Newspaper article The Canadian Press

Editorial Exchange: Mr. Harper Faces Test as Economist

Newspaper article The Canadian Press

Editorial Exchange: Mr. Harper Faces Test as Economist

Article excerpt

Editorial Exchange: Mr. Harper faces test as economist

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An editorial from the Winnipeg Free Press, published Oct. 15:

Prime Minister Stephen Harper may fancy himself as The Great Economist, an impartial technocrat guided only by the pursuit of sound fiscal principles on behalf of a grateful nation.

Many real economists, however, including experts in the non-partisan Parliamentary Budget Office (PBO) and even members of his own party, might disagree.

Since the Conservatives formed a government in 2006, Mr. Harper has cut the total tax burden by almost $30 billion. The result, of course, was a dramatic increase in debt over that time.

The government is poised to bring in a budgetary surplus this year, but the way it intends to spend it raises questions about tax fairness and effectiveness, as well as the prudence of cutting revenue that might be needed to manage an uncertain fiscal future.

The PBO, for example, issued a scathing indictment last week of the government's recently announced tax credit on employment insurance premiums for small business.

The government had said the $550-million tax credit would create 25,000 person-years of employment over two years, but the PBO said it would only create 800 jobs, or about $550,000 per job.

This may be good politics, but it's hardly stellar economics, and there's more.

The PBO report also said the government's habit of collecting billions of dollars more in EI premiums than needed could cost the economy 9,000 jobs.

In addition, Mr. Harper announced plans last week to double the size of the Children's Fitness Tax Credit, even though a study by the Canadian Tax Journal found it is more likely to be used by wealthy parents and more likely to be spent on boys than girls. A proposed adult fitness tax credit is equally flawed.

Mr. Harper's plan to introduce income-splitting for families with dependent children would allow a spouse to transfer a portion of his or her taxable income to the spouse in the lower tax bracket, reducing the family's tax load. …

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