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Budget Scorecard

CGA-Canada has made a number of recommendations to the federal government on priorities going forward in the areas of fiscal prudence, tax reform and meeting tomorrow’s challenges. Here is how Budget 2008 measures up from CGA-Canada’s point of view.

Fiscal Prudence

Tax Reform

Meeting tomorrow’s challenges

FISCAL PRUDENCE

	CGA-Canada Proposals		2008 Budget
	Balance the budget and keep program spending below economic growth.		The budget is balanced. Spending is set to increase at an annual average rate above 5 per cent through 2006-07 to 2009-10.
	Reduce the debt according to a multi-year debt-to-GDP ratio plan.		Planned debt reduction is $10.2 billion in 2007-08, $2.3 billion in 2008-09 and $1.3 billion in 2009-10 – on track to meet the target debt-to-GDP ratio of 25 per cent by 2011-12.
	Reform management culture of the federal civil service to better direct resources to program priorities and to ensure current and future federal spending generate highest program value.		The Government continues to implement the Expenditure Management System by reviewing all departmental spending over a four-year cycle. The first round of these reviews included 17 federal organizations with spending of $13.6 billion. The savings realized are being used to fund new initiatives in these organizations and other priorities.

Comments

With the possibility of tighter times ahead for Canada, the Minister of Finance is well advised to exercise prudent management over the nation’s finances. The budget is balanced and the nation’s debt is decreasing. However, in the face of global economic uncertainty, CGA-Canada is concerned that there is insufficient funding set aside to cushion Canada’s economy - $2.3 billion for 2008-09 and $1.3 billion for 2009-10. Secondly, a closer look at the budget numbers reveals that total government program spending is projected to increase more rapidly than economic growth.

Grade:

Needs improvement.

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TAX REFORM

	CGA-Canada Proposals		2008 Budget
	Appoint an independent panel of experts to undertake a fundamental review of the tax system.		No action taken.
	Create savings incentives.		A new Tax-Free Savings Account with an annual contribution limit of $5,000 to help Canadians save. Investment income, including capital gains, earned within the account will not be taxed and withdrawals will be tax-free.
	Extend the Capital Cost Allowance (CCA) and ensure the rates in Canada reflect reality.		The 50 per cent straight-line accelerated CCA treatment will apply for one additional year, and the accelerated treatment will then be provided on a declining basis over a two-year period.
	Simplify the Scientific Research and Experimental Development (SR & ED) tax credit system and make the program more accessible to businesses.		Improvements to the SR & ED program include: Increasing the expenditure limit from $2 million to $3 million; Increasing the upper limit for the taxable capital phase-out range from $15 million to $50 million; Increasing the upper limit of the taxable income phase-out range from $600,000 to $700,000; Administrative changes to ensure the program’s policies and procedures are aligned with current business practices and applied in a consistent manner across the country.

Comments

Although modest, CGA-Canada welcomes the new tax-free savings account which provides Canadians with options to save. This has been a proposal of ours for several years. Going forward and as economic circumstances permit, the federal government needs to continue working towards making Canada’s personal tax rates internationally competitive.

Grade:

Pass.

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MEETING TOMORROW’S CHALLENGES

	CGA-Canada Proposals		2008 Budget
	Invest in human capital.		Budget 2008 invests: $350 million for a new Canada Student Grant Program, beginning in 2009, and rising to $430 million by 2012-13; $123 million over four years to streamline and modernize the Canada Student Loans Program; $25 million over two years to establish a new scholarship award for top Canadian and international doctoral students; Enhanced flexibility for Registered Education Savings Plans, increasing the time limit they may remain open to 35 years from 25 years; $3 million over two years for Canadian recipients of Canada Graduate Scholarships who wish to study abroad; $21 million over two years to establish up to 20 Canada Global Excellence Research Chairs to strengthen the ability of Canadian institutions to attract and retain top science leaders.
	Invest in Canada’s knowledge economy.		$80 million per year to Canada’s three university granting councils for research; $15 million per year for the Indirect Costs of Research program; $140 million for Genome Canada; $250 million over five years for an Automotive Innovation Fund to support research and development investments in the automotive sector.
	Improve the integration of internationally educated and trained workers into Canada’s workforce.		The government is providing $22 million in new funding to support immigration initiatives over the next two years. This funding will improve the responsiveness of the immigration system and better align it with labour market needs.
	Enhance the Employment Insurance (EI) program.		The management and governance of the Employment Insurance (EI) program will be improved through the creation of the Canada Employment Insurance Financing Board – an independent Crown corporation.
	Public-private partnerships: Strengthen government-business relations.		A new Crown corporation called PPP Canada Inc. will be created to work with the public and private sectors to support public-private partnerships.
	Develop a forward-thinking multi-faceted strategy to address the problems associated with an aging workforce. Aging population Labour shortages Pension plans		An additional $90 million will be provided to extend to 2012 the Targeted Initiative for Older Workers to help older workers stay in the workforce.

Comments

The Minister of Finance has no choice but to be frugal, given the uncertain economic times and relatively bare cupboards. The Budget’s short-term focus – its two-year horizon – has made it difficult for this government to bring a long-term vision to the multitude of challenges facing the nation.

Grade:

Pass.

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CGA-Canada | Last Updated: March 27, 2008

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Budget Scorecard

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