPC budget. Today, the the budget was delivered in the House of Commons.

On the surface, the budget doesn't look as ideomatic as I was expecting - but as is often the case with what amounts to policy documents, one has to look carefully at both the overall picture as well as the details.

A quick review of my "guesses":

1) GST Cut.

This didn't take a genius to forecast. Although the GST is probably the most visible tax that we deal with, and hence the most hated, a 1% GST cut really isn't a big deal. Think about it - if you go to Wal-Mart and spend $100 on product, the GST drops from $7 to $6 - a whole $1 difference on a $100 purchase. The government's example is $300 on a $30,000 car purchase. That's nice - if you have $30,000 to drop on a car. Most people I know can't afford to do that.

It's good public relations to cut the GST, but really the only people that benefit from it are those with significant amounts of disposable income. (The people who can afford to drop $5,000 on part of their new "home theatre" system and not notice it)

2) Rollback of Liberal Tax Cuts

Sure enough, they undid as much of this as they dared, and then tried to compensate by adding a slew of peripheral tax changes - the impact of which I am unsure of at this time. (As with all such things, it takes a while to "see the overall picture", and I'm going to have to wait and see what the "Employment Tax Credit" actually means.

3) Huge money dumped into the military

I missed on this one - the increases to military spending were relatively modest in relation to the claims that were made during the election campaign. Knowing the CPC's love affair with military hardware, I expect the "real expenditures" will occur when a sufficiently large emergency is looming on the horizon.

4) More money spent on prisons

Apparently, they haven't thought through their "get tough on crime" notion of imposing "mandatory minimum sentences". This one will probably emerge in a year or two's time, when the changes are starting to overcrowd our prisons to the point that they become powderkegs for the government.

5) Massive Government Program Cuts

Apparently, they've opted to go for this in stages. The "small government" mentality of the CPC has been reined in a bit, with program spending to be cut by $2 billion over two years, on a case by case basis. This doesn't sound "bad" up front, but I have the uneasy feeling it is a foreshadowing of things to come later.

6) $0.65/hour for parents raising children

Hey, guess what? They did exactly what they said they would. We'll have to wait and see exactly what happens to the tax law provisions here, but I don't expect most families will see the entire amount at all. As I've commented before, this program is utterly ineffective in dealing with the challenges that face parents every day. In reality, it's a sop to the "family values" crowd that idealizes the 1950's notion of the "nuclear family" - it's a policy "tip" intended to signal other parts of the yet-to-be-unveiled agenda. Realistically, the $1200 simply doesn't go much of anywhere in terms of childcare. It's unlikely to actually create any real change in the availability of spaces, nor in their affordability.

Other Thoughts:

I am very concerned by the significant changes being made to corporate taxation. As it is, under Chretien a huge amount of this nation's tax burden was downloaded onto individual Canadian taxpayers during the 1990s. The Conservatives have continued that with even more drastic cuts which essentially dump more of the burden onto the middle-income individual taxpayers. (This in an era when the economy is booming, and corporate profits are at all time highs - especially in the resources sectors) I disagreed with massive corporate tax cuts in the 1990s under previous Liberal governments, and I disagree with them today under the CPC. Again, the large corporations are the ones who benefit the most from these tax cuts, and the the Canadian people are left carrying the resulting burden.

There are a number of tax credits and other pseudo tax cuts in here which I'm afraid I'll have to take a "wait-and-see" stance on. The documents published today are simply too sketchy to put any real meaning on them. Some of them are superficially good ideas, but until I see the "ground rules" in the form of the revised income rules, I'm going to have to remain a bit skeptical as to their actual benefits. Like the $1200 "child care" issue, the devil is in the details.

Overall, what I've read so far isn't as radical as what I've seen the CPC talk about in the past, but I think much of the "moderation" has more to do with Harper hoping that he can hang on after the next election.