Federal budget vows to slash deficit, with spending cuts over next 5 years

OTTAWA (NEWS1130) – In today’s federal budget, Finance Minister Jim Flaherty is calling for massive cuts down the road to fight a monstrous deficit.  However, most of the cuts are destined for coming years, once stimulus spending concludes.

The budget outlines $17.6 billion in spending restaint over five years–largely in foreign affairs and defence spending.  A comprehensive review of government programs will save $6.8 billion dollars over five years.  Flaherty says that will take the deficit from $53.8 billion for the year ending April 1, to a shortfall of $49.2 billion for 2010-11.

But Flaherty says deficits will plunge dramatically after that, falling to a modest $1.8 billion budgetary shortfall in 2014-15.

Flaherty did offer support to our amateur athletes.  On the heels of 26 medals–15 gold–at the Winter Olympics, sports federations will be getting an extra $17 million a year for the next two years.  That’s on top of the $47 million the government already spends each year to fund programs, like “Own the Podium.”

The president of the Canadian Institute of Chartered Accountants hasn’t found any big breaks for the average person in the budget.   Kevin Dancey has been scouring the budget to find out if you get any breaks at tax time.  “No there is not much here on the personal side for the average consumer.  This is a budget the finance minister has tightly constrained given the economic environment.”

Dancey says all the personal tax breaks were contained in last year’s budget.  He says there are budget  changes that might affect some people–for instance, divorced couples can split child tax deductions, and you can no longer deduct elective cosmetic surgery–if it’s just to make you look better. 

 However, there are potential changes coming for credit unions, which will now get a chance to expand across Canada.  Credit Unions will be allowed to expand beyond their home province, something not currently allowed.  Credit unions–which are provincially regulated–would face similar rules as banks, giving them a chance to offer new products, while facing the same ban as banks on selling insurance in branches.

Highlights of the federal budget:

–  promises $17.6 billion over five years in spending restraint in areas including foreign aid and defence.
–  comprehensive review of government programs to save $6.8 billion dollars over five years.
–  program spending increases by $11.4 billion to $249.2 billion in 2010-11, but falls by $7.8 billion the following year.
–  deficit falls from $53.8 billion for year ending April 1 to $49.2 billion in 2010-11; with a plan to cut it to $1.8 billion by 2014-15.
–  eliminates tariffs on manufacturing equipment by 2015.
–  continues corporate tax cuts started last year.
–  closes a tax loophole for executives who cash out stock options, estimated to save the government more than $1.6 billion over five years.
–  eliminates medical tax credit for cosmetic surgery unless recommended by a doctor, effective immediately.
–  freeze on EI premium rate (paid by workers and employers) continues until the end of 2010.
–  $3.2 billion in personal income tax relief, largely through raising of the basic personal tax exemption, announced in last year’s budget.
–  $7.7 billion in promised stimulus money for infrastructure.
–  $4 billion for to continue extended EI benefits and training.
–  total debt for 2010-11 rises to $566.7 billion
–  total spending of $280.5 billion, up $12.8 billion over last year.