Welcome to star spangled Canada

Decked out in swanky new shoes, Federal Finance minister Jim Flaherty delivered his first budget. The government is weak — it controls only…

Decked out in swanky new shoes, Federal Finance minister Jim Flaherty delivered his first budget.

The government is weak — it controls only 125 seats in Parliament — so nobody expected Flaherty to be bold.

And he wasn’t.

Still, it suggests a direction. A troubling direction.

Flaherty’s is a birdshot budget — it hits many targets but doesn’t inflict much damage.

Unless, of course, you’re small and frail.

Flaherty did lower the GST, but that move benefits affluent people who spend money more than the nation’s poor.

Ottawa’s bottom-rung tax rate has been boosted to 15.5 per cent, up from 15 per cent. It is a seemingly small tax increase, but it will have a disproportionate impact on low-income Canadians.

And corporate taxes?

They drop two per cent, to 19 per cent.

As well, the federal capital tax gets scrapped in January, two years earlier than expected.

All of which stimulates the economy.

Good move?

Well, it’s getting a mixed reaction from financial experts.

“When you have an economy running at full capacity, maybe you can ask the question if it’s a good idea to fuel further this economy,” said Clement Gignac, chief economist at National Bank Financial.

And Craig White, the Royal Bank of Canada’s chief economist, suggested the additional stimulus could provoke another jump in interest rates, to 4.5 per cent from four per cent.

Again, that move will have a disproportionate effect on folks with the least money.

The tax breaks were twice as large as the new spending initiatives, said Flaherty.

Except that federal spending often goes towards improving the lives of the nation’s poorest people.

Like aboriginal Canadians.

The former Liberal government had planned to improve housing and basic infrastructure on native lands.

Flaherty erased the $5 billion promised through the Kelowna accord. Now, only $1 billion will be allocated to aboriginal housing.

Most of the increased federal spending will go towards jails, police and the military.

So there’s a clear thread in the budget.

Make life a little harsher for those on the margins; build jails, hire police and transfer federal resources to the wealthy.

Welcome to the new Canada, something eerily akin to today’s America. (RM)

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