What Does the Proposed 2015 Balanced Budget Mean to the Canadian Tax Payer?

2015 Balanced budget

It is a great thought and sense of relief knowing that the budget for our country will be in balance, and not only that there are strong indicators that it will have a $6.4 billion surplus during 2015-16. So are the tax payers going to derive any benefits from this?   Does this also mean that our government is going to maintain a balanced budget going forward?

First we need to look at how did we manage to get a balanced budget in the first place?   We all assume this was based on the wise spending and responsible financial management of our government. As taxpayers we were all prepared to make some sacrifices to ensure we got here.   So it seems like everyone did their part.

Now, it is the conservative government who sphere headed this feat of budget balancing, so now what happens if we decide to vote in another political party?   Is this going to undo all the good that has been done?   Also, was the timing of the balanced budget focused on making sure it took place in an election year?

This could have two effects on the way we vote in 2015.   It may be that we are totally impressed that the Harper government came good on its promise of a balanced budget, then we may be fearful that if we don’t vote them back in that another party may not be as astute at keeping us out of debt.   These are two very big considerations.

What we are forgetting about is though, that in the throne speech of 2013 there was talk about introducing balanced budget legislation.   This would mean that it becomes law, and we would think that any political party that comes in would be bound by those laws.   However, the law makers also have the power of changing the laws, so having laws in place to protect the budget is of no great comfort.   During the 1990’s Alberta introduced similar legislature but had to amend it because it headed into a poor economy, which put it back in the red once again.

Many tax payers are viewing 2015 as a year of relief when it comes to the government’s decisions.   Some are thinking that the lower gas prices are a sign of this. Without understanding how government finances really work, what looks to be good on the surface can really have side effects.   The dropping oil prices are one of these that could have a significant impact on the budget balancing, but according to Finance Minister Joe Oliver in spite of this they will still be able to come good on their promise of being in financial balance.

There have been some signs of tax breaks because of the progress that has been made in getting the budget out of the red.   These are the recent tax breaks, so if you are thinking that there is going to be some huge cuts to taxes in the future, it may not be as big as what you are expecting.   We have to keep in mind that not only was it a fight to get the country out of debt, but it will be an ongoing fight to keep it that way.

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Sam Seidman, CPA, CA, LPA
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