Flaherty Backtracks on Budget

[jdobbin]

Another Conservative flip flop?

http://ca.news.yahoo.com/s/capress/070507/...al/tax_reversal

In a reversal, Finance Minister Jim Flaherty says a new controversial tax measure will be rewritten to ensure that legitimate Canadian corporations can continue to invest abroad and deduct the interest charge from their taxes.

Under pressure to back down from a "sleeper" measure in the March 19 budget that Canadian businesses said would cost them more than $1 billion and make them less competitive, Flaherty confirmed Monday that draft legislation being prepared by the finance department would ensure that the provision only went after tax havens and so-called double dipping.

"I think some of them have seen more there than there was," he said. "The intention always was to go after the tax havens, not to go after the single deduction."

[Figleaf]

Well, I hope Micheal Bluth is happy now that someone on the tory bench has shown a slight capacity for reflection and reconsideration. Sure it was at the behest of the business community, but hey, at least it represents an actual interaction between the choices of the government and the surrounding reality. That's got to count as a step forward.

[geoffrey]

Good move by Flaherty, now only if he would listen to all the non-CPC economists, finance experts and business leaders that have condemned the income trusts decision.

[normanchateau]

Good move by Flaherty, now only if he would listen to all the non-CPC economists, finance experts and business leaders that have condemned the income trusts decision.

Interesting how when the business community complained about losing this tax deduction on interest on foreign investments, Flaherty reversed himself. But when economists and ordinary low and middle income people complained last year about their personal income tax rate being increased by Flaherty effective July 1, 2006, he ignored them. Not only did he ignore them but he REDUCED their basic annual personal deduction. I suppose that if you're in a high enough income special interest group, Flaherty listens.

The Canadian Taxpayers Federation, when they reviewed the Flaherty budget a month ago, were generally critical of the big spending but did note the following:

"A new tax measure in the 2007 Budget will also result in Ottawa collecting more revenues from businesses. Closing an interest deductibility loophole will, according to budget estimates, result in $40-million more flowing to government coffers. Yet a finance official claims this amount is just “the tip of the iceberg.” Private-sector forecasts say the tax measure is worth hundreds of millions of dollars a year."

Thanks do Flahery's flipflop, that loophole has been brought back this week.

So what else does the Canadian Taxpayers Federation have to say about Flaherty?

"The Finance Minister dismisses any criticism that he has become a big spender even when his two-year binge will total $24.4-billion. As National Post columnist Andrew Coyne calculates, Mr. Flaherty is now “the biggest-spending finance minister in the history of Canada.” It’s a sad achievement but well-earned since Canada’s New Government is now 14% bigger after two Flaherty budgets."

Source:

http://www.taxpayer.com/main/news.php?news_id=2530

For Stephen Harper to have approved such a budget suggests that he's no longer a fiscal conservative nor even competent. Why do the Conservatives have a leader who is a social conservative but not a fiscal conservative? No wonder they will never have a majority government.

[geoffrey]

So, do you want your social programs cut or not Normie? You can't have smaller government and more government at the same time. You whine about all the cuts to programs the CPC makes, and then complain that they are spending more than ever?

Unbelievable.

[jdobbin]

For Stephen Harper to have approved such a budget suggests that he's no longer a fiscal conservative nor even competent. Why do the Conservatives have a leader who is a social conservative but not a fiscal conservative? No wonder they will never have a majority government.

There was certainly areas of the budget that could have been cut that weren't.

[normanchateau]

So, do you want your social programs cut or not Normie? You can't have smaller government and more government at the same time. You whine about all the cuts to programs the CPC makes, and then complain that they are spending more than ever?

Unbelievable.

So Geoffrey you approve of the Conservatives spending more in 2006 and 2007 than the Liberals did in 2005?

Unbelievable.

And you approve of them raising personal income tax rates in 2006?

Unbelievable.

And you approve of Mr. Flaherty being the"biggest-spending finance minister in the history of Canada".

Unbelievable.

