Budget balance hard to find

[Dave_ON]

http://www.cbc.ca/news/politics/story/2011/06/06/pol-weston-budget-analysis.html

Perhaps it's just me but I'm eagerly awaiting to find out how precisely with the ever increasing spending the government is planning how this ever elusive balanced budget will materialize. Now I'm not advocating an increase in taxes, but I just don't see how the math comes out, that allows us to arrive at a balanced budget when we are increasing spending and cutting taxes. Something has to give and either taxes must go up or services must get cut. Now old Jim has already said he's not cutting transfer payments, and with very little wiggle room elsewhere what's going to happen? Unless he's planning to start selling more crown assets I don't see any other alternative.

I found this portion of the article to be fascinating.

Truth is, far from the Conservative government’s ushering in an era of austerity over the past five years, federal spending and the bureaucracy have both grown at rates unmatched since the early Trudeau era almost 40 years ago.

Figures provided by the Finance Department show the Conservatives have increased spending on operations by a whopping 45 per cent since they took over control of the public purse from the Liberals in 2006.

Finance Department figures show the Conservative government now promising to shrink the public payroll has actually allowed the bureaucracy to balloon by almost 40,000 employees, an increase of 16 per cent in the past five years.

Honestly being compared to Trudeau era spending is somewhat over the top imnho, however I'm certain I'm not the only fiscal conservative that is somewhat taken aback by this. They've been spending like a drunken liberal since 2006. Granted there were extenuating circumstances, global recession, the devil (read: opposition) made them do it... blah blah blah. Now the balls entirely in their court, we're well on our way to recovery and the opposition is no longer the balance of power so what gives? Spending other peoples money is easy and fun, but eventually you run out of other peoples money (kudos to Margaret Thatcher). It would appear that the CPC is well on their way to becoming the LPC they so harshly criticized.

[Evening Star]

Honestly being compared to Trudeau era spending is somewhat over the top imnho,

Because we actually got something for the money then?

[fellowtraveller]

I don't see any other alternative.

is answered by

the Conservative government now promising to shrink the public payroll

[RNG]

Because we actually got something for the money then?

Other than a divided nation, what?

[Dave_ON]

is answered by

Sure they're promising that, but have done precisely the opposite, a 16% increase. If they were going to shrink the payroll wouldn't they have done this already?

[CPCFTW]

Because we actually got something for the money then?

Taxpayers are getting something... their money back. But you're right that the entitled welfare nation of the great Canadian hero Brigette Depape isn't getting anything for OUR money.

[Dave_ON]

Because we actually got something for the money then?

Oh we're most assuredly getting something for the money, and honestly we've needed to beef up our military spending for quite some time now. My concern is that this increased spending combined with promised tax cuts, increased civil service, and no real planed budget cuts is unsustainable. We can't afford it without cutting deep or reversing earlier tax cuts, or worse yet, increasing income tax.

[CPCFTW]

Correct me if I'm wrong, but wasn't most of the deficit related to spending initiatives and the Economic Action Plan for the recession? I think it was 40 billion spent on stimulus in 2009, and the stimulus has been mostly ongoing. I don't see why these spending initiatives couldn't be scaled back as we come out of the recession. Especially considering the spending initiatives were concessions made by a minority government.

[Smallc]

I don't see why these spending initiatives couldn't be scaled back as we come out of the recession.

They ended March 31st. The deficit will still be $32B this year.

[fellowtraveller]

Sure they're promising that, but have done precisely the opposite, a 16% increase. If they were going to shrink the payroll wouldn't they have done this already?

They have little to fear now from public unions, so I expect the hacking and whacking to begin soon, I certainly hope so.

They can start with CRA, Defence, Indian Affairs and Health.

CBC and Canada Post are also candidates for some reality therapy.

[RNG]

Correct me if I'm wrong, but wasn't most of the deficit related to spending initiatives and the Economic Action Plan for the recession? I think it was 40 billion spent on stimulus in 2009, and the stimulus has been mostly ongoing. I don't see why these spending initiatives couldn't be scaled back as we come out of the recession. Especially considering the spending initiatives were concessions made by a minority government.

