I had thought, heading into today’s lockup, that there would be one big upside to spending my day in seclusion with half the journalists in the country reviewing budget documents: We’d at least be sheltered from the NHL’s Trade Deadline, the day on which Canada’s hockey obsession descends into self-parody.
Alas, no such luck. A TV screen in front of me has been tuned into Sportsnet all day, which means that every time I glance upward I get Bill Watters or Nick Kypreos staring back at me.
This might be less of a problem if the budget were so riveting that I couldn’t tear my eyes from it. But it turns out Jim Flaherty wasn’t just pulling off a ruse the past couple of months, dampening expectations so we’d all be blown away by how much he delivered. There really is nothing in this thing.
Or at least, there’s nothing that much matters in the short-term; nothing that requires a major investment up-front. What we do get, and what the Tories are (probably correctly) betting will lead coverage, is a signature policy that’s built on the backs of future governments.
You have to give Flaherty credit. When the cupboard is bare – albeit somewhat by choice, since nobody forced him to cut the GST or to put $10.3-billion in surplus toward debt reduction – you have to be creative. And the new Tax-Free Savings Account, which he’s billing as “the single most important personal savings vehicle since the introduction of the RRSP,” is nothing if not creative.
Just how many Canadians will take advantage of the opportunity to contribute $5,000 per year to a tax-free account remains to be seen. A tax expert conveniently seated next to me points out that for those who don’t max out their RRSP contributions – and that includes a lot of middle-income earners - this new option will have considerably less appeal. In keeping with that analysis, Finance officials are predicting that roughly 50 per cent of the funds placed in these new accounts will come from seniors. So the lifelong savings hinted at by Flaherty may be a bit exaggerated.
If you happen to have a full copy of the budget in your possession, or care to view it online, page 79 offers a take on what those lifelong savings will bring us that’s unfortunate on a couple of levels. “Lindsay,” who begins setting aside cash when she’s 18, has enough to buy a car when she’s 25 and (wait for it) an RV when she’s 65. Aside from the unpleasant images this may conjure of Robin Williams movies, it’s a little depressing to consider that we’ll still be driving RVs nearly a half-century from now. More importantly, as the same tax expert has observed, it’s going to be one wreck of an RV that Lindsay gets for her $50,000 sometime in the 2050s – which underscores the diminishing returns younger people would get from money put aside now.
Since most Canadians have better things to do than sit around a conference centre all day contemplating Lindsay and her RV, though, the savings accounts will go a long way toward turning this budget into a good-news story. At worst, some Canadians will be indifferent. And quite a few will be grateful for the help with affording vacations or new TVs or whatever else one can reasonably expect moderate savings to allow.
From Flaherty’s perspective, that gratitude is a pretty amazing pay-off. Because for him, it’s basically free. The hit in revenues could eventually be sizable; nobody really knows right now. But by the government’s estimate, a grand total of $5-million will come off the books in 2008-09. In 2009-10 it’s $50-million, but in the grand scheme of things that’s negligible as well. Only sometime next decade will the costs really start to pile up, and by then it’ll be left to some other finance minister – and very possibly some other government – to worry about it.
It’s not a policy on which elections* will be won or lost. But if you need to distract from a budget with little else in it, a gift to taxpayers on someone else’s tab isn’t a bad way of doing it.
***
*Speaking of elections, you’ll note that the preceding 700 words or so are shamefully lacking in the requisite speculation as to whether this budget will trigger one. That’s because, it being painfully obvious that it won’t, I figured I’d spare you. Hope you don’t mind.