You claim I have whined "about all the cuts to programs". What cuts are those? I don't see the outrageous handouts that Flaherty made to Quebec at the expense of British Columbia in the last budget as a program cut. It's a redistribution of funds designed to get the Quebec vote. No wonder Quebecers got a tax cut as a result. Unbelievable.

[jdobbin]

So, do you want your social programs cut or not Normie? You can't have smaller government and more government at the same time. You whine about all the cuts to programs the CPC makes, and then complain that they are spending more than ever?

Unbelievable.

There are lots of areas that could be cut, Geoffrey. I would cut Western Diversification, Atlantic Opportunities. Despite the benefits to Winnipeg, I think the Human Rights museum should not have been funded when the rest of the federal museums are strapped. I have my doubts about ethanol funding. I would have cut the tax credit programs in favour of a general income tax cut.

There is a lot of slush money floating around. Thirty million for a new sponsorship program doesn't seem like money well spent. It's small potatoes but I think each government department has stuff like that to look at.

Income tax cuts, productivity gains and efficient government operations should be the objective day in and day out.

[normanchateau]

Income tax cuts, productivity gains and efficient government operations should be the objective day in and day out.

Isn't it ironic that your objectives are fiscal conservatism whereas the current Prime Minister has totally abandoned fiscal conservatism in the last two federal budgets? The only vestige of conservatism he retains is social conservatism.

[geoffrey]

So Geoffrey you approve of the Conservatives spending more in 2006 and 2007 than the Liberals did in 2005?

Actually, I don't. And that's why I'm not voting Conservative. Your having your cake and eatting it to by saying they spend too much and cut too much. I'm saying they need to cut more and spend less. I have a rational position, you, do not.

And you approve of them raising personal income tax rates in 2006?

You'd have to look at it in the bigger context, but even in that bigger context, I disapprove of the income tax increase.

And you approve of Mr. Flaherty being the"biggest-spending finance minister in the history of Canada".

Clearly, no.

You claim I have whined "about all the cuts to programs". What cuts are those? I don't see the outrageous handouts that Flaherty made to Quebec at the expense of British Columbia in the last budget as a program cut. It's a redistribution of funds designed to get the Quebec vote. No wonder Quebecers got a tax cut as a result. Unbelievable.

At the expense of BC? Imagine how I feel being an Albertan. We've funded everyone's asses other than Ontarios for the last 50 years (ok, BC has been a have about half of the time). We get a poor deal, not BC, not Ontario and most certainly not Quebec.

I think it's been quite obviously from the flak I take from the CPC talking point repeaters here that I'm quite outspoken against the non-conservatism of the conservatives. Now where do you stand Normie? Do you stand for something? Or just against something? I have a strong feeling it's much more of the later.

Until left leaners like yourself realise that a negative campaign and attitude won't win you another seat, your going to be in opposition to a government that actually reflects your views quite nicely (handouts for the hell of it style government).

Let's drop the CPC does everything wrong lines, and get the conversation to be a little more constructive around here. I'd like to hear how you think they should spend less, but deliver on more programs, ect. ect.. Unfortunately, all I get is "Harper is a scary socon that hates children and spends our money," which to be honest is definitely not a message I give more than a second's thought to.

[normanchateau]

So Geoffrey you approve of the Conservatives spending more in 2006 and 2007 than the Liberals did in 2005?

Actually, I don't. And that's why I'm not voting Conservative. Your having your cake and eatting it to by saying they spend too much and cut too much. I'm saying they need to cut more and spend less. I have a rational position, you, do not.

Where is your evidence that I claim the Conservatives cut too much? I merely said that they spend too much. Why is that irrational?

[normanchateau]

Until left leaners like yourself realise that a negative campaign

Left leaner? Because I point out that this Finance Minister has spent more in his first two budgets than any finance minister in the history of Canada?

What if I said he had spent just the right amount. Would that make me a right leaner?

[geoffrey]

Where is your evidence that I claim the Conservatives cut too much? I merely said that they spend too much. Why is that irrational?

Well, then I have to ask you, what should they be cutting, which programs go tomorrow?

Your going to be very hard pressed to find a few billion to scrap.

