The Harper government unveiled their 2015 budget with both eyes firmly fixed on the 2015 election.
This is a budget aimed at middle class families across Canada with tax cuts for parents, increased benefits for families with kids, action on student loans, a small business tax cut and all done against the backdrop of disappearing deficits and growing surpluses.
The feds estimate that they will have moved from a deficit of 5 point 2 billion dollars in 2013-2014 fiscal year to a 4 point 8 billion dollar surplus in by 2019-2020 all the while putting more money in your pocket.
“We understand that raising a family can be expensive and we believe that decisions about how that money should be spent are best made at home by mum and dad, not by bureaucrats in Ottawa,” Finance Minister Joe Oliver said before laying out the range of tax cuts and benefits on display in the budget.
The already announced the Family Tax benefits will kick in this year allowing families with children under 18 at home to transfer income from the higher earning spouse to the lower earning spouse.
The Universal Child Care Benefit extends to children up to the age of 18 meaning a $60 a month per child payment, this on top of the $100 per month for each child under the age of six.
The amount a family can claim for child care, paid for at a daycare centre increases by $1,000
In addition the amount parents are expected to contribute to their kids post secondary education is changing. Payment contributions by parents will vary depending on your income and where you live but the income level at which payment expectations kick in is rising.
The Tax Free Savings Account contribution limit rises to $10,000.
And the small business tax rate will lower from 11 percent to 9 percent by 2019.
Proof that this is a political document can be found in the fact that the government arrives at their small surplus of $1.4 billion this year by selling off their shares in General Motors and reducing the $3 billion contingency fund to $1 billion.
You can expect the opposition parties to try and score political points with those facts but that will hardly take the shine off of a bevy of tax breaks and benefits.
According to government examples, published in the budget, a typical two earner family with two kids, one spouse whom they call Henry earns $84,000 while Cathy earns $36,000. The Harper government claims that compared to 2006, before their tax and benefit measures came into effect, this family is better off to the tune of $6,640 in 2015.
That means they will pay $3,293 less in income tax, $1,018 less in GST and will gain $2,329 in child care benefits.
Economist Ian Lee, a professor at Carleton University, says this budget is aimed squarely at the Conservative Party’s base but he says despite popular myth, that is not the well to do in Canada but the middle class.
“Families of modest incomes with children living at home in the burbs,” Lee said. “To put it in the language of demography and statistics and so forth, it’s the lower middle class and the middle-middle.”
Lee pointed out that most high income neighbourhoods in Canada are represented by the NDP or Liberals and that with this budget the Conservatives have targeted that vast swath of middle income earners.
With all those goodies, too many to mention really, it will be hard for progressive parties like the NDP and Liberals to campaign against.
Seniors also get benefits in this budget. The minimum withdrawal for Registered Retirement Income Funds (RRIF) will be reduced. A new home accessibility tax credit will be introduced to help seniors with the costs of adapting their homes to changing needs.
So how will progressives fight against this budget?
Maybe a bit of complaining that the government is raiding the contingency fund or selling GM to get their surplus, but will Canadians really care?
The big complaint will likely be, the government isn’t spending enough.
David Macdonald Chief Economist at The Canadian Centre for Policy Alternatives says the big problem in his eyes, not enough infrastructure spending.
“This is not a budget that is devoted to job creation or economic growth,” Macdonald said. “It is a budget that is devoted to creating a surplus at all costs.”
Macdonald said that the government should be putting money into infrastructure at a time when economic activity in the oil patch is waning. The government’s response is to point to the Building Canada Fund, a multi-billion dollar infrastructure program.
The NDP and Liberals claim it isn’t enough and are demanding more but promises of infrastructure spending is tough sell against jingle in your pocket or more digits showing up in your online bank statement.
What do you think of the budget! Speak your mind in the comments!