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The Globe and Mail

Harper proposes job-killing permanent tax on everything

Dale Orr is as respected an economist as we have in this country. Serious, non-partisan, insightful, willing to praise or criticise all political parties.

From a report titled "Some Insights to the Government's Economic and Fiscal Update," which is cited in the line story in today's Globe and Mail, some interesting policy proposals that haven't received much attention so far:

"The Update did not give any profile to the fact that the reduction in the forecast deficit benefits very significantly from a huge forecast surplus in EI. "

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So far, who cares, right? EI surplus leads to reduction in federal deficit - that just accounting, isn't it? Couldn't be any less interesting or politically sexy, you say? Stay with me, it gets better.

"The forecast deficit falls from $27 billion in 2011/12 to $5 billion in 2014/15, a reduction of $22 billion. Forecast EI premiums exceed forecast EI benefits by a cumulative total of $18.9 billion over this period. Therefore the surplus in EI contributes about $19 billion of the cumulative $22 billion reduction in the total fiscal deficit over the 2012/13 - 2014/15 period. "

In other words, the only semblance of a plan that Flaherty has to reduce the deficit is through an EI surplus - or at least 95% of his plan is to run an EI surplus.

Again, not exactly a game changer.

"Embedded in the forecast for EI premiums in the government's Update is an assumed increase in the EI premium rate in 2012."'

Ding, ding, ding. "Increase in the EI premium rate"...that sounds an awful lot like a payroll tax increase to me. What does Orr have to say about that?

"Mr. Flaherty pledged to return to balanced budgets without a tax increase. Isn't an increase in EI premiums a tax increase?"

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To repeat, isn't an increase in EI premiums a tax increase?

The answer? Yes, yes it is.

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