Friday, November 18, 2005

Goodale's Proposed Tax Cuts a Sham? Oh, what an Expected Surprise!

From the Globe and Mail website:
With its recent tax-cut proposals, the Martin government tried hard to convince Canadians it's offering immediate relief to lower- and middle-income earners. But read the fine print: The actual proposals don't quite measure up to the advertised message.
Take, for instance, Finance Minister Ralph Goodale's promise to hasten a tax cut announced in February's budget, by raising the "basic personal exemption" immediately by $500. He also promised to reduce the lowest tax rate from 16 per cent to 15 per cent, effective for this tax year. This all sounds better than it really is.
First, the government has no power to effect an immediate change in the tax law and likely faces insurmountable barriers to passing these amendments through Parliament any time soon.
Leaving that problem aside, however, the change to the 2005 basic personal credit actually delivers a very modest amount of tax relief. In fact, it would slightly scale back the value of an existing tax credit.
Oh! Big surprise there.............Smoke and mirrors.............

This is what it really amounts to:
The $500 amount that looked so impressive in the news will not be deducted from anyone's tax bill. It is true that taxpayers would be able to earn an additional $500 before income tax kicks in. But currently the tax owing on that $500 is only $80 ($500 x 16 per cent). So, it would be more straightforward to explain to voters that this measure represents an $80 tax cut, or $6.66 per month.
According to the author of the article...........It is easy to mislead the public about the impact of proposed tax reforms on different groups and individuals. These things are complicated and normal people have better things to do than spend time decoding the minutiae of tax law. Yet this puts citizens at a serious disadvantage in judging the merits of what is, ultimately, a fundamental aspect of our social contract.
There's no deal here.........all the other promises and proposals that the Liberals are threatening we'll lose if this country goes to an election.........are they a sham too? I think so. Bring on an election and get rid of the bums.

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