Canadian Budget

[Sam Pawlett]

His Eminence Paul Martin gave his budget speech yesterday. He delivered
the 2nd balanced budget in a row. The main point in the budget was 13
billion( over 5 years) in new spending for Canada's beleaguered  health
system. Also included was some tax cuts. An elimination on the 3% surtax
on individuals earning over 50K per annum. Some 200,000 low income
people will no longer pay income tax. He also included a $500 child tax
credit for low income parents. $1.5 billion was earmarked for high tech
research (mostly in health), $375 million for  the military( improve
housing for families of military personnel) and  $1.5 billion for youth
initiatives (whatever that is). Projections for the budget surplus for
the fiscal year 1999 are between 4-10 billion depending on the usual
factors e.g. growth, revenue etc. Revenues will be $156.7 billion,
expenditures about the same. Personal income tax now counts for 48% of
gov't revenues while corporate taxes count for 13% of same. In the
golden age, personal and corporate taxes were 50-50. This shift in the
tax structure and the related increases in inequality and poverty are
the real story behind the de facto SAP that Canada has undergone in the
last 10 years. Payments on the national debt ($580 billion) will take
25% of gov't expenditure( presumably this includes interest payments).
Martin set aside $3 billion to pay down on the debt principal.

     Elimination of the 3% surtax is dumb. It amounts to $330 per
person, will cost the gov't $6 billion in revenue and will do little to
boost effective demand. It is a rhetorical ploy so the gov't can say
"Look middle class, we're on your side." The gov't should be
_increasing_ taxes on the higher tax brackets.  Eliminating tax on
200,000 low income people is good. The health spending is good news but
not nearly enough. The Liberals  now present themselves as the saviors
of the Canadian poor and working class even though they destroyed what
was left of Canadian social democracy. They also present themselves as
having saved Canada from the IMF though their governance has differed
little from what the IMF has said Canada should do. Conservative
commentators from the usual myriad of business roundtable's, tax lobby
groups and chambers of commerce issued their typical highly predictable
clichés Lower Taxes! Lower Spending! More money to the debt! Do John
Loxley et. al. still put out the alternative budget? Seemed that there
was some real creative thinking going on there.

Sam Pawlett
Vancouver

BTW, Tom, has Jock Finlayson changed his toupee recently?