British Columbia Federation of Labour

First appeared in Business in Vancouver

By Jim Sinclair, President, B.C. Federation of Labour

Pity poor federal finance Minister Jim Flaherty. He can't go for coffee in his hometown of Whitby without someone demanding tax cuts.

"I hear it at the hockey arena," he told reporters. "I hear it at the coffee shop, I hear it from people on the street: taxes in Canada are way too high."

So the Conservatives' 2007 budget claims to turn its back on its big business buddies - "we crack down on corporations that have avoided paying their fair share" - to "reduce the tax burden on working families."

To hear the spin, you'd think Flaherty was a born-again socialist.
The numbers tell a different story.

Flaherty's $310 child tax credit works out to about $6 a week for families that qualify, barely a down payment on a package of Pampers.

And his long goodbye to the Accelerated Capital Cost Allowance for the oil sands means taxpayers will subsidize Big Oil until 2015, at a cost of hundreds of millions of dollars.
Pre-budget polling by Conservative pollster Allan Gregg told a familiar story of growing working and middle-class anxiety at an economy that makes people work harder just to stay put.

Half of Gregg's respondents called for increased spending on social programs, only 19 percent wanted tax cuts. (Many of the latter must live in Whitby.)

Normally a strong economy would create a buoyant mood, Gregg noted, but not now. "People believe in the face of all this prosperity, it's being unequally shared, first, and secondly that we've allowed our social safety net - our health care, our education system, the quality of our cities - to unravel."

To really be meaningful for working families, the 2007 budget had to hit three targets:

• It had to fund key services that make it easier for working Canadians to participate in the economy and achieve income security - universal child care is the obvious priority; 
• It had to restore critical programs, particularly in affordable housing and transit, that improve our cities and give working families some room to improve their own lives; and
• It had to take concrete steps to end the devastating reduction in manufacturing, both in central Canada and in resource communities like Williams Lake.

Flaherty failed on all three counts.

The much-touted support to families will not be noticed by most and low-income families without children will, of course, get nothing.

The cancellation of the national child care agreement negotiated by the Liberals, under NDP pressure, is a mistake the Conservatives refuse to fix.

Despite the increase in the 2007 budget, Conservative measures have not produced any child care spaces and overall funding is only 25 percent of what the cancelled accord had proposed.

The budget is equally defective on critical programs needed to reduce poverty and income inequality, particularly in our cities.

There is a crisis requirement for affordable housing, but the budget is silent on this issue. There are no concrete measures to improve rapid transit, an obvious area for investment if the government is serious about global warming. Even promised police spending failed to materialize.

And then there are the corporate tax cuts.

Despite record corporate profits, Canada's New Government believes CEOs need more help on the bottom line. According to the Canadian Labour Congress, corporate income tax rates were reduced to 21 percent in 2004 from 28 percent in 2000, well below American rates.

These cuts, which are not linked to investment, have already cost $10 billion a year.
Budget 2007 take a small step toward encouraging investment by allowing a two-year write-off of investment in eligible manufacturing equipment - a measure that will cost only $700 million a year. Most of the tax cuts will still benefit the financial sector about twice as much as struggling manufacturers.

No new services for working families. No investments to reduce income inequality. No tax measures to generate decent, family-supporting manufacturing jobs. And a "fiscal imbalance" fix that has premiers setting their hair on fire.

Let's hope this is Jim Flaherty's last budget.