Friday, April 24, 2015
Friday Beaver - Canadian edition
Canada is set for a collision course. These are just a few parts of the problems. Canada made it through the economic collapse in 07 because consumer debt back then was low. Canadian banks were in a better position to weather the storm and the housing market wasn't anything like it was in the U.S. Fast forward to today. Canadian consumer debt is up 20% and even higher than it was in 07. Oil revenues are down as is the Canadian dollar. Economic growth was at 0% this past quarter. Can't speak for the entire country but Toronto and Vancouver housing markets have been booming as I'm sure Alberta's was as well. The Harper budget just came out . It may be balanced but at what cost? He gave out his goodies but check what areas he cut. And then there's the issue of how did he pay for all of this? Did he use the sales of GM stock? If so what's next when bills come due?
Items of note
Even before the budget came out the Harper government was touting what was to be in it, on the taxpayers dime I might add. It sounded more like a campaign flyer than a government announcement. And many of the promises had to be revamped before it was all finished as oil revenues slid. There was a delay for getting this out. Maybe they couldn't find the lipstick for this pig.
So how'd they do it? First they robbed the country's piggy bank for a couple of billion. What had been a cushion of $3 billion is now $1 billion. Don't expect that to change any time soon if the Tories hold power.
Income splitting - Letting couples divide their total income so that the tax rate is lower. Works well if one is making a lot of money but in reality this only helps the wealthy plus it lowers tax revenues. Paid for by eliminating the child tax credit.
TFSAs - That's like a Roth retirement savings account in the U.S. What it amounts to is money you've already paid tax on that won't be taxed again when you retire. All said and done you land up with less. Less because the accounts don't pay squat in interest, some have fees, and inflation will eat up the rest. This is a boon the the stock market guys who will gamble with the money. You'd be better off buying gold coins and hiding them in the closet.
Public transit - A fund starting at $250 million which local governments can borrow against meaning they can transfer the actual costs to taxpayers. The 250 number might sound like a lot but a mile of highway costs $2.5 million last I checked and that's the cheap part of highway construction.
Seniors - Don't have to withdraw as much from their retirement accounts. That'll keep more money in the hands of the bankers to play their game of Monopoly. And the home accessibility tax credit for renovations for seniors and disabled which just increased the cost of those home projects. You know how contractors work.
Security - A good chunk of change is going into security. Everything from increasing the spy budget to increases in the military. What ever happened to those $15 billion fighter jets? Oops it was $20 billion and climbing. Guess that's what jets do.
Manufacturing - Write off depreciation faster. Hum that'll take more taxes away, but not to worry government will just steal it from some place else.
Small business - A whopping 2% lowering of their tax bill to " stimulate growth". Unfortunately that wouldn't cover the cost of hiring one employee, 2% of $500,000 is a mere $10,000. Think Tim Horton's employees make more than that.
Public employees - It's sounding more and more like they'll get the shaft in all this and negotiations have not even begun. Expecting a $900 million savings without so much as a meeting is wishful thinking.
Ah but fear not, the good news Tory fairies will just magically shift all the responsibility to your grandchildren, problem solved.
Bank fails later
UPDATE: No fails this week