CTF Claims Major Budget Victories - Martin Follows CTF's Taxpayers' Budget

OTTAWA: The Canadian Taxpayers Federation (CTF) has reacted to Budget 2000 - the seventh in Paul Martin's tenure as Finance Minister - tabled today in the House of Commons.

"Minister Martin has proven the pundits wrong. He has listened to wishes of millions of Canadians and killed bracket creep by indexing the tax system to inflation, retroactive back to January 1st of this year," said a beaming CTF federal director, Walter Robinson. "This is not only a victory for the CTF, but more importantly for each and every one of Canada's 15 million taxpayers."

"This is the most significant measure of tax relief and tax reform in over a decade. We must give credit where credit is due, Mr. Martin finally did the right thing," added Robinson. "We have lobbied for this change for almost three years and our hundreds of media appearances, thousands of petitions and emails and consistent pressure at every turn has won the day. Citizen and taxpayer advocacy can make a difference."

Personal tax relief measures include:

• Restoring full-indexation to the tax system retroactive to January 1, 2000;
• Lowering the middle income tax rate from 26 to 24% on July 1, 2000 and further reducing this rate to 23% over the next five years;
• Raising the basic personal exemption (BPE) to $8,000 over five years;
• Raising the middle and high income tax bracket thresholds to $35,000 and $70,000 over the next five years;
• Elimination of the 5% surtax for incomes from $65,000 to $85,000 effective
• July 2000, with the remaining rate being reduced to 4% for taxpayers over $85,000 effective January 1, 2000;
• Increasing the RRSP foreign content limit to 25% in 2000 and 30% in 2001;
• Reduction of the capital gains inclusion rate from 75% to 66%; and
• Postponement of capital gains on shared acquired through stock options.

"These measures combined with tax reductions to business signal a new beginning for Canadian taxpayers. The government has taken concrete steps to addressing the issues of brain drain, tax competitiveness and declining standards of living," added Robinson. "But we must not be complacent, there is still more to do."

"When measured against our GDP, income taxes are also coming down, this reverses a nine-year trend," added Robinson. "Now if we could only see the projections out to 2004/2005 to see if the government's reliance on personal income tax revenues will decline from it's current level of 47% of total revenues which is simply to high."


Program Expenditures

"While responding to health care needs and refurbishing the RCMP and military spending clearly reflect the priorities of Canadians, taxpayers should be concerned about the fact that the government is using the surplus of over taxation to fund these priorities," noted Robinson.

"Instead of re-allocating from existing budget envelopes by ending corporate welfare, winding down regional development schemes and ending job creation boondoggles, the feds have opted to use the surplus of over-taxation revenues to fund new initiatives. Mr. Martin and his colleagues have ignored the obvious lessons arising from the HRDC. This puts a blemish on this taxpayer friendly budget," added Robinson.


The Debt Picture

"Due to this intransigence and refusal to re-allocate wasteful program spending into more productive and priority areas, Ottawa's use of surplus revenues to increase program expenditures is having a direct and dramatic impact on much needed and long overdue debt reduction," Robinson lamented.

"Simply aiming for a lower debt-to-GDP ratio is insufficient, a legislated schedule of annual debt repayment is sorely needed. After all, debt is nothing more than deferred taxes," stated Robinson.

"This approach is akin to hoping for a massive salary increase to reduce the relative size of one's mortgage and credit card debts," stated Robinson. "Even with Minister Martin's prudence factored into the annual contingency reserve, it will still take over 100 years to pay off our $577 billion national debt. Asking taxpayers who haven't even been born yet to pay for the excess and fiscal irresponsibility of the last 30 years is tantamount to intergenerational tax evasion."

"The big black mark in this budget is again the lack of focus or a plan to reduce our national debt," said Robinson. "Currently, for every dollar that Ottawa confiscates from taxpayers, only 73 cents of public services are provided in return to taxpayers as 27 cents is a sunk cost to pay debt servicing charges. This is shameful."

"In today's budget address, Minister Martin stated the budget cuts federal tax rates for the first time in 12 years, but he has ignored future taxpayers by not moving quicker with a legislated plan for annual debt reduction," stressed Robinson. "This is the biggest disappointment in what is otherwise a budget which responds to the demands of Canada's scarcest resource, it's taxpayers."

"Until the government embarks on legislated schedule of annual debt reduction, we will continue to lose, on average $114 million a day to institutional bondholders. Reducing debt today, cut's tomorrow's taxes. We'll continue to deliver this message to Minister Martin," concluded Robinson.