Well, budget day came and went, and not surprisingly everyone is heaping praise on the new government for their “bold” plan. Front and centre in this new budget is the GST reduction, from 7% to 6% starting July 1st. This is an interesting idea for several reasons. One, the current Finance Minister (the one that in theory sets the budget and presents it to Parliament) says that GST reductions are ill-advised. Don’t believe me? Cerberus noted this about a month ago in this post:
Hon Mr Flaherty: The member opposite again raises the question of reducing the sales tax. I must say that with respect to tax cuts, I agree with Paul Martin. With respect to reducing the GST federally and the RST provincially, I also agree with the federal minister, and we’ve talked about this. All you get is a short-term hit, quite frankly. You accelerate spending. You pull it ahead by a month or two. It has no long-term positive gain for the economy.
Now, I said several months ago that the GST cut was ill-advised, and it has been repeated elsewhere by just about everyone that understands economics and government financing; at least as far as a means of tax-reduction. I certainly didn’t know that Jim Flaherty himself agreed with me. Then again, it doesn’t surprise me either.
So what else is available for all of those idiotic voters in this country in the Conservative budget grab-bag? Well, there’s a daycare credit for children under the age of six. I find this interesting. The government is basically saying “we know people can’t find daycare, so instead of creating daycare spaces, we’ll give people money and hope that private spaces open up to take it.” This has to go down as the first case of corporate welfare for daycare in history. But lets be honest, the budget does call for
$250 million to support the creation of new child care spaces. The goal is to create 25,000 additional spaces each year.
Of course there is no mention of how this money will be spent, or how 25,000 is close to enough. The Canadian Council on Social Development estimates that 1.1 million spaces are needed. Of course, solving expensive and complicated problems is a lot harder than simply saying that you’ll solve them and making a feeble (yet visible) effort at it; and the latter is much more politically expedient.
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The GST cut is indeed an unfortunate waste of money. Yet it feels difficult to even say that here and not seem like I’m defending “excess” taxation. I’m sure the Liberals realized the enormous political benefit to cutting the GST but even they, in their desperation to hold on to power, didn’t opt to go down that path. Makes me wonder whether the Tories will end up paying the price for their policy.
I thought it was very good insight to suggest ‘corporate welfare’ when talking about child care. That’s really what it amounts to, and for the first time we’re taking about what would have typically been another Canadian social welfare program.
I think about it, and it has to come down to this: it is so easy to say “there is no insight, they don’t know what they’re doing, the money doesn’t match the demand, the private sector can’t be trusted.”
But the fact is these are real people, so-called experts, paid top notch salaries to draft policy and think through every foreseeable scenario, and these are the people who have drafted this legislation.
So the answer is that they know what they’re doing, they’ve seen the alternatives and the outcomes, and this is exactly what they want. Quick fix solutions that are politically expedient, cater to the rich, dependent on the private sector and to hell with whether they satisfy the public need or not. These are the people that are now running the country.
Comment by Ted — May 14, 2006 @ 12:30 am