Reductions were less than half of those announced by Harper and Flaherty, says independent report
Toronto (24 May 2006) - The Stephen Harper Conservatives misled Canadians by vastly overstating the true value of tax cuts in their first budget, says a report by Global Insight, a world economic forecasting organization based in Boston.
Dale Orr, chief Canadian economist for the organization, says the Tory budget cut personal taxes by less than half as much as Finance Minister Jim Flaherty indicated to the House of Commons when he tabled the budget on May 2. The personal cuts contained in the budget will actually be worth $9.5 billion over the next two years, not $19.1 billion as announced by Flaherty.
Despite the feel-good headlines generated by the budget rhetoric, the Tories actually cut take-home pay (not taxes) for many Canadians, Orr says in the report.
His conclusions are supported by Don Drummond, chief economist at Toronto-Dominion Bank, who agrees with Orr's conclusion that the Tories exaggerated the tax cuts. However, Drummond says "the overall growth" of taxes is coming down as a result of recent budgets by both the Conservatives and the Liberals.
Orr says Conservative budget claims are inaccurate because they did not compare their cuts with rates now in effect. Instead, they compared them to levels which do not include cuts made last year by the previous Liberal government.
Smoke and mirrors
“We conclude that in budget 2006, there was much less tax relief than advertised,” the Global Insight report said. “When tax relief is measured the usual way, as opposed to
the Budget 2006 way, tax relief is only about 1.4 times as much as new spending.”
The Liberal cuts, announced in November, were in effect when the Conservatives took office although legislation to make them permanent had not been passed. NUPGE
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