Wednesday, June 28, 2006

More on Fiscal Balance

You see! Even finance minister Jim Flaherty sees that the whole fiscal imbalance is because the situation is all backwards. And Paul Wells talks about it. So does Andrew Coyne.

Thing is, the federal gov't simply taxes too much and ARE awash in cash. Being that tax freedom day was 5 days earlier this year, I'd say we're on the right track.

So now that ol' Jim, a former Ontario finance minister, recognizes that provinces can't come out with their baskets, the provinces are on their own--more independent I'd say!

So voila! It's balanced right? WRONG.

The question now is: does this leave more room in the future for the feds to lower income taxes? I think it does.

To me, that will be the real test of this new government. They've delivered on their election promises. What about the next budget? A couple points off the middle class rate would be nice.

THEN we can start talking about the real fiscal balance. Yet that will leave provinces room to raise taxes. But that's not really a good election platform though is it? So Flaherty has really painted the provs in a corner. If 8/10 provs have a surplus, then who's left to raise taxes?

The cities. That level of government which delivers the most direct services to the citizens.

But then the feds should forget about transferring gax tax revenue to the cities.

I'd say the backwards mentality has now reversed itself.

We'll see come the next budget. Stay tuned...

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