Ottawa on track to beat deficit target

[Azure]

The federal government is well ahead of schedule in reducing the size of the deficit, even as it is preparing to cut back on pensions and the size of the public service.

The Finance Department reported Friday that November's shortfall totalled $1.9-billion, well shy of the $4.5-billion of red ink penned during the same month last year.

The bigger story is that for the first eight months of the 2011-12 fiscal period that ends in March, Ottawa is about $9-billion to the good of where it stood last year. As of November the deficit stood at $17.3-billion compared to $26-billion for the same period in 2010.

With only four months to go in the 2011-12 fiscal year, Ottawa is well on pace to beat the $32.3-billion deficit target of the fall's economic update.

http://www.theglobeandmail.com/repor...rticle2317307/

Yay?

Slava you might have to reconsider your thread on this subject that you made a while back saying that they should easily be able to balance the budget. Combine this with the pledge made by Harper to cut entitlement spending(about damn time) and Clement saying cuts of up to $8 billion could be made, instead of the $4 billion that he originally said, and we're looking to be in pretty damn good shape.

Interesting note, Paul Martin wanted to restructure OAS back in 1998 but was met with fierce opposition. I guess we'll have to see if Harper gets it done. We can't keep going with what we have. OAS payments will be over $100 billion per year by 2030 with the current rules.

[Azure]

Article talking about the more aggressive approach the Conservatives are taking.

The Conservative government is already cutting costs faster and more deeply than planned, with new data showing Ottawa has quietly trimmed overall government spending by 3 per cent.

That’s the conclusion of a new report by Parliamentary Budget Officer Kevin Page, which reviewed all government spending over the first six months of the current fiscal year.

The 3 per cent decrease suggests Ottawa is on track to beat its plan to hold total spending growth to 1.5 per cent this fiscal year.

The downward spending trend might explain why the Conservatives are now signalling future cuts could be more aggressive than originally planned.

The government’s 2011 budget laid out a plan that targeted a 5-per-cent cut to the government’s roughly $80-billion direct program spending budget by 2013-14, which works out to a permanent cut of about $4-billion a year.

But according to the PBO’s analysis, Ottawa is well on its way. Spending on operating expenditures is down 4 per cent and capital spending is down 15 per cent.

http://www.theglobeandmail.com/news/...rticle2298838/

I like it a lot.

This is what the US needs to do. Slow but sure.

[Knut]

Secret agenda !!!!

[opendoor]

Originally Posted by Azure

Article talking about the more aggressive approach the Conservatives are taking.



http://www.theglobeandmail.com/news/...rticle2298838/

I like it a lot.

This is what the US needs to do. Slow but sure.

The United States' problem is more revenue than expenditures. They're using deficit spending to maintain an artificially low tax rate.

[MarchHare]

I wonder how much closer the country would be to getting back in the black had Harper not insisted on cutting the GST against the advice of every economist.

[Jason14h]

I wonder how much closer the country would be to getting back in the black had Harper not insisted on cutting the GST against the advice of every economist.

None unless you believe the gov't can invest that 2% better then its citizens.

[Knut]

Originally Posted by MarchHare

I wonder how much closer the country would be to getting back in the black had Harper not insisted on cutting the GST against the advice of every economist.

Liberal Spin



Would he have been elected without the promise of cutting the GST ?? Maybe not. Then we could potentially be much worse off.

Give credit where credit is due. The Conservatives are setting us up to be in good financial shape.

[MarchHare]

No spin about it. Cutting the GST was bad fiscal policy. Every economist in the country said as much, but the government went ahead and did it anyway.

The Conservatives do indeed deserve credit for slaying deficits faster than they originally forecast. As a fiscal conservative (small-c), I applaud them for their work in that respect. They also deserve criticism for putting politics ahead of the good of the country by making a bad campaign promise to cut a tax that should not have been cut, consequently raising the federal deficit/debt further than it needed to be.

[Cowboy89]

Personally I like it. But the left wing counter arguement will be along the lines of how we as a society desperately need these entitlements, especially as many boomers are going to be entering retirement pension-less, and in debt.

These are typical NDP arguements that work well for them because their arguements never can be quantified or qualified.

[opendoor]

Originally Posted by Jason14h

None unless you believe the gov't can invest that 2% better then its citizens.

That's not really relevant, unless you think the lower GST generated about $10 billion in additional government revenue each year (which is roughly how much revenue was lost with the 2 point reduction).

You can argue that a lower is GST is better long term, but I don't really see how it can be argued that it didn't hurt current revenues or that the government has essentially borrowed money to go pay for a GST rate cut.

[Cowboy89]

Originally Posted by MarchHare

No spin about it. Cutting the GST was bad fiscal policy. Every economist in the country said as much, but the government went ahead and did it anyway.

