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  • Towards Justice: Tackling Indigenous Child Poverty in Canada July 9, 2019
    CCPA senior economist David Macdonald co-authored a new report, Towards Justice: Tackling Indigenous Child Poverty in Canada­—released by Upstream Institute in partnership with the Assembly of First Nations (AFN) and the Canadian Centre for Policy Alternatives (CCPA)—tracks child poverty rates using Census 2006, the 2011 National Household Survey and Census 2016. The report is available for […]
    Canadian Centre for Policy Alternatives
  • Fossil-Power Top 50 launched July 3, 2019
    What do Suncor, Encana, the Royal Bank of Canada, the Fraser Institute and 46 other companies and organizations have in common? They are among the entities that make up the most influential fossil fuel industry players in Canada. Today, the Corporate Mapping Project (CMP) is drawing attention to these powerful corporations and organizations with the […]
    Canadian Centre for Policy Alternatives
  • Tickets available for Errol Black Chair Fundraising Brunch 2019 June 26, 2019
    You are invited to CCPA-MB’s annual fundraising brunch in support of the Errol Black Chair in Labour Issues.  Please join us to honour: Honoured Guest: John Loxley is Professor of Economics at the University of Manitoba and a Fellow of the Royal Society of Canada. Guest Speaker:  Jim Stanford is Economist and Director of the Centre […]
    Canadian Centre for Policy Alternatives
  • The fight against ISDS in Romania June 24, 2019
    CCPA is proud to co-sponsor this terrific video from our colleagues at Corporate Europe Observatory. It chronicles grassroots resistance to efforts by Canadian mining company Gabriel Resources to build Europe’s largest open-pit gold mine in a culturally rich and environmentally sensitive region of Romania. After this unimaginably destructive project was refused by the Romanian public and courts, the […]
    Canadian Centre for Policy Alternatives
  • A critical look at BC’s new tax breaks and subsidies for LNG May 7, 2019
    The BC government has offered much more to the LNG industry than the previous government. Read the report by senior economist Marc Lee.  
    Canadian Centre for Policy Alternatives
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Erin’s Budget Notes

Excellent analysis by Marc and Andrew leaves me with relatively little to add. The Steelworkers and NDP made many of the same points.

Budget 2008’s minor new investments in public programs will amount to only one-sixth the value of recent corporate tax cuts during the next fiscal year. Budget 2008 (Table 1.1, page 10) proposes $1.4 billion of new spending in 2009-10, whereas the Economic Statement (Table 3.1, page 73) pegged the cost of post-2006 corporate tax cuts at $7.9 billion in that year.

The main new tax break, Tax-Free Savings Accounts, is poor policy for reasons outlined by Andrew and Marc. The budget presented these Accounts as being affordable for the public treasury by projecting their cost for only the first few years, but lucrative for individuals by projecting potential tax savings over two decades of compound interest.

The up-front cost is low because any income contributed is taxable. Tellingly, the C. D. Howe Institute introduced them as “Tax-Prepaid Savings Plans” before the Conservatives promoted them as being “Tax-Free”. However, because the interest will avoid tax as it accumulates and when it is withdrawn, this measure could burn a significant hole in future government revenues.

I like the accelerated capital cost allowance for manufacturing because it is tied to tangible investment in Canada. However, Budget 2008 extended this measure on a “declining basis” rather than continuing it at a straight-line rate. Although the manufacturing crisis has dramatically worsened over the past year, the targeted tax incentive in today’s budget is worth less than the one in last year’s budget.

Through 2013, no-strings-attached corporate tax cuts will cost twenty times as much as both versions of the manufacturing capital cost allowance (CCA) combined. As manufacturers receive the 50% CCA, the oil sands will retain its 100% CCA through 2010.

Finally, CCAs do not help manufacturers that no longer have profits against which to write-off their capital investments. A refundable tax credit would provide a much stronger investment incentive, particularly for manufacturers that have become unprofitable.

Comments

Comment from Andrew Jackson
Time: February 27, 2008, 8:28 am

Erin, I note that spouses can fully share the new tax free accounts – another modest step along the road to the eventual goal of income splitting.

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