Reacting to criticism that Ottawa is running up huge surpluses on the backs of over-taxed Canadians, the federal government tabled the Surplus Allocation Act in parliament today. On the surface, the plan sounds responsible and reasonable: Any leftover surplus will be divided into three parts: one part will be allocated towards debt repayment, one part towards social spending and one part towards tax relief.
Before we start dreaming of a big fat tax refund, there is a catch: the act merely addresses any unexpected budget surpluses. The government can always spend it all during the budget and ensure that there isn’t anything left over for tax relief. Now, they can claim that they are cutting taxes, without actually having to do it! Very clever!
Even if the government does post a huge surplus like it did during the last fiscal year ($9.1 billion in surplus versus the budgeted $1.9 billion), it won’t translate into much of a tax relief. Let’s do the math: the unexpected surplus would be $7.2 billion. Subtracting the $3 billion contingency reserve and dividing the rest in three parts leaves us with $1.4 billion. Since there are about 15 million taxpayers, each of us can expect a princely sum of $93.33 back. What can I say? It is certainly not enough to cover the tab for a pizza dinner.
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3 responses so far ↓
1 Yeroc // Oct 17, 2005 at 10:52 pm
I’m not sure why people are so upset with the federal surplusses going to pay down the deficit?!? You do realize that roughly 17% of all government revenues go towards servicing the debt? Imagine if all that debt were paid off… We could have a 17% cut in our taxes (if we’re patient and willing to wait a few years)! I guess everyone wants money NOW.
2 Canadian Capitalist // Oct 18, 2005 at 8:03 am
yeroc: I believe that tax cuts are good for the economy. People tend to try to earn a bit more if more stays in their pocket. Economic growth follows.
In any case, paying down debt isn’t such a bad idea. But, the government is on a massive spending spree and the little bit that will be left over now, they are planning to divide three ways. It makes no sense. I do hope they just pick one (tax cuts or paying down debt, but not more spending please) and stick with it.
3 Andrew // Oct 29, 2005 at 12:31 pm
Check out http://www.globalrichlist.com and see what rank you are for the richest people on earth. Working a low paying Apple Care Centre, I make $17,000 a year before taxes. Living on a wage that makes me the working poor in Canada, I’m still among the top 12% of the worlds richest people. Kinda blows your mind eh?
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