Promises That Spell Disaster

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Stephan Harper has seen the credibility of Liberals eroded by corruption and a he started giving out lavish promises that if implemented shall be goodbye to the surplus budgets and the sound economy. I shudder at the prospect. Why the person who desires to be Prime Minister cannot act like one, and show some sense of responsibility? Why is he hell bent on promising the electorate what he can do at the peril of the nation’s economy? Conservative Leader Stephen Harper’s promises made to date will produce a deficit “of at least $12.4 billion over five years. It is important to have an audit of his promises and see where we shall be going, if the se promises are really implemented.

GST Reduction
Harper’s flagship tax plan is to cut the GST to five per cent from seven per cent – a move that cannot be accepted by any economist worth the name. Critics point out that a reduced goods and services tax is of greatest help to those who can afford to spend the most. The analysis conducted by economists is telling. The GST Reduction to 6 per cent from 7 per cent shall have the following economic effect:
· A one percentage point cut in the GST represents a 14.3 per cent reduction in the GST revenues collected every year
· The cost of this promise escalates year after year since GST revenues increase as consumer consumption increases
· In the fiscal year 2006-07 Finance Canada estimates show GST revenues to be $32.670 billion, increasing to $39.165 billion in 2010-11.
· Therefore a 1% point cut in the GST would result in $4.667 billion in forgone GST revenue in 2006-07 while in 2010-11 the forgone revenue would increase to $5.595 billion.
· This would represent an estimated $25.5 billion in forgone revenue over 5 years.

And now we see the impact of further reduction to 5 % from 6 %

· A one-point reduction in the GST would represent a 14.3 per cent reduction in GST revenues.
· With a Finance forecast to be $39.165 billion in 2010-11, this means revenues will be reduced by an additional $5.597 billion.

It is important to remember that GST revenues are not static. As they grow year after year, so does the value of tax deduction. One can easily gauge the result.

Are you there, Mr. Prime Minister Hopeful?

The next carrot was to the small businessmen. Let us the impact of the same, and also evaluate the cost of this and other promises:

Small Business Tax Cuts
The Conservatives announced that they would both increase the small business threshold to $400,000 from $300,000 immediately and reduce the small business tax rate to 11 per cent from 12 per cent over 5 years. The cost of both promises is likely to be about $480
$500 Tools Tax Deduction:
The Conservative Party identifies the cost of implementing this promise to be $30 million per year.
$1000 Apprenticeship Grant:
The cost of this assurance is likely to be around $80 million per year.
$2000 Apprenticeship Job Tax Credit
Excellent, but at a cost of $160 million per year to the nation.

$500 Tax Deduction for Text Books
Why let the students not be attracted. And the cost of this carrot is only $75 million per year and that is forever.

Student Loan Program Eligibility
At a very low cost of just $20 million per year
Increasing the RRSP Deduction for seniors
But can you be content with small change: no. So rope in everybody. What difference does the cost make? It is only $2.235 billion over five years
Sports Tax Credit
Again why not tempt players. The cost is nominal, since it does not go from the pocket of Mr. Harper. It is $650 million during 5 years.
16 % Tax Credit for Public Transit
The Conservatives are offering a tax credit for public transit worth 16 per cent of the actual, receipted amount spent on public transit. And the financial cost is $400 million a year

I have not calculated all these costs. They are courtesy Mr. Anderson, a conservative candidate, and an acolyte of Mr. Harper. His website has all the homework.

I might have thought that Mr. Harper shall at least not touch the most lucrative money-spinner of the federal Government. But no, he is casting his net wide. Immigration is the most profitable of all the activities. Only the Right of Permanent Residence Fee currently raises approximately$210 million a year. Mr. Harper has to win the vote of prospective immigrants. So, he proposes to cut that Fee in half immediately, from $975 per person to $488. This would represent an immediate revenue reduction of $105 million a year. He would also like to reduce it to $100 per person by 2010-11, which would generate $21 million in government revenue.

Independence of Quebec
And now come to his other promises. In a frenzy to win over voters of all hues, and to make an entry into Quebec, that has till now remained beyond the pale of Conservatives, Harper did not hesitate to dangle the promise of more autonomy. He held out to them the promise of more autonomy at home and a bigger voice abroad, hoping more intimate relations with the province will lead to electoral bliss. Stephen Harper said that he would go further than the Liberals and allow Quebec to play a role in international institutions, such as UNESCO, when its cultural responsibilities are at stake. He also pledged to recognize provincial autonomy “as well as the special cultural and institutional responsibilities of the Quebec government.”

He also dished out the desire that the Tory government would correct the so-called fiscal imbalance between Ottawa and the provinces – a key gripe of Quebec. Any federal leader who swears by his country would not talk in such terms. For the first time Paul Martin was correct when he called Harper’s plan divisive that was bound to weaken the government. In any other country he might have been tried for treason, but we Canadians are too tolerant. Of course premier of Quebec was gung ho on this declaration of Harper, who said who said the Tory leader’s promise of greater autonomy “goes in the right direction for Quebec.”

I am reminded of Lord Durham’s observation in 1839 that Canada was “two nations warring in the bosom of a single state.” Some 165 years later, Canada remains a country where, in the words of historian H. V. Nelles, “unambiguous unity and a singular identity” still largely elude its inhabitants. Except that today, Canada is really three nations: Quebec, the West, and the multicultural cities. Quebec is already separate within Canada. To the average Quebecer, the Canadian federal government is essentially irrelevant. Quebecers make almost all their own political and social choices, and the international markets are as influential an economic force in that province as they are in the rest of Canada, perhaps more so. The province has a thriving French-language magazine, book, film, Web and TV industry that utterly dominates public tastes, as opposed to the American products that resonate widely in the rest of Canada. No serious people today think that Quebecers want to return to past political arrangements or that Quebec nationalism is a waning fad. The province has never signed the 1982 Canadian constitution (though it is bound by its provisions) and support for independence hovers around the 50 per cent mark. A few weeks from now, Quebecers may well send more secessionists to represent them in the federal House of Commons than ever before. Can we hope for the country to remain united under the inspired leadership of this leader who runs with the hare and hunts with hounds?

Any body can be sure all these promises are being made with the explicit desire not to implement them. I am fully aware that Harper is manipulating the voters by dangling all sorts of hope and making all promises; possibly he crosses his fingers when he makes a statement. He has taken a cue from the Liberal leadership of Ontario that made all correct promises, but failed to keep them. As a political and management strategist I can understand his compulsions; but they not create vibes with the political culture of this country that prides on honesty. Or is honesty and integrity only for you and me; the high and mighty can be as devious as they desire? I am reminded of Shakespeare and shall like to use his quote for Mr. Prime Minister Hopeful (God forbid):

“Thou art siren
Hawk in the garb of dove.
Be gone from here,
I kick thy love. “