This, and Harper et al argued against stimulus spending but due to his minority position was forced to implement it by the combined opposition. And they they dumped on him for it. As usual.

[CPCFTW]

They ended March 31st. The deficit will still be $32B this year.

I'm pretty sure that this is still a new "phase" of the economic action plan. There is additional spending in this budget in winding down these programs. The infrastructure expenditures are certainly not complete. And remember that this budget was created and designed to appease opposition parties. There were only minor tweaks to the original budget that was rejected by the opposition. All in all, the big cuts will be coming in future budgets now that the government doesn't have to placate the opposition to maintain power. The government wasn't about to make snap wholesale changes to a budget it had just tabled. A lot of research and taxpayer's money went into developing the 2011 budgetary plan. The government now has plenty of time and the requisite power to find the "targeted savings" it had promised.

Edited June 7, 2011 by CPCFTW

[Smallc]

I'm pretty sure that this is still a new "phase" of the economic action plan. There is additional spending in this budget in winding down these programs.

You're correct, there is a very small amount of spending to finish by October 31st projects that did not end by the deadline of of March 31st. There is very little stimulus spending in this budget.

[msj]

They have little to fear now from public unions, so I expect the hacking and whacking to begin soon, I certainly hope so.

They can start with CRA, Defence, Indian Affairs and Health.

I hope they don't shrink the payroll at CRA because the service has been getting worse and worse.

About 4 years ago I had a client who was constructing a building. So we file the GST return for a big refund.

Within a week, the CRA is contacting us asking for a print out of the general ledger and a copy of the invoices to go along with it.

In 2011?

Another client is building a building and we send in a really big refund (since banks don't fund the GST/HST the client has to come up with the money to pay the contractor out and wait for the refund).

I phone 3 weeks after filing to ask what's going on.

Find out a week later that an auditor has not been assigned yet.

Finally deal with the auditor and the cheque is in the mail - about 5 weeks longer than the previous experience.

Now, I would say this is a one time thing but I have had dozens of recent experiences similar to this - corporate income taxes, GST/HST, personal income taxes.

It's pathetic.

And it's only going to get worse if we keep electing bozo's like Jim Flaherty: his budgets have all these little stupid tax credits in them so that the CRA then hires more people to looke at receipts to make sure Johnny's swim class was 8 weeks long so his mom and dad can get $75 back on their tax return (yes, I'm serious, they actually contact accountants who have efiled tax returns to look at these receipts).

Simplify the tax system (including GST/HST) and then lets reduce the payroll at CRA.

In that order.

[Sandy MacNab]

I hope they don't shrink the payroll at CRA because the service has been getting worse and worse.....

......... I have had dozens of recent experiences similar to this - corporate income taxes, GST/HST, personal income taxes.

It's pathetic.

And it's only going to get worse if we keep electing bozo's like Jim Flaherty: his budgets have all these little stupid tax credits in them so that the CRA then hires more people to looke at receipts to make sure Johnny's swim class was 8 weeks long so his mom and dad can get $75 back on their tax return (yes, I'm serious, they actually contact accountants who have efiled tax returns to look at these receipts).

Simplify the tax system (including GST/HST) and then lets reduce the payroll at CRA.

In that order.

Whooopeeeee, A KINDRED SPIRIT!!!!

As one who deals with at least one small aspect of tax every work-day, I agree 10,000%!

If there is one thing I hate about this CPC government is the constant tinkering and fiddling with trivia. The country needs tax simplification - both the ITA and Regulations - and all put in language that the average, reasonably intelligent/educated person can understand. It would also help if agents were required to take and pass ESL lessons before they were turned loose on the public.

[RNG]

I hope they don't shrink the payroll at CRA because the service has been getting worse and worse.

About 4 years ago I had a client who was constructing a building. So we file the GST return for a big refund.

Within a week, the CRA is contacting us asking for a print out of the general ledger and a copy of the invoices to go along with it.

