Paul Martin Criticized Over Federal Budget

by Mike Godfrey, Tax-News.com, Washington

13 December 2001

Although the general feeling is that in his recent federal budget, Canadian Finance Minister Paul Martin achieved what he set out to achieve, namely to reinforce domestic security and prepare Canadian citizens for the economic upswing which is expected next year, there are concerns from several quarters that many provisions made in the budget were unecessary, and under current economic conditions, wasteful.

Although the vast majority of the Canadian public applauded the decision to set aside $6.5 billion for security spending over the next five years, some of Mr Martin's more marginal choices, such as woodlot management, native health, and a research institute for the study of linguistic minorities, drew criticism. As the Canadian National Post commented on Tuesday: 'Most of this would be open to vigorous debate in good times, but in a budget that was supposed to cut extravagance and focus on necessity, it is wholly superfluous.'

Mr Martin was also slammed by tax experts for failing to direct enough of the budget surplus towards tax cuts, which they argue would have boosted the confidence of Canadian consumers and thus stimulated the economy. Although the six month tax holiday on small business corporate tax was cautiously welcomed, there were criticisms that this amounted to little more than 'an accounting trick that pushes tax payable around the calender'.

Responding immediately after the Finance Minister's budget speech, Peter Woolford, the Vice President of Policy Development and Government Relations with the Retail Council of Canada, revealed that Canadian retailers had greeted the provisions announced in the budget with mixed feelings. 'Confidence levels cannot be sustained when consumers are under financial pressure,' he explained. 'This is exactly the time when Canadians should be able to look to their government for income support through tax reductions.'

Recommended