You're missing the other half of the arguement being that economists in general agreed with consumption taxes as opposed to income taxes. Meaning that Harper should have left the GST alone while cutting income taxes or capital gains taxes instead. Therefore consumption for consumption sake which is negative to long term economic growth is penalized, while savings and investment which are positives for long term economic growth are rewarded. Economist's did not generally have a unified opinion on whether 'leaving well enough alone' on both forms of taxation was optimal.

[The Yen Man]

Personally, I trust an expert economist opinion about as much as I trust a weatherman. Half of them are always on one side of the fence while the other half is on the other. That way, at least half of them are always right it seems.

[Cowperson]

The GST is the fairest tax in the land.

On the theme of the thread, under-promise and over-deliver. You just look better.

Cowperson

[Parallex]

Originally Posted by Azure

Yay?

Nay. It's certainly better then the opposite result (being further indebted then expected) and I'm happy to see a lower deficit but I'm not going to look at the Feds being $2,600,000,000.00 off projections while still accruing more debt as a good thing.

Let's call it "less bad".

[MarchHare]

Originally Posted by The Yen Man

Personally, I trust an expert economist opinion about as much as I trust a weatherman. Half of them are always on one side of the fence while the other half is on the other. That way, at least half of them are always right it seems.

Not in the case of the cutting the GST. Harper's decision was criticised as being bad taxation policy by damn near everyone, from the major banks to the right-wing Fraser Institute and the left-wing CAW.

Plan to cut GST blasted
TAVIA GRANT
Globe and Mail Update
October 24, 2007 at 8:00 PM EDT

The Conservative government's plan to trim the GST for a second time has been soundly rejected as a top tax-cutting priority by a large group of economists surveyed by The Globe and Mail.

All 20 economists said other tax cuts would be better for the country than trimming another percentage point from the goods and services tax, which represents more than $5-billion in revenue.

It's a remarkable show of unanimity on public policy, given that the responses were from organizations as diverse as the Fraser Institute, the Canadian Auto Workers, Canadian Manufacturers & Exporters, Bank of Montreal and the Halifax-based Atlantic Institute for Market Studies.

Most economists said the government's priorities should be cutting personal income and business taxes, especially the latter.

“There is an overwhelming consensus amongst economic research that business taxes are the most economically damaging taxes and thus should be the federal government's top priority,” said Niels Veldhuis, director of fiscal studies at the Fraser Institute in Vancouver.

And most said point blank that the government's proposed GST cut is a bad move, one with a negligible effect on the economic health of the nation that does nothing to boost productivity.

“In the modern, global economy, Canada has to do everything it can to make its workers and companies competitive,” said Don Drummond, chief economist at Toronto-Dominion Bank.

“The federal surpluses have offered a golden opportunity to move forward in a very decisive manner. The GST rate cuts don't move that agenda forward at all,” Mr. Drummond said.

The Conservative government said last week that it plans to cut a second percentage point from the GST, bringing the sales tax to 5 per cent, after a one-percentage-point cut last year.

Mr. Drummond and others have plenty of ideas about where that $5-billion could go.

Personal and corporate income tax reductions, “if properly structured,” would be one, he said. Another would be reversing the earlier GST tax cut and shaving every Canadian's marginal personal income tax rate by two percentage points.

Emphasis added.

[spetch]

didn't know we only have 20 economists in Canada.

[MarchHare]

Originally Posted by spetch

didn't know we only have 20 economists in Canada.

Don't be facile.

There were 20 economists interviewed for that particular G&M article, but you'll find that cutting the GST received near-universal opposition amongst the profession. Insofar as any tax can be considered "good" for the economy, the GST is widely considered to be a much better source of government revenue than income or corporate taxes.

[The Yen Man]

I actually do agree with MarhHare though that in the end, cutting the GST was probably not a smart move by the government. On the one hand, I do commend the Harper government for actually delivering on a campaign promise. But realistically, a 1-2% decrease in GST isn't too noticeable to any one person, but the actual additional tax revenues that generates for the government is significant.

[nik-]

If they would offer a tit for tat income tax reduction traded for a higher consumption tax, I would be for it.

[FlamesAddiction]

Originally Posted by The Yen Man

I actually do agree with MarhHare though that in the end, cutting the GST was probably not a smart move by the government. On the one hand, I do commend the Harper government for actually delivering on a campaign promise. But realistically, a 1-2% decrease in GST isn't too noticeable to any one person, but the actual additional tax revenues that generates for the government is significant.

Agreed.

It was nothing more than buying votes really. Cutting the GST by 1-2% sounds nice, but when you get right down to it, the only people who save enough money from it to really notice the difference, are a small percentage of wealthy people who make huge purchases often. For the average person, the amount of money in total that the government loses out on isn't worth the small amount of money you save in a year.