After much speculation and concerns, Conservative Finance Minister Jim Flaherty released the 2012 federal budget
in the House of Commons Thursday. The budget made a number of cuts, both in jobs and federal funding for programs, but did not make any substantial tax changes for individuals.
The Department of Finance projects that with this budget the federal government will save $5.2 billion per year until 2015. The budget deficit, which currently stands at more than $33 billion, is forecasted to be wiped out by 2015 and ended with a surplus.
“In this budget, our Government is looking ahead not only over the next few years but also over the next generation," said Flaherty in his parliamentary speech
. "The reforms we present today are substantial, responsible and necessary. They will ensure that all across government we are focused on enabling and sustaining Canada’s long-term economic growth."
Here is a look at what was inside of the Economic Action Plan 2012
Cost saving measures & cuts
By the next election cycle, the federal government will return to a surplus by saving $5.2 billion per year. This will be done by making a significant number of reforms and cuts to the overall federal government.
- More than 19,000 federal public sector jobs will be cut over the next three years.
- CBC funding to be cut by 10 percent over the next three years.
- Government to sell some official international residences and downsize others.
- Duty-free cross-border shopping limits to be raised this summer to $200 for 24-hour shopping and $800 for more than 48 hours.
- Governor General to officially start paying incomes taxes, but will receive a wage increase.
- Atlantic investment tax credit to be ended.
One of the biggest news stories hitting the front-page of newspapers the morning after the budget was released is that further production of the one-cent coin will end as of this autumn. The penny will still hold value and be used in commerce. It currently costs 1.6 cents to produce the penny.
“The penny is a currency without any currency in Canada," Flaherty told reporters Thursday after the budget was released, reports the Toronto Star
. "So, I say to everyone, all of you here: free your pennies from their prisons at home and those jars they’re in and give them to charity.”
By the end of each year, the federal government will save $11 million.
Many nations around the world have conducted similar actions. Finland, Sweden, Norway, Australia, New Zealand and others got rid of the penny and there were no dire complaints from the general public.
Another reform introduced Thursday, which was expected since Prime Minister Stephen Harper announced changes to Old Age Security during a conference
in Davos, is the eligibility age for OAS. Starting 2023, the age of eligibility will be raised from 65 to 67, but will not affect anyone who is 54 or older as of Mar. 31, 2012.
"The Old Age Security program was designed for a much different demographic future than Canada faces today. In the 1970s there were seven workers for every one person over the age of 65. In 20 years there will be only two. In 1970 life expectancy was age 69 for men and 76 for women. Today it is 79 for men and 83 for women. At the same time, Canada’s birth rate is falling," explained Flaherty in his budget speech
“The result is that Canadians are living longer and healthier. There are fewer workers to take their place when they retire. Canada has changed. Old Age Security must change with it, to serve the purpose it was intended to serve. ”
Other reforms include:
- Public servants to pay more into pensions under the 50/50 formula.
- Retirement age for public servants to be raised from 60 to 65 for people hired in 2013.
- Katimavik youth program to be eradicated.
- Changes to innovation incentives - $500 million in savings for direct grants and venture capital.
What stays the same?
Although the Tories introduced a series of measures to grow the economy and to find savings in overall activities of the federal government, there were a number of aspects that remained unchanged in this year's budget.
- The number of personnel in the Canadian Forces remains at 68,000 and reserves will stay at 27,000.
- Alcohol and tobacco rules to remain unchanged
- Personal taxes will stay the same.
- A one-year extension of hiring credit for small business owners.