Citing the weak global economy, Finance Minister Jim Flaherty said Tuesday the $26-billion federal budget deficit will not be eliminated until the 2016-17 fiscal year.
The revision, contained in Flaherty’s annual fall economic update, could have a significant impact on Canadians.
In the 2011 election campaign, Harper floated several popular tax breaks, including doubling the children’s fitness tax credit, a $2.5-billion measure to allow income-splitting on young families’ tax returns, a doubling to $10,000-a-year of Tax-Free Savings Accounts limits and an adult fitness tax credit.
But all these measures were made dependent on eliminating the federal budget deficit. That was meant to be done by March 31, 2015. Now the government is saying the books won’t be balanced until two years later, by March 31, 2017.
“Any movement on that would have to await a balanced budget,” Flaherty acknowledged when asked Tuesday about the income-splitting proposal.
The next federal election is expected in 2015.
The Canadian Taxpayers Federation ripped into the Harper government over the revision in its deficit-cutting timetable.
“In last year’s election, Stephen Harper promised Canadians a balanced budget in 2014-15, followed by major tax relief for Canadians,” Gregory Thomas, the federation’s federal director, said. “Mr. Flaherty is breaking the Prime Minister’s most important election promise.”
While expressing concerns about possible economic shocks from Europe and the United States, Flaherty announced the Harper government is not modifying its current economic plan, which calls for reductions in federal spending of $5 billion a year in an effort to balance the federal government’s books.
Opposition parties blasted the Conservatives for sticking with a steady-as-she-goes economic strategy despite a declining economy and larger deficit.
Calling Flaherty’s economic update “a public-relations exercise” that takes no notice of the deteriorating economic climate, NDP finance critic Peggy Nash said the Conservatives “continue to ignore the warning signs.
“They don’t seem to have a plan to get this economy back on track,” Nash told the media Tuesday.
She said it’s time for Ottawa to come up with an overall economic strategy to stimulate growth and reduce unemployment. One option, the NDP says, would be a multi-billion-dollar plan to repair and expand bridges, transit and other urban infrastructure. Such spending would spur economic growth and, in turn, help reduce federal budget deficits, she said.
Liberal finance critic Scott Brison gave the update “a failing grade” for not offering “a concrete plan” to create jobs. He also criticized Flaherty for pushing off the date for balancing the budget. “He’s been wrong on every deficit projection he’s ever made and there’s no reason to believe he’ll be right this time,” Brison said.
Flaherty stressed that Canada’s economic performance continues to make it a standout among industrialized nations. “Compared with most advanced countries in the world today, we are in a relatively good position,” he told a business audience in Fredericton, N.B.
Still, he acknowledged weak global economic conditions are knocking the federal government’s deficit-reduction plans off course.
As a result, he forecasts a $26-billion budget deficit this year, up sharply from the $21 billion deficit he predicted in the March budget.
“Weak global demand has translated into lower-than-expected world commodity prices and this, in turn, has lowered the level of (economic growth) and government revenues in our forecast,” he said.
It will be the second year in a row the Harper government has missed its deficit-reduction target. And Flaherty said the federal budget will not be balanced until the 2016-17 fiscal year.
As usual in the fall fiscal and economic update, there were no new tax or spending measures announced Tuesday.
The latest assessment is clouded by the risks of financial turmoil in Europe and the United States.
Based on private-sector forecasts, the government has already said next year’s economic growth will come in at 2 per cent, down markedly from the 2.4 per cent cited in the March budget.
But Flaherty said Canada’s economy could be “significantly stronger” than expected if U.S. President Barack Obama can successfully work with Congress to avoid the fiscal crunch that threatens to batter the American economy early next year.
In his press conference, Flaherty added that his government has contingency plans in hand in case of economic shocks from the U.S. or Europe. “We’ve been concerned about this subject for many months and we prepare,” he said. But he declined to give the details.
Original Article
Source: the star
Author: Les Whittington
No comments:
Post a Comment