Wednesday, February 27, 2008

Federal Budget Day

The Conservative government tabled their 3rd budget today. As the economy is started to sour and previous budgets have lowered the budget surplus there was not a lot of room for new big commitments. Their was a sprinkle of money for infrastructure, mass transit, manufacturing sector, middle income earners, green projects.

The government has introduced a tax free saving account of up to $5000. This account provides a type of tax shelter for people who want to invest their savings but cannot wait until retirement before they may need to cash out. This will also help encourage some people to invest in savings, which are important for future economic growth. Keeping the contribution value low will prevent high end income earners from being able to take advantage of the program. This is a small way to try to repay the middle class that shares a disporportional amount of the tax burden.

The most disappointing aspect of the budget is the end to the rebate of fuel efficient cars. The goal of the program was to make the purchase of green cars more affordable. The Canadian car makers were against this plan because they did not have vehicles available on the market to meet the rebates. Hopefully the help being offered to the auto sector will allow for the development of more affordable green technology vehicles.

The Liberals have declared this to be a watered down Liberal budget. They don't love it but it is not worth having an election over. With the economy heading towards a down turn and the days of double digit budget surpluses in the past, it may be hard for the Liberals to put their vision of Canada in place without new sources of government revenue or reversal of 3 years of Conservative programs.

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