Monday, March 19, 2007

The Corgis Digest The Budget

Well, we didn't see a whole lot of that coming. Here at TDPC HQ we are having three reactions to the budget. On a gut level, I'm very disappointed. Being a Conservative and a conservative, the spending spree seems reckless and the lack of tax cuts is very disappointing. While I didn't realistically hope for income splitting, I was hoping for more of a tax break for middle income families. The telling thing for me was how pleased the pundits on CBC were with the whole thing - even rent-an-economist Don Drummond had grudging praise, and former Sask. NPD finance minister someone-or-other was pleased too. For true conservatives, there's no worse thing than praise from the CBC.

The second reaction is on a practical level, looking at individual measures. The child tax credit will be useful, but more tax relief would have been better. Likewise the spousal amount increase. It'll make some difference, but it doesn't do much for horizontal tax equity. The disparity between single income and dual income families remains huge. Hard to believe there is no general income tax relief, and disappointing to see the capital gains tax promise deferred.

I'm pleased with the 'green car' package and especially pleased to see the purchase rebate being based on actual fuel consumption rather than a particular automotive technology. I really hope that this program can be harmonized with the provincial initiatives in this area. For example, in Ontario, the provincial rebate applies only to hybrid vehicles, meaning that a Honda or Toyota hybrid qualifies, even though it burns more fuel than the Smart fortwo or my Golf TDI, neither of which are eligible for the provincial rebate. Thankfully both of those diesel powered vehicles will be eligible for the new federal rebate. This should provide a good incentive for us to catch up with Europe in terms of fuel efficient vehicles, many of which are also superior in performance and refinement to what's offered in North America.

The third reaction is to stand back and look at the politics of the thing - which is obviously what drove the budget this year. Politically, this budget is pretty much bullet-proof. Is that a smart move? I don't know... I wonder if we'd have been better off leaving something for the opposition parties to fight over; as it is, the Liberals, NDP and Bloc have cut a back room deal that lets them all achieve their political aims as well - the Libs and Dippers saving face by voting against the budget with no danger of an election, the Bloc by claiming victory in their fight for fair treatment for Quebec. Politically this budget works for everyone, not just the Conservatives. Will PMSH engineer an election once the NDP and Liberals have voted against the budget? It looks less and less likely to me. So the political landscape doesn't really change and the Tories will have to work hard to keep selling the budget, to keep it fresh in the memories of voters.

Overall, I'm disappointed, but willing to reserve judgement, if at the end of the day it keeps Canada in the hands of good government and strengthens the chance of a majority for such a government in the future.