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Yard Ape
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Cut taxes and spend on defence, Ottawa told
C.D. Howe Institute, Alliance agree
Eric Beauchesne
Southam News
OTTAWA - The federal government can afford to cut taxes and boost spending on national security in Monday‘s budget without going back into a deficit, the Official Opposition and a major economic think-tank argued yesterday.
Paul Martin, the Minister of Finance, has warned that with the weakness in the economy and new national security demands in the wake of the Sept. 11 terrorist attacks, the government cannot afford further tax cuts.
Instead, Mr. Martin has said any further economic stimulus should come from low interest rates.
The C.D. Howe Institute in its pre-budget proposals argued, however, that by tightening spending on business subsidies, training programs and natives, the government can afford more than $20-billion in new tax cuts and spending over the next five years.
Jason Kenney, the Alliance finance critic, in a separate package of budget proposals, warned that Canada cannot afford not to cut taxes further.
"It‘s so important for us to continue getting those taxes down because Canada continues to fall behind the standard of living in the U.S.," Mr. Kenney said. "Canadians‘ standard of living has declined from 87% of the U.S. level in 1980 to 70% of the U.S. level in the last year.
"We cannot afford to allow the security imperative and the Liberal recession to let us ignore this long-term decline in our economy, which we must address with further tax relief in this budget."
The C.D. Howe Institute proposed $13.9-billion in additional tax relief for individuals and businesses over five years, as well as $3.7-billion for new security measures, $3.2-billion in new health, education and infrastructure spending, and a further $2.7-billion for economic innovation and development aid.
The institute projected that its proposals, on top of the downturn in the economy, would reduce this year‘s $8.9-billion surplus to $5.6-billion next year, including $3-billion in contingency reserves and $1-billion in economic prudence.
Assuming the economic downturn will be shallow and short, it projected the surplus would then rebound and rise steadily to almost $25-billion in the fifth year.
Its spending proposals over the five years includes $2.6-billion for improved national security and military equipment and pay, and $680-million for intelligence-gathering and processing.
Another $500-million would go toward upgrading seaports, airports and border crossings.
The tax cuts would include accelerated reductions in personal income taxes, in the taxes on dividends and in EI premiums, as well as the elimination of corporate capital taxes and increases in the ceilings on annual RRSP contributions. The institute also proposed new pension savings incentives.
It said that despite the increased spending and tax cuts, its budget proposal would allow the government to cut its debt to $492-billion or 37% of GDP in five years from $547-billion or 52% at the end of last year.
It also joined the Alliance in warning against subsidizing the extension of high-speed Internet access to rural Canadians, a project championed by Brian Tobin, the Industry Minister.
Meanwhile, the National Citizens‘ Coalition has launched a radio ad campaign urging the Liberals to focus spending on the military and national security.
C.D. Howe Institute, Alliance agree
Eric Beauchesne
Southam News
OTTAWA - The federal government can afford to cut taxes and boost spending on national security in Monday‘s budget without going back into a deficit, the Official Opposition and a major economic think-tank argued yesterday.
Paul Martin, the Minister of Finance, has warned that with the weakness in the economy and new national security demands in the wake of the Sept. 11 terrorist attacks, the government cannot afford further tax cuts.
Instead, Mr. Martin has said any further economic stimulus should come from low interest rates.
The C.D. Howe Institute in its pre-budget proposals argued, however, that by tightening spending on business subsidies, training programs and natives, the government can afford more than $20-billion in new tax cuts and spending over the next five years.
Jason Kenney, the Alliance finance critic, in a separate package of budget proposals, warned that Canada cannot afford not to cut taxes further.
"It‘s so important for us to continue getting those taxes down because Canada continues to fall behind the standard of living in the U.S.," Mr. Kenney said. "Canadians‘ standard of living has declined from 87% of the U.S. level in 1980 to 70% of the U.S. level in the last year.
"We cannot afford to allow the security imperative and the Liberal recession to let us ignore this long-term decline in our economy, which we must address with further tax relief in this budget."
The C.D. Howe Institute proposed $13.9-billion in additional tax relief for individuals and businesses over five years, as well as $3.7-billion for new security measures, $3.2-billion in new health, education and infrastructure spending, and a further $2.7-billion for economic innovation and development aid.
The institute projected that its proposals, on top of the downturn in the economy, would reduce this year‘s $8.9-billion surplus to $5.6-billion next year, including $3-billion in contingency reserves and $1-billion in economic prudence.
Assuming the economic downturn will be shallow and short, it projected the surplus would then rebound and rise steadily to almost $25-billion in the fifth year.
Its spending proposals over the five years includes $2.6-billion for improved national security and military equipment and pay, and $680-million for intelligence-gathering and processing.
Another $500-million would go toward upgrading seaports, airports and border crossings.
The tax cuts would include accelerated reductions in personal income taxes, in the taxes on dividends and in EI premiums, as well as the elimination of corporate capital taxes and increases in the ceilings on annual RRSP contributions. The institute also proposed new pension savings incentives.
It said that despite the increased spending and tax cuts, its budget proposal would allow the government to cut its debt to $492-billion or 37% of GDP in five years from $547-billion or 52% at the end of last year.
It also joined the Alliance in warning against subsidizing the extension of high-speed Internet access to rural Canadians, a project championed by Brian Tobin, the Industry Minister.
Meanwhile, the National Citizens‘ Coalition has launched a radio ad campaign urging the Liberals to focus spending on the military and national security.
