Tuesday, February 3, 2009

More Budget

On to the Environmental section and more.

The section on Clean Energy is vague so I can't analyze it.

Reporting on environmental indicators isn't specific either. Seems well intended, but who knows?

The area on Nuclear Energy appears somewhat targeted and a sound approach if one is a proponent of Nuclear, and does acknowledge issues related to Chalk River.

Basically, this section appears in keeping with the general interest level regarding environmental issues of this Government. That's not praise.

Supporting Small Business

There is nothing bad in this, but depending on what is actually done will determine if this has any significant impact. The indicated increased availability of credit to small business could have a real impact, but there is no indication as to criteria or the total amounts available.

The rest isn't negative, but isn't going to move any mountains.

Helping all Regions Prosper

Providing more than $1 billion over five years for a Southern Ontario development agency to help workers, communities and businesses in this region. ($250 million per year, better than nothing I suppose. )

The next item; Providing $1 billion over two years for a Community Adjustment Fund that will help mitigate the short-term impacts of restructuring in communities. This in conjunction with the previous item could have real value, depending on whether it is actually new money, or a continuation of money previously announced, as is often the case.

A Business Tax Advantage for Long Term Prosperity

Here is a meat and potatoes item, where ideologies divide. The main concerns should be tax fairness, and applying incentives where they would do the most good. Particularly for the next few years. I understand what the Conservatives are trying to do, and am not ideologically opposed to a 25% overall tax rate target for businesses/corporations, but their is no equity or fairness in this approach as it provides a tax ceiling for corporations but not for individuals. So again, it favors corporations. Given our times, I don't think competitive countries are going to be slashing corporate taxes a whole lot, so here, why now?

I like Garth's idea better where tax on the first $50,000 for small business is eliminated. This would be a great help to small business and would encourage many to work for themselves. It's not like there would be no taxes paid on that money, as most owners of these small businesses would draw the majority of that in personal income and pay taxes based on personal rates. But hey, big Corporations wouldn't like that, would they?

The next item I disagree with is the idea of all provinces using harmonized consumption tax. For those who don't live in a Province with harmonized sales tax, you might not realize how many items there are that you only pay one tax on, while those who live in Provinces who have this system pay both taxes on those items. Used vehicles jumps out at me first. This gives both levels of government the opportunity to tax these items multiple times. And that my friends is no small amount of change. We live in a country where owning a vehicle is not optional for most and this is just another means of taxing ordinary citizens, while at the same time favoring large profitable corporate entities, and attracting more based on a lesser share of the tax burden.

If a 78 to 80 cent dollar isn't a sufficient advantage for these corporations, then perhaps governments should look at ways to assist businesses to lower expenses related to fixed costs. I would suggest personal income taxes first. If anyone doesn't think that the amounts that come off a person paycheck is part of their employers fixed costs, they should reconsider that thinking. It is simple really, people's wage requirements are based on net income, not gross income. The point is, the gross income is the fixed cost for the business, and if that is lowered by virtue of an income tax reduction, then businesses can reduce their overall payroll costs without affecting net income for their employees. The result is a saving for business. Thus, the competitive environment for businesses improves, people's real income stays the same, and economic activity should increase every bit as much as if this competitive advantage were created with a tax cut for corporations. In fact, it would be a much more fair approach, as it would offer this advantage to all sizes of business, even proprietary businesses. You know, like Joe the Plumber? Both approaches would result in less revenue for government, but the resulting spin offs would be far more applicable to Canadian citizens, would be a much more direct boost to the economy and the resulting economic advantages or gains would be far easier to control as opposed to corporate profits. Government doesn't have control over where that goes.

Capital Cost Allowance

The changes here are not so much a bad idea, but that they are not targeted properly. The total sum involved here over the next 5 years is approx. $1.8 Billion, or nearly $400 million per yr. It appears there is no criteria or requirements regarding directing any of these monies toward Canadian firms, suppliers, manufacturers etc. It appears to be at the sole discretion of the participants. This of course deals somewhat with the free trade, fair trade ideologies, but there are other ways of attaching conditions to maximize benefits within Canada. Such as commitments to new purchases of equal dollar amounts from Canadian sources. These would not have to be the specific items targeted here, but anything from office supplies to building materials. As is, these proposals have a bit of an aura of, if you build it, they will come.

Tariff relief on Machinery and Equipment

"Budget 2009 will also take steps to facilitate the movement of goods by improving the Customs Tariff rules respecting the treatment of temporarily imported cargo containers, and undertake consultations with respect to further liberalizing the use of these containers in Canada."

Whuzzat? What are they up to there? And who will benefit?

Sectoral Competitiveness

First section on Short term support for key sectors says nothing.


Some good things there, but the amounts to be spent seem a bit sparse.


Some good thing there, some things that are vague particularly slaughterhouse capacity. Something worth watching. They do seem to be acknowledging that there are other interests to be considered and encouraged other than the monopolies. Particularly in the area of co-operatives.


Looks ok, but without details nothing of much value can be said about that.

That's it for now. I'm putting the Ouji board and crystal ball back in cupboard for a rest. Next up is the Automotive and Space Industry. All Cadets welcome!

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