Monday, April 2, 2012

2012 Federal budget –- Penny Wise, Dollar foolish?

Canada
Canada (Photo credit: palindrome6996)

Ottawa gets rids of pennies, increases pension age from 65 to 67 and returns skilled workers applications filed before 2008
The 2012 Canadian federal budget announced by Finance Minister Jim Flaherty will get rid of the penny coin for starters and is aimed to control government spending and create better economic times for Canada. Well that is the plan anyway. In detail the budget is targeting the civil service, future retirement benefits, will stabilize immigration quotas to skills shortages and expand Canada’s free-trade agreements.
“Our government is looking ahead not only over the next few years but also over the next generation,” Finance Minister Jim Flaherty told the Commons.
Amongst the reforms $11 million a year is expected to be saved by phasing out the one cent coin that actually costs 16 cents to produce.  Canadians can continue to use pennies as long as they have them. When they don’t, cash purchases will be rounded up or down to the nearest five-cent increment.
Around 19,200 federal government jobs, with most of the cuts being felt around Ottawa and civil servants will also have to contribute more to their pensions and there will be a $115 million decrease in budget. There is also a $319 million cut to the Canadian International Development Agency; and $165 million to aboriginal affairs.
Ottawa will also spend $387 million to change how Employment Insurance benefits are calculated with a view to eliminating “disincentives to accepting all available work prior to applying to the EI program.” The impact will vary from region to region but some workers may find their benefits reduced or harder to obtain, officials said.
Younger Canadians will be forced to wait longer to collect Old Age Security payments, to 67 from 65. The change will be phased in and those aged 54 and older won’t be affected.
The defence department is being asked to find savings of $1.1 billion a year – However, the Canadian Forces’ strength of regular troops will be maintained at 68,000 and its reserve force at 27,000.
The government also provided $205 million to extend a tax break for small businesses who expand their workforce and $5 billion to renew the Canadian Coast Guard fleet.
There were no across-the-board changes in individual taxation.
Overseas Canadian diplomats will be moving into smaller premises, some properties will be sold. Even the Governors General will have to pay tax for the first time on their $130,000-plus salaries.
Regular Canadian shoppers in the U.S will be happy as the government wills as of this summer increase duty-free cross-border shopping limits to $200 for 24-hour trips and $800 for trips of 48 hours or more.
The government is hoping to cut back spending by $5.2 billion over the next three years.
Ottawa will run a $21 billion budget deficit in the 2012-13 fiscal years, with overall spending set at $276 billion. The Tories aim to balance Ottawa’s books by 2015.
Opposition NDP Leader Thomas Mulcair said the deep cuts will hurt job creation.
“Instead they are slashing health care, they are slashing pensions. It’s a betrayal,” Mulcair told reporters. “In the long term, the continuation of these Conservative policies will leave the greatest economic, ecological and social debt in our history in the backpacks of future generations. That’s a result of the choices the Conservatives are making,” Mulcair said.
Liberal leader Bob Rae said the budget is “ignores environmental and economic problems and does not favour economic development in central Canada and they will suffer.”
Flaherty defended his budget saying, “We have no need to resort to the drastic cuts being forced upon some other developed countries today.”
Official Opposition Critic on Finance, Peter Julian, MP (Burnaby-New Westminster) said, “Instead of choosing flawed F-35s, costly mega-prisons while the crime rate is going down, and breaking their electoral promise with reckless and unnecessary cuts to OAS, the Harper government should focus instead on the real priorities of Canadian families and work to improve public services, develop a jobs plan, strengthen pensions, and make life a little more affordable.”  Julian added, “The budget outlines the Conservative plan to raise the OAS eligibility age from 65 to 67, forcing seniors to work two years longer to make ends meet. It also unilaterally changes the funding formula for federal health transfers, short-changing provinces by a whopping $31 billion, opening the door to privatization and two-tier health care.”

People who travel outside of Canada for 24 to 48 hours will be able to return with $200 of tax-exempt goods. The previous limit was $50. Those who stay in the States longer than 48 hours can bring back $800, up from $400. The rules for same-day trips of less than 24 hours have not changed; travellers cannot bring back anything duty-free.
The same rules apply for Canadians who travel abroad.



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