Anyways, you posted this article on January 13, 2007:

OTTAWA, Dec. 8 /CNW Telbec/ - Media representatives are invited to a news conference to be followed by a rally in front of the Supreme Court of Canada and on Parliament Hill, to speak out against Stephen Harper's anti-women policies.

An ad hoc nation-wide coalition is demanding that the federal government reverse a series of political decisions that will have a negative impact on Canadian women, namely:

* The closure of more than half of the Status of Women Canada's regional offices;

* Changes to the funding criteria for women's groups and removing the word "equality" from the objectives of the women's program;

* Major cuts of 43% to the operating budget of Status of Women Canada;

* Cancellation of the Canadian Court Challenges Program;

* The refusal to adopt proactive pay equity legislation and,

* Cancellation of the funding for the Canada-wide child care program.

In context, it seems like you were against these cuts, and the cuts to the child care program...

Now, a little tidbit, but childcare programs are about as expensive as all things get. If you want your taxes to go down, your going to have to give something up. Is it the $100/month ridiculous payment? Is it stone aged Canadian Health Care?

Who knows. But it's something. Social programs have to go if you want less spending... money doesn't spend itself (well, actually it seems like it does). Which program do you cut first for the few billion that your going to need to find to fund your income tax cut?

[noahbody]

And you approve of them raising personal income tax rates in 2006?

Unbelievable.

To be fair, the raising of income tax was only due to the Liberals lowering it by a percentage point during the election campaign, after the Coservatives had announced their plan.

[normanchateau]

Where is your evidence that I claim the Conservatives cut too much? I merely said that they spend too much. Why is that irrational?

Well, then I have to ask you, what should they be cutting, which programs go tomorrow?

Your going to be very hard pressed to find a few billion to scrap.

Anyways, you posted this article on January 13, 2007:

OTTAWA, Dec. 8 /CNW Telbec/ - Media representatives are invited to a news conference to be followed by a rally in front of the Supreme Court of Canada and on Parliament Hill, to speak out against Stephen Harper's anti-women policies.

An ad hoc nation-wide coalition is demanding that the federal government reverse a series of political decisions that will have a negative impact on Canadian women, namely:

* The closure of more than half of the Status of Women Canada's regional offices;

* Changes to the funding criteria for women's groups and removing the word "equality" from the objectives of the women's program;

* Major cuts of 43% to the operating budget of Status of Women Canada;

* Cancellation of the Canadian Court Challenges Program;

* The refusal to adopt proactive pay equity legislation and,

* Cancellation of the funding for the Canada-wide child care program.

In context, it seems like you were against these cuts, and the cuts to the child care program...

I do recall posting that. I don't recall the context but it does support your point. Where would I cut? The following petition appears on the website of the Canadian Taxpayers Federation. It's probably not one you'd support. Correct me if I'm wrong.

Stop Corporate Welfare

To the Parliament of Canada:

The petition of the undersigned taxpayers of Canada states;

THAT successive governments in Canada have squandered billions of taxpayer dollars in grants, loans, loan guarantees and equity investments to private businesses;

THAT taxpayers of Canada object to their federal government’s costly and wasteful corporate welfare programs directed at business;

THEREFORE, your petitioners respectfully request that Parliament immediately enact legislation which would prohibit financing of private business enterprise through grants, loans, loan guarantees or equity investments, or any other direct or indirect financing.

[normanchateau]

Where is your evidence that I claim the Conservatives cut too much? I merely said that they spend too much. Why is that irrational?

Well, then I have to ask you, what should they be cutting, which programs go tomorrow?

Here's a novel idea from the Canadian Taxpayers Federation. Rather than cut programs, take the extraordinary multibillion dollar surplus and use it to provide taxpayers with a reduction in income tax rates. Paul Martin as Finance Minister thought this was a good idea. Preston Manning thought this was a good idea. The incompetent Stephen Harper is taking us precisely in the opposite direction.

Big Government Conservatism

* Program Spending up 7.9% in 2006/07 and projected to rise by 5.7% in 2007/08

* Three dollars of spending for every dollar of tax relief in fiscal ’07

Ottawa: The Canadian Taxpayers Federation (CTF) reacts to the 2007/08 federal budget, which was tabled in the House of Commons by Finance Minister Jim Flaherty this afternoon.

