"What is wrong with you lefties?" asked the Economist of Considerable Renown. "That budget was a win for you."
In the immediate aftermath of the federal budget, I was still trying to come to terms with the logic of this apparently schizophrenic government document. What were the architects of this budget thinking?
"If this budget is such a godsend to the left," I asked the Economist of Considerable Renown," why is Conservative Leader Stephen Harper endorsing it?"
Taxes and tax cuts
Last April, the General Accounting Office (GOA)—a kind of business inspectorate that works for the U.S. Congress—dropped something of a bombshell when it announced that two-thirds of the companies operating in the United States paid no federal taxes on their profits between 1996 and 2000. For the year 2000, 94% of all U.S. firms paid taxes of less than 5% of their profits.
The recent announcement by Finance Minister Gary Collins that BC is now expected to post a $1.2 billion surplus in 2004/05 caught many by surprise. After all, it was only seven months ago that Minister Collins tabled his first balanced budget, after sky-high deficits the previous three years. What explains this dramatic shift from red to black?
Paul Martin began his budget speech on February 27, 1995, with the following words:
“Mr. Speaker, there are times in the progress of a people when fundamental challenges must be faced, fundamental choices made, a new course charted. For Canada, this is one of those times. Our resolve, our values, our very way of life as Canadians are being tested. The choice is clear.
“We can take the path too well-trodden of minimal
When Canadians went to the polls last June they chose, in policy terms, new spending by the federal government over shrinking government through more tax cuts. In so doing, they rejected arguments that higher public spending would inevitably undermine Canada's economic performance, or conversely, that reducing the size of government by cutting taxes would boost the economy.
(Ottawa) Would cutting taxes even further boost Canada's economic performance? Would introducing a new social program like early childhood education and care hurt Canada's productivity? A new report from the Canadian Centre for Policy Alternatives reviews the evidence, finding no relationship between how big a government is and a country's economic performance.