Budget: something for everyone - with any political clout - and nothing for Canada's poorest families

Santa returned to Canada this February and the Liberals expect wide-eyed gratitude

By: Richard Shillington

  For most Canadians - naughty and nice - it looks like the Budget made their dreams come true - except for the kids with holes in their stockings.
  For everyone else, there are goodies: cuts in the taxes on capital gains, disappearing surtaxes, and easing foreign rules for RRSPs. There are increased exemptions, tax brackets and some reduced tax rates - at first glance - something for everyone. Almost everyone. Paul Martin promised to concentrate the assistance on those who need it. Yet the ones who got the least from this budget are the poorest of Canadians and, in particular, the poorest of children.
  Think of those on welfare. They don't pay income taxes so they miss most of what this budget had to offer (a cut in the GST rate would have helped them). If they have children, they will receive the increased Child Tax Benefit but their welfare check will be cut back by almost as much. One is reminded of towns where the boss controls the rents and the payroll. "You got a raise but your rent went up."
  Keep in mind that it's hard to help poor children if you won't help kids on welfare. About 2/3rds of poor children are on welfare. An early look at the budget suggests that welfare kids will get to keep some of the increased Child Tax Benefit. Its about $70 per year so its far short of a gravy train. Its also far short of the value of the various tax cuts for other Canadians which are worth hundreds and sometimes thousands of dollars.
  Even this small step, the modest increase for welfare kids is a victory since this is the first federal budget since the Tories in 1985 to increase the Child Tax Benefit without excluding welfare kids. So at long last Ottawa is willing to let welfare kids get some increase even if it amounts to just over $1 per week.
  I'll give Mr. Martin full credit for finally indexing the Child Tax Benefit and the income tax system. It took some courage to kick the bracket-creep habit which had delivered billions in tax revenue at almost no political cost over the last 14 odd years.
  Children on welfare will get perhaps the smallest share of this post-deficit feast but at least they will no longer have inflation erode their support. Too bad we couldn't find it in our political hearts to give them an equal share of the bounty.
  The Liberals will likely receive a substantial political thank-you based on this. Politically the budget is brilliant, something for everyone - who has any clout.
  Perhaps the next election is not too far away. Poor kids don't vote.

Richard Shillington, Ph.D., is a statistician who specializes in the quantitative analysis of health, social and economic policy. He appears regularly before committees of the House of Commons and the Senate, and frequently provides commentaries for television, radio and newspapers on issues of taxation, human rights and social policy. Richard's Straight Goods column will appear weekly.

Other articles from Richard Shillington
  Death by the rules
  House Finance Committee gives more windfalls to wealthy; rotten apples to poor kids
  Attn: Paul Martin: a REAL "children's budget", please
  A poor measure of poverty
  Are RRSPs really for you?

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