Finance Minister Delivers Liberal Spending Budget:

Federal government spending on all programs increased from $175.2-billion to $189.0-billion in 2006/07, this represents the third largest increase in percentage terms at 7.9% and the second largest jump in dollars since the budget was balanced in 1997/98. Program spending is budgeted to jump another 5.7 per cent in the upcoming year fiscal 2007/08) to $199.6-billion.

“Rather than reduce the overall tax burden, the Conservative government opted to spend down the federal surplus,” said CTF federal director John Williamson. “Program spending is up 7.9% as a result of the finance minister wildly overshooting his original 2006 budget target of 5.3% an astounding 50%. As such, there is little reason to believe Mr. Flaherty will hit next year’s budgeted spending boost of 5.7%.”

http://www.taxpayer.com/main/news.php?news_id=2515

[scribblet]

To be fair, the raising of income tax was only due to the Liberals lowering it by a percentage point during the election campaign, after the Coservatives had announced their plan.

Right, not to mention tax relief in other areas.

[normanchateau]

And you approve of them raising personal income tax rates in 2006?

Unbelievable.

the raising of income tax was only due to the Liberals lowering it by a percentage point during the election campaign, after the Coservatives had announced their plan.

The Conservatives were in power when Canadians paid their 2005 income taxes. The Conservatives were in power when Canadians paid their 2006 income taxes. The Conservatives had a choice each time and they chose to raise income taxes.

What made this Conservative tax increase particularly despicable was that it only applied to the first 36,000 of income so that it's biggest impact was on those who earn the least. Of course that's the group least likely to make a fuss or have any impact on Big Government. As this thread indicates, the Conservative Big Government caved when Big Business complained about the foreign investment interest tax loophole being taken away. So Flaherty restored that loophole. This will mean a reduction in government revenue. How will he balance the budget now to pay for this postbudget loophole? Increase personal income tax rates again?

[rover1]

Not having strong opinions on the main discussion, I would say that it an interesting one, with good contributions

As far as why Mr Harper is forthcoming as to financial matters, and not so much on social matters, perhaps he sees his popularity more linked to the social side, and prefers to go softly in areas where many are said to be frightened about some of his proposed policies.

My observation is that Mr Harper is, by far, the best politician in Canada. This doesn't mean that I necessarily agree with him, but is a tribute to his skill.

[normanchateau]

As far as why Mr Harper is forthcoming as to financial matters, and not so much on social matters, perhaps he sees his popularity more linked to the social side, and prefers to go softly in areas where many are said to be frightened about some of his proposed policies.

What do you mean by "forthcoming as to financial matters"? As President of the National Citizens Coalition, Finance Critic of the Reform Party, leader of the Canadian Alliance Party and leader of the Conservative Opposition, he was a fiscal conservative. But now he's delivered two budgets which bear no resemblance to fiscal conservatism. By forthcoming do you mean adopting policies which are the opposite of those he professed to believe?

[rover1]

Probably a better question for Mr Harper than for me. Why not write him and ask? If you make it a neutral, non-confrontational letter, he might answer. If he doesn't, you can tell us.

[normanchateau]

Probably a better question for Mr Harper than for me. Why not write him and ask? If you make it a neutral, non-confrontational letter, he might answer. If he doesn't, you can tell us.

What do you mean by "forthcoming as to financial matters?"

[normanchateau]

Another Conservative flip flop?

http://ca.news.yahoo.com/s/capress/070507/...al/tax_reversal

Here's what Flaherty said in March when he delivered the budget:

"We’re putting an end to the practice of corporations borrowing in Canada to fund business operations abroad, then using the interest deductions to offset Canadian income.

It is a practice that has resulted in Canadian taxpayers indirectly subsidizing the foreign operations of multinational corporations, and paying the price in reduced business activity and job losses in Canada.

No more. The interest expense on debt incurred to acquire shares of a foreign affiliate will no longer be deductible."

A complete flipflop by the Conservatives in response to pressure from Big Business.