unimaginative2
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Here's a National Post take...
Harper, wise like a fox
John Ivison, National Post
Published: Friday, November 02, 2007
OTTAWA -Stephen Harper offered another example this week of how far ahead of his political adversaries, and the pundits, he really is. While much ink was spilled on whether Stephane Dion would bring down the government over the mini-budget, Mr. Harper was already looking ahead to the next move on the chessboard.
That's because he had no expectation the Liberals would vote against a $60-billion tax giveaway. Instead, he designed it to drain the government's coffers of funds with which Mr. Dion could launch a credible election campaign.
As the Tories noted in a release yesterday, Mr. Dion has already committed to spending the $6-billion a year GST cut on three different initiatives: his own income tax cuts, a child-care package and a cities agenda. Then there's the $5-billion pledge to implement the Kelowna Accord, ambitious national strategies to combat global warming and so on.
Unfortunately for Mr. Dion, even the most optimistic private-sector forecasts suggest there will be no money in the kitty to blow on multiyear, multi-billion-dollar commitments once Jim Flaherty has delivered the spring budget.
According to the government's own figures, the surplus will be $11.6-billion this year, of which they plan to use $10-billion to reduce the national debt. This leaves $1.6-billion to spend this year, $1.4-billion next year and $1.3-billion in 2009-10 (after $3-billion in debt repayment in each of those years).
The government has low-balled these figures for years but the average private-sector projections are similarly pessimistic about the ability of the economy to keep racking up double-digit surpluses as far as the eye can see. The best guess of such forecasters as the Conference Board and Global Insight is that the surplus will come in at $2.9-bllion this year (after the $10-billion debt repayment), $2.9-billion next year and $2.3-billion in 2009-10 (again after $3-billion is spent on the debt).
No wonder Mr. Dion said he would consider rescinding the GST cut. Unless he raises taxes or contrives to force an election before the government can enact the $10-billion debt repayment, he will quickly discover that the only national programs he can afford are sprucing up Canada's heritage railway stations and beautifying Prime Ministerial grave sites.
In May, Liberal finance critic John McCallum pushed the idea of raising the GST back to 7% and was shouted down by caucus colleagues who said it would be electoral suicide to increase the most hated tax in Canada. But even the McCallum plan was proposed as a means of funding broad-based income tax cuts, not to provide general revenue for social programs.
One Liberal pointed out that the Conservatives will be constrained by the same fiscal handcuffs, but this ignores the fact the Tories will feel the benefit of this week's tax cuts for some time to come -- the GST cut comes into force on Jan. 1, while the cheques from the retroactive income tax cut will start landing in mail boxes in April. Moreover, the government has no plans to spend billions on expensive social programs that don't currently exist.
In the end, Mr. Harper has simply outfoxed his opponent. Mr. Dion was left with the choice of inviting immediate electoral extinction or deferring despair until he is obliged to produce a platform on a shoestring. Liberals must hope he chose wisely.
jivison@nationalpost.com
Harper, wise like a fox
John Ivison, National Post
Published: Friday, November 02, 2007
OTTAWA -Stephen Harper offered another example this week of how far ahead of his political adversaries, and the pundits, he really is. While much ink was spilled on whether Stephane Dion would bring down the government over the mini-budget, Mr. Harper was already looking ahead to the next move on the chessboard.
That's because he had no expectation the Liberals would vote against a $60-billion tax giveaway. Instead, he designed it to drain the government's coffers of funds with which Mr. Dion could launch a credible election campaign.
As the Tories noted in a release yesterday, Mr. Dion has already committed to spending the $6-billion a year GST cut on three different initiatives: his own income tax cuts, a child-care package and a cities agenda. Then there's the $5-billion pledge to implement the Kelowna Accord, ambitious national strategies to combat global warming and so on.
Unfortunately for Mr. Dion, even the most optimistic private-sector forecasts suggest there will be no money in the kitty to blow on multiyear, multi-billion-dollar commitments once Jim Flaherty has delivered the spring budget.
According to the government's own figures, the surplus will be $11.6-billion this year, of which they plan to use $10-billion to reduce the national debt. This leaves $1.6-billion to spend this year, $1.4-billion next year and $1.3-billion in 2009-10 (after $3-billion in debt repayment in each of those years).
The government has low-balled these figures for years but the average private-sector projections are similarly pessimistic about the ability of the economy to keep racking up double-digit surpluses as far as the eye can see. The best guess of such forecasters as the Conference Board and Global Insight is that the surplus will come in at $2.9-bllion this year (after the $10-billion debt repayment), $2.9-billion next year and $2.3-billion in 2009-10 (again after $3-billion is spent on the debt).
No wonder Mr. Dion said he would consider rescinding the GST cut. Unless he raises taxes or contrives to force an election before the government can enact the $10-billion debt repayment, he will quickly discover that the only national programs he can afford are sprucing up Canada's heritage railway stations and beautifying Prime Ministerial grave sites.
In May, Liberal finance critic John McCallum pushed the idea of raising the GST back to 7% and was shouted down by caucus colleagues who said it would be electoral suicide to increase the most hated tax in Canada. But even the McCallum plan was proposed as a means of funding broad-based income tax cuts, not to provide general revenue for social programs.
One Liberal pointed out that the Conservatives will be constrained by the same fiscal handcuffs, but this ignores the fact the Tories will feel the benefit of this week's tax cuts for some time to come -- the GST cut comes into force on Jan. 1, while the cheques from the retroactive income tax cut will start landing in mail boxes in April. Moreover, the government has no plans to spend billions on expensive social programs that don't currently exist.
In the end, Mr. Harper has simply outfoxed his opponent. Mr. Dion was left with the choice of inviting immediate electoral extinction or deferring despair until he is obliged to produce a platform on a shoestring. Liberals must hope he chose wisely.
jivison@nationalpost.com