Monday Budget - Tax rebates for Hybrids
Canadian govt survival hangs on Monday's budget
By Randall Palmer
REUTERS
8:11 a.m. March 16, 2007
OTTAWA – The campaign machines are revving up ahead of Monday's federal budget, with all parties professing not to want an election but keenly aware that Canada could be heading back to the polls unless the budget passes.
As if on cue, Prime Minister Stephen Harper, elected to head a minority government 14 months ago, will be rallying his Conservative troops on Saturday night at a candidates' training camp in Toronto.
The Conservatives have been running pre-election ads, as has the small opposition New Democratic Party, but everybody says it is all just in case all three opposition parties team up to defeat it.
Harper “has been very clear we do not want an election,” press secretary Carolyn Stewart-Olsen said. “We will be ready, however – (it's) all up to the opposition.”
As polls stand now, none of the opposition parties would be likely to gain seats, and while Harper might boost his standing in Parliament he currently does not have the popular support needed to win a majority in the House of Commons.
Some pundits say he should try to engineer his defeat anyhow to take advantage of perceived disarray in the main opposition Liberal Party, whose new leader, Stephane Dion, has failed to generate much excitement.
But the government appeared to be designing the budget to make it politically dangerous for the opposition to defeat it, by including in it a number of items the Conservatives could use in an election campaign, including:
- C$1.5 billion ($1.3 billion) from the surplus of the current fiscal year, ending March 31, to fight climate change;
- legislation to end tax holidays for income trusts as announced last October;
- new funding arrangements and new funds to tackle the ”fiscal imbalance,” the concept that Ottawa takes in too much money and gives the provinces too little;
- a “working income tax benefit,” announced in November, to make it financially worthwhile for people to get off welfare.
It has also promised middle-class tax cuts, and said it was considering – as promised in the last campaign – deferring capital gains taxes for investors who reinvest profits.
And with environment the hot topic these days in Canada, other green initiatives – possibly including tax rebates for buying fuel-efficient hybrid cars – were likely.
SUPPORT FOR THE BUDGET
As bitter a pill as it might be for some in opposition, at least one party must step up to the plate and vote for the Conservatives' budget, or abstain in sufficient numbers, or the government falls and Canada would face its third general election in as many years.
To some extent, the New Democrats and the separatist Bloc Quebecois have painted themselves into a corner. The New Democrats have said that, as a price for their support, the government must get rid of accelerated writeoffs for the booming oil sands business, but Harper has ruled out doing that.
The Bloc has said the government must give C$3.9 billion a year in new money to Quebec within three years. The government will give some new money but almost certainly not that much.
To support the budget might require opposition parties going back on pledges, but the Conservatives have already set an example.
They broke a promise not to tax income trusts and most analysts expect them to break another promise in this budget. They had said that in setting an equalization formula for making transfers to poorer provinces that they would exclude nonrenewable resource revenues like oil money, but they are now looking at a formula that would exclude only half such money.
As for the Liberals, Dion said Friday he would have a close look at the budget “with the best interests of Canadians at heart.” On Tuesday, he said: “I don't want an election.”
Remarkably, what has been accepted as nonnegotiable, regardless of who is in power, is that Canada – alone among G7 nations to be running a balanced budget – will book its 11th straight surplus for the coming fiscal year.