Low expectations

I'm not really expecting anything spectacular from today's federal budget in Canada. It's Jim Flaherty, after all (and yes, for my American readers he is the brother of actor Joe Flaherty). Child care and fixing the child tax credit (in particular to weed out fraud) would be at the top of my list. One can also argue about how to reform equalization (the extra transfer payments to poorer provinces). I think a 50% inclusion rate for natural resources and power would be fair, but there might be a better way to do it. As for the surplus, I would split it three ways.

One third would go towards tax reductions for the lower and middle classes (whether this is a working income supplement or an increase in the exemption, either would be fine). One third would go towards debt retirement (with further tax reductions from interest savings). The remaining third would go towards fixing health and education, conditional that transfers in future years would be pegged to measurable performance increases in those fields (i.e. shorter wait times for elective surgery and higher test scores).

I hope to review the documents when they come out (shortly after 4 PM EDT, 2000 GMT) and give a critique later tonight.

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