In 2011?

Another client is building a building and we send in a really big refund (since banks don't fund the GST/HST the client has to come up with the money to pay the contractor out and wait for the refund).

I phone 3 weeks after filing to ask what's going on.

Find out a week later that an auditor has not been assigned yet.

Finally deal with the auditor and the cheque is in the mail - about 5 weeks longer than the previous experience.

Now, I would say this is a one time thing but I have had dozens of recent experiences similar to this - corporate income taxes, GST/HST, personal income taxes.

It's pathetic.

And it's only going to get worse if we keep electing bozo's like Jim Flaherty: his budgets have all these little stupid tax credits in them so that the CRA then hires more people to looke at receipts to make sure Johnny's swim class was 8 weeks long so his mom and dad can get $75 back on their tax return (yes, I'm serious, they actually contact accountants who have efiled tax returns to look at these receipts).

Simplify the tax system (including GST/HST) and then lets reduce the payroll at CRA.

In that order.

Weird to me. Since Revenue Canada became the CRA they have become polite, and helpful and a joy to deal with. Unlike the freaking simple servants at the old Revenue Canada. I've been a one man band consultant for many years now and transforming the old Revenue Canada simple servant bastards into the CRA Crown corporation with some accountability has been an incredible benefit to me.

[Keepitsimple]

They have to cut 5% out of $80 billion. That's like reducing a family's operating expenditures from $500 per week all the way down to....yep....$475. The only reason it's a big deal in the Federal Gocernmentr is because of Union resistance to anything that would reduce the number of jobs and the advocates of any "programs" who cannot accept that perhaps some of them have outlived their usefulness and need to be reorganized, combined with others, or completely wound down. The union mentality is to not rock the boat - don't work too fast, don't be creative, follow procedures to the letter. Creative productivity is unknown in unions. 5%. Five percent. Should be peanuts.......but the predictions of doomsday are already upon us.

Edited June 8, 2011 by Keepitsimple

[Dave_ON]

They have to cut 5% out of $80 billion. That's like reducing a family's operating expenditures from $500 per week all the way down to....yep....$475. The only reason it's a big deal in the Federal Gocernmentr is because of Union resistance to anything that would reduce the number of jobs and the advocates of any "programs" who cannot accept that perhaps some of them have outlived their usefulness and need to be reorganized, combined with others, or completely wound down. The union mentality is to not rock the boat - don't work too fast, don't be creative, follow procedures to the letter. Creative productivity is unknown in unions. 5%. Five percent. Should be peanuts.......but the predictions of doomsday are already upon us.

Oh I'm not predicting doomsday by any stretch just simply pointing out that we are moving the budget in the wrong direction. Is this a trend that will continue or one time (5 year) anomaly? I'm not convinced it's an anomaly, and I suppose I'm somewhat distrustful of Flahrety when it comes to balancing the books without needing to sell assets to do it. There have been not details heretofore on how this will be achieved and that's what concerns me. We're already in a shortfall and with further tax cuts/credits looming and not yet budgeted, how are we going to pay for it all?

[Dave_ON]

And it's only going to get worse if we keep electing bozo's like Jim Flaherty: his budgets have all these little stupid tax credits in them so that the CRA then hires more people to looke at receipts to make sure Johnny's swim class was 8 weeks long so his mom and dad can get $75 back on their tax return (yes, I'm serious, they actually contact accountants who have efiled tax returns to look at these receipts).

Simplify the tax system (including GST/HST) and then lets reduce the payroll at CRA.

In that order.

I'm with you on that. I'm more a fan of no income tax, but since that will likely never happen, we need to make it a low reasonable rate for all with little to no exemptions/credits. Why should tax first be collected and then refunded? This means that people like you and I have no shortage of employment, but for the little business guy who can't necessarily afford a comprehensive business system or a tax accountant can easily get swamped. They have to know all the tax laws, know the filing procedures and what they qualify for in terms of exemptions/credits. This guy is more concerned with the day to day running of his business and shouldn't have to worry about learning an overly complicated tax and refund system.

