Maybe if Finance Minister Jim Flaherty had donned a pair of red mittens and delivered the budget from the slopes of Sochi he could have roused a bit more excitement for the government’s economic action plan for the coming year.
As it was, we had to settle for a cautious budget that contained a few boutique tax-relief measures but no big breaks for most Canadian families.
“It’s just tweaking, closing loopholes, dealing with perceived abuses,” said Deborah MacPherson, national leader of KPMG Enterprise Tax.
Indeed, “fiscal prudence” was the theme of Tuesday's budget speech, with Flaherty reminding us of the fragility of the world economy and the continued need for restraint if we want to eliminate the deficit by 2015.
Even as times get better, now is the time to “stay the course that has worked so well," Flaherty said during his speech to parliament on Tuesday.
On that point, at least, Flaherty won applause from the Canadian Taxpayers Federation, which shares the government's goal of balancing the books.
But Gregory Thomas, CTF federal director, said Canadians aren't willing to waiting much longer to finally get some significant tax relief. In particular, the federation is pushing for a reversal in Employment Insurance payroll tax, which it calculates has risen by 28 per cent since 2008 financial crisis.
The 2014 budget forecasts EI premium revenue to surpass benefits by $14.1 billion over the next three years, according to the federation.
Thomas also slammed the government for earmarking $500 million over the next two years for the Automotive Innovation Fund. The government said the money is there to support research and development in a highly-competitive global industry. Thomas called it “croney capital” that would be better spent helping Canadians pay down household debt.
Flaherty had earlier hinted at measures to address prices differences that see Canadians pay more for consumer goods than across the border, a hot topic for Canadian shoppers.
On Tuesday, he said the government plans to bring in legislation to deal with cross-border price discrimination, which has been helped as of late by a falling loonie. The new legistlation would give the competition commissioner the ability to enforce new rules geared at multinational companies.
While the budget held few dramatic changes, Deborah MacPherson said it delivered in its aim of moving towards greater tax fairness and transparency.
One example is the proposed change to so-called “immigrant trusts” which will bring to an end to the ability for someone who temporarily moves to Canada to keep their money in a tax-free haven outside the country for up to five years.
“Canadians are taxed on a world-wide basis, why should (newcomers) get a tax-free holiday?” she said, interpreting the government's intentions.
MacPherson said a plan to automate the application process for the HST/GST rebate is a step in the right direction, as is the proposed increase to the tax credit available to adoptive parents (from $11,774 to $15,000 per child).
Other small adjustments will allow world-class amateur athletes to get a break when it comes to calculating their available Registered Retirement Savings Plan (RRSP) room, and give search-and-rescue volunteers a tax credit similar to the one extended to volunteer firefighters in 2011.
Higher excise taxes on tobacco will raise the price of a carton of 200 cigarettes by $4 and essentially end the discount on smokes sold at duty-free stores, by raising taxes there by $6 a carton. The increase will reap government $685 million in 2014-15.