2005 Federal Budget

Scarcely half an hour ago, at 4:00pm EST, the 2005 Federal Budget documents became available on the Government of Canada Finance Department web site.

With the issues of the gun registry, sponsorship scandal, mad cow disease, SARS, the war in Iraq, and Kyoto still fresh in our minds, the Budget predictably responds with its stated priorities of maintaining sound financial management, securing Canada's social foundations, achieving a productive and growing economy, moving towards a green economy and sustainable communities, and meeting our global responsibilities.

Support for health care is re-emphasized in this budget as is further solidification of our role in international aid and assistance. New to this budget is a deal for Canadian communities, allowing them to share in the proceeds of the gas tax revenues. Job creation and innovation also play a role in the budget as money is allocated to invest in people, skills, ideas, and regional development. More than $10 billion is also dedicated to enhancing the quality of our air, land, and water through environmental programs.

The issue of tax primarily appears in the Budget's "A Fair and Competitive Tax System" found in "Chapter 4 - A Productive, Growing and Sustainable Economy".

Tax highlights include:

- improving tax assistance for persons with disabilities;
- increasing to $10,000 the limit Canadians may earn without paying tax;
- removing 860,000 taxpayers from the tax rolls, including about 240,000 seniors;
- proposing the elimination of the corporate surtax and reducing the general corporate income tax rate by 2%; and
- enhancing tax incentives for efficient and renewable energy generation equipment.

Budget 2005 claims that most of the tax benefits will go to low- and modest-income Canadians. (Over 70 per cent of the tax relief will go to those earning less than $60,000 per year.) While the Budget increases to $10,000 the limit Canadians may earn without paying taxes, the RRSP annual contribution limit is also raised to $22,000 by 2010. The question remains, how many low- and modest- income Canadians can afford to put $22k a year into their RRSPs?

Time and a closer examination of the Budget details will shed light on the benefits to Canadians of modest incomes. Over the coming days and weeks, we will no doubt see a flood of response, analysis, and critiques of the first budget delivered by a minority government in more than two decades. Stay tuned.

Full details of the 2005 Federal Budget can be found at:
http://www.fin.gc.ca/budtoce/2005/budliste.htm