-- CTF Condemns Government for Token Tax Relief and Ignoring the Debt --

OTTAWA: The Canadian Taxpayers Federation (CTF) has given Paul Martin's fifth budget a "C" grade. "C for complacency on the national debt, C for contempt of taxpayers, C for criminality in not tackling bracket creep, and C for complicating the tax system with a variety of new credits and deductions" said Walter Robinson, Federal Director of the CTF.

However, the CTF applauded the Finance Minister for bringing down the first balanced budget in 28 years. "But the real credit for the deficit victory is reserved for Canadian taxpayers who have languished under $25 billion of tax increases in the last four years. $11.9 billion of this amount comes directly from increases in personal income taxes," noted Robinson.

Budget '98 includes a $500 increase in the basic personal exemption and an elimination of the 3% surtax for Canadians with incomes of less than $50,000 and the government claims that these measures have helped 14 million Canadians. On the other hand Robinson cautioned that these measures represent a hollow victory. "Don't believe the hype when it comes to Paul Martin's tax shell game. While he has put chump change into the right hand pocket of Canadians through raising the basic exemption and eliminating the 3% surtax we can not forget that he is simultaneously sucking $3,100.00 out of the left hand pocket of 21,000,000 taxpayers through CPP premium increases over the next six years."

"In total, Budget '98 offers $7.7 billion in tax relief over the next three years but pales in comparison to the $12 billion that will be forked over by Canadians to pay for CPP premiums over the same period," said Robinson. "And Mr. Martin continues with his partners in crime, the provincial Finance Ministers, to profit from annual taxation by stealth through bracket creep. By refusing to fully index income tax brackets to inflation this Government continues to hammer the poorest in our society and push working Canadians into higher and higher tax brackets."

The federal government has also chosen to ignore the national debt and instead grow its way out of our debt woes. Debt servicing charges are actually going to increase over the next three years from $41.5 billion to $45 billion. And the national debt will stay constant at $583.2 billion. "The international markets were waiting for Canada's first historic payment on the principal of its national mortgage and they were sorely disappointed. Paul Martin's debt strategy is lazy and signals a complete 180 degree turnaround from his former vigilance on the deficit. The spending interests have definitely won the day."

Budget '98 offered numerous tax credits and incentives to address many concerns of Canadians. However, a better approach would have been to provide broad-based tax relief for all Canadians. Robinson noted that "the credits and deductions serve to further complicate the tax system. We'll add another 100 pages to the income tax act and more Canadians will be forced to seek professional assistance to file their annual tax return. The savings conferred by these credits will be offset by costs Canadians incur in seeking assistance to file their taxes."

"Almost $12 billion in new spending, pithy tax relief and a complete ignorance of our debt woes is not good news for Canadians. While we may celebrate a balanced budget like we celebrate a birthday, it is clear that there is no cake (tax relief) or presents (debt reduction) for hard working taxpayers."

"Canadians still suffer from the highest tax rates in the G-7 and our debt-to-GDP ratio is still the second highest amongst our G-7 partners, second only to Italy," concluded Robinson.