Tories choose deficit-cutting over spending
Flaherty unveils frugal plan focused on cuts, tax evaders, skills training
OTTAWA— The Harper Conservatives stuck to their frugal deficit-reduction mantra in a bargain-basement federal budget that keeps the cash flowing for urban renewal projects but looks to corporate Canada to refurbish the struggling economy and get more Canadians into the workforce.
Finance Minister Jim Flaherty mixed departmental cuts, modest spending, a clampdown on tax evasion and support for Ontario’s hard-hit manufacturing industry in a strategy aimed above all at wiping out the $25.9-billion federal deficit by 2015.
The budget largely ignored demands by the NDP and some economists for Ottawa to engage in another round of stimulus spending to boost the economy, which Thursday’s document said will grow only by a mediocre 1.6 per cent in 2013.
“We will not spend recklessly,” Flaherty declared in the Commons on Thursday. “In uncertain global economic times, the most important contribution a government can make to bolster confidence and growth is to maintain a sound fiscal position.”
NDP Leader Tom Mulcair labelled the package a “shell-game con job.” He said austerity budgets are no way to cure a weak economy. The finance minister’s predictions for deficit reduction and economic growth have been consistently wrong, Mulcair stated.
“When we’re here together next year, we’ll find out that that was also wrong,” he told the media after Flaherty delivered the budget.
The 2013 package is a grab bag of measures and policies. To help return Ottawa’s books to black, the Conservatives are counting on ferreting out tax cheats and closing tax loopholes, which could pull in an extra $300 million in revenue this year alone. Ottawa for the first time is offering rewards for tips that help tax collectors track down people using foreign tax havens.
“What we’re after are people hiding their money offshore and avoiding Canadian taxes,” Flaherty told the media.
Responding to complaints that the same products cost more in Canada than the United States, the government is cutting $76 million worth of import tariffs on ice skates, skis and snowboards, as well as baby clothing.
“This is an important test” to see if Canada’s retailers pass on savings to consumers, Flaherty remarked.
In a smattering of other measures, the budget:
Eliminates a wrinkle in the taxation of small-business income, saving the government $500 million a year. Expands the adoption tax credit. Commits Ottawa to working with the provinces to regulate payday loan companies.
Extends a small-business hiring tax credit.
No across-the-board income tax increases, or cuts, were announced.
With1.3 million unemployed, Flaherty unveiled a proposal to enlist the provinces and employers to expand skills training through the Canada Jobs Grant. But the program, which would be funded with a portion of the $500 million the federal government already sends annually to the provinces for training, won’t start until 2014. And it will depend on successful federal-provincial negotiations.
Municipal leaders will be pleased by Flaherty’s commitment to renew the Building Canada Fund, which will provide approximately $14 billion over a decade to cities and towns to finance improvements in transit systems, bridges and other infrastructure.
In recognition of the tough times faced by Ontario’s manufacturers, the budget allocates $920 million to encourage economic activity through the Federal Economic Development Agency for Southern Ontario.
The 2013 package also helps manufacturers by providing $1.4 billion in tax relief for buying new machinery and equipment.
The frugal nature of the understated budget was driven home by continued belt-tightening, all with an eye to balance the budget by 2015, the year that Conservatives are due to face voters.
Flaherty was adamant that goal would be met, saying a balanced budget was vital to safeguard the country’s economy. “We can get there by 2015 by quite moderate choices . . . We do not need to slash and burn,” he told reporters.
The cuts announced in last year’s budget, including reducing the civil service by19,200 workers, continue to bite. This year’s budget adds another $500 million in savings.