Honestly all these piddly little credits makes a great deal of hassle for folks in your industry and mine. I work for a company that makes Business software, and the reports that some of the provinces require and the feds is utterly unbelievable sometimes. Having said that the CRA is a gem to deal with over the IRS in the US or God forbid the state tax agency in Louisiana which is one of the most complex and sub-compartmentalized tax structures I've ever encountered.

I don't think the average person realizes how expensive all these tax credits really are. It's not so much about the revenue loss, as the beauty of a refund is, you technically have it in your operating funds for the duration of the fiscal year, however, the administration required to maintain, audit and administer these credits can be staggering. Oddly enough these folks are disinclined to work for free

Edited June 8, 2011 by Dave_ON

[msj]

Weird to me. Since Revenue Canada became the CRA they have become polite, and helpful and a joy to deal with. Unlike the freaking simple servants at the old Revenue Canada. I've been a one man band consultant for many years now and transforming the old Revenue Canada simple servant bastards into the CRA Crown corporation with some accountability has been an incredible benefit to me.

They may be better than when they were "Revenue Canada" but their service has been getting worse in the past 5 years (and past 3 in particular).

IOW, they are heading back towards the bad old days.

[msj]

I'm with you on that. I'm more a fan of no income tax, but since that will likely never happen, we need to make it a low reasonable rate for all with little to no exemptions/credits. Why should tax first be collected and then refunded? This means that people like you and I have no shortage of employment, but for the little business guy who can't necessarily afford a comprehensive business system or a tax accountant can easily get swamped. They have to know all the tax laws, know the filing procedures and what they qualify for in terms of exemptions/credits. This guy is more concerned with the day to day running of his business and shouldn't have to worry about learning an overly complicated tax and refund system.

I don't feel sorry for the small business person.

You go into business you should know the rules. Other than tinkering with CCA rates/classes, its not like most small businesses have had to worry too much from tax changes in the past 5 years (or even 10 years).

Really, for most businesses it's not that complicated when it comes to doing that part of the tax return.

As for needing a low reasonable rate - we have reasonable low rates and they aren't the problem.

The problem is endless tax credits to the point that people come in thinking that they can get a credit or a tax deduction for virtually anything and are actually disappointed.

Then we hire people at the CRA to check receipts to ensure that obscure eligibility rules are being applied so that the credit is allowable.

Yes, we could probably lower the rates to even lower more reasonable rates if we ended most tax credits.

Honestly all these piddly little credits makes a great deal of hassle for folks in your industry and mine. I work for a company that makes Business software, and the reports that some of the provinces require and the feds is utterly unbelievable sometimes. Having said that the CRA is a gem to deal with over the IRS in the US or God forbid the state tax agency in Louisiana which is one of the most complex and sub-compartmentalized tax structures I've ever encountered.

Yes, better than the IRS but that's because the US is even more screwed up than we are so it's not exactly a good comparison.

One of these days Americans are going to wake up and realize that they do have to pay higher taxes and their system is going to get worse.

Meanwhile, in Canada we have had 12 years of tax cuts and the past 5 have been some of the stupidest ways to cut taxes (endless tax credits, reduction to the GST, income splitting for a select group of people [seniors] etc).

I don't think the average person realizes how expensive all these tax credits really are. It's not so much about the revenue loss, as the beauty of a refund is, you technically have it in your operating funds for the duration of the fiscal year, however, the administration required to maintain, audit and administer these credits can be staggering. Oddly enough these folks are disinclined to work for free

Agreed.

[Oleg Bach]

Balance of the books is impossible _ If the governmental books were perfectly balance, the economy would have no character - and no vigor - we have to have ups and downs in order to build economic character that is progressive...forget about balancing the budget - just learn to manage and above all to BUDGET.

[RNG]

I'll climb back up on my soapbox and shout FAIRTAX. Read the US bill. http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=106_cong_bills&docid=f:h2525ih.txt.pdf

Edited June 8, 2011 by RNG