Monday, April 06, 2009

In order of precedence

The full CCPA report which I mentioned yesterday is now available. And in addition to dealing with my concern about accepting the Cons' estimates at face value, it also raises a few more important questions about the budget:
As the government’s 2009–10 fiscal year begins April 1, 2009, it stands to reason that the government expects almost all of its measures to begin within a month or two of that date. But that may be wishful thinking.

The Home Renovation Tax Credit, for instance, worth $3 billion for Canadians who have the means to build a cedar deck on their cottage, flowed almost immediately following the introduction of Budget 2009. Such expedited funding shows how quickly funding can flow when government commitment exists.

In contrast, the hardest hit Canadians will have to wait longer than usual to see their benefit. The Working Income Tax Benefit (WITB), the only tax measure for those making less than $25,000, does not get the same retroactive treatment as the home renovation tax credit for Canada’s cottage owners. Instead, the working poor will not be able to claim any additional support until early 2010, when they file their 2009 tax returns. As stimulus, it will be too little too late.

Changes in the Canada Child Tax Benefit and National Child Benefit supplement also do not receive expedited treatment. They will not be implemented in April when almost all other tax measures begin to be funded. Instead, those who live close to the poverty line and have children will have to wait until summer to receive their additional benefits.

The hardest hit in Canada are the first to face unemployment and sometimes bankruptcy, but they are the last to receive benefits from the government’s changes to the tax system.

Income transfers to low-income Canadians are also the most effective way to stimulate the economy through the tax system, based on Budget 2009’s own estimates. Low-income transfers are more than twice as effective as corporate or broad-based personal tax cuts. Yet the federal government is quickly implementing broad-based tax cuts that are least effective and procrastinating on those measures, like WITB, that have the largest stimulative effect on the economy.
Not that it should come as much surprise that the Cons' vote-buying efforts have been placed at the front of the line ahead of benefits for those who actually need them. But it's also worth noting how the Cons' timeline may influence the Libs' current calculations about when to pull the plug on the Harper government.

After all, the Cons' failure to actually get any benefits into the hands of Canadians who need them most would seem to make them vulnerable in the short term - particularly as they try to preach patience about a stimulus package which already falls short of dealing with the economic downturn to date. But it might be a lot more difficult for the Libs to vote non-confidence this fall just as the Cons' funding finally starts to trickle through to a slightly larger range of recipients.

Of course, the most likely outcome might well be for the Libs to find another excuse to keep propping up the Cons through the rest of the spring, then point to the start of funding as a reason not to force an election well into 2010. But it must surely be obvious that Canadians looking for federal leadership through a severe recession deserve better than a government which has chosen to slow down the flow of stimulus funds - and voters have every reason to be as impatient with the Libs who have chosen to keep the Harper government in power as with the Cons who have once again shown where their priorities lie.

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