Wednesday 28 January 2009

Federal Budget - 2009

I cannot believe what I read. It was with great delight that I anticipated the measures our government was going to take to ensure that Canadians who might need help will be protected in the current economic crisis. This is the same effect as the 2% GST cut - a few more bucks in my pocket, no lasting economic effect, and no impact on those who seek jobs and require retraining.

For family incomes of under $40,000 they will have an increased base tax exemption ($317). CBC said this is 50% of the population. Good plan. However, why should those who make between $40,000 and 80,000 get an estimated $2 billion in tax breaks? Just like stock holders, who demand dividends in this crisis, this is the group who needs to keep putting money back in. The more people we can help, the less debt we will face later, and the lower our borrowing costs. I really resent leaving an $85 billion debt to my granddaughter.

Much to my dismay, I realized that this budget will only benefit those who have money, and who can save on taxes. Those who can afford to spend $10,000 on renos, for example. Why do they need a tax break? Even if you can find a contractor, the good ones are booked months in advance. The bad ones are bad-mouthed on Holmes on Homes! They are a-plenty.

Seniors, who can get a $150 tax credit - for what purpose? What will that buy? They are trying to please everybody, while helping few. Dr. Cooper calls this 'triage'. I call it shameful.

Those who least need a tax break, whose tax dollars should go to helping those who might avail themselves of hard-won unemployment insurance dollars (I cannot call it Employment Insurance -EI!), will still be suffering. With a two-week delay in payments many will suffer as they qualify for their (now) 50 weeks of EI. What are they thinking? Re-election? Those whose incomes fall below the poverty level, who are trying to find work and move out of that horrible category of 'working poor' will still face their grief. Of course, those who least qualify, with inadequate working hours: women, part-time workers, are the first who are let go in this economic crisis. We need to find work for those who need to be retrained.

I am not an economist, but how will cutting taxes create jobs? Hubby's ideas was infrastructure: build a fast rail line between Toronto & Montreal. THIS will create jobs. It will speed the rate of travel, call up industries (steel - for example) that will require workers. The lovely notion of giving money to municipalities, who will fight over precious funds, will not result in an equitable and necessary division of dollars. Not only that, but it is the cities, with low tax bases, many workers and the poor (who do not pay taxes), who have crumbling water mains and need redevelopment.

This money is dependent upon municipalities and provinces matching the funds for these 'shovel ready' projects. How can they do this? Many of the projects that need to be completed will have to be applied for, may have already been started, may not qualify for funds, and will have to face a long drawn out RFP process.

Dr. Sherry Cooper, Chief Economist for BMO, complains in her article, The Advil Budget: Ottawa's New Fiscal Reality: Crimson & Clover, Over and Over, complains that the budget is "chock-full of government spending and rather light on the side of tax cuts". The root cause, she blames the US below prime issue, but I think the high gas prices, and panicky, greedy stock holders caused this pain.

We need to figure out a new economy.
What do people need? -employment, health care, shelter, food, dependable utility services, affordable Rx, an education that prepares them for work, day care, reliable transportation, a help up when they need it.

What do people want? -tax breaks, jobs that pay unfair salaries,cheap goods and labour, the American Dream: way too many 'things' that clutter a life, high dividend returns, maxed out credit cards, free University education for jobs that do not require them, SUVs, handouts.

We can't have both ends of this spectrum
We need our government to help those prepared to create employment do so. We need to determine our priorities. Do we want outsourcing and cheap goods and services? Or do we want to pay fair market value for goods and services to ensure that the poor do not get poorer and that those who work hard, and are able to earn a living, can get the health care they need, the leisure time they want and to find meaningful work.

Dr. Cooper says this will do 3 things:
  1. cushion the economic crisis
  2. mollify the opposition
  3. presents moderate responses to try and balance the chaos
This budget will not do much for anyone.

1 comment:

The Weaver of Grass said...

Has it not always been thus with all Governments Jenn? I am sad to say that money talks and those with huge quantities (bankers spring to mind here) have always pulled the strings.