Reacting to criticism that Ottawa is running up huge surpluses on the backs of over-taxed Canadians, the federal government tabled the Surplus Allocation Act in parliament today. On the surface, the plan sounds responsible and reasonable: Any leftover surplus will be divided into three parts: one part will be allocated towards debt repayment, one part towards social spending and one part towards tax relief.
Before we start dreaming of a big fat tax refund, there is a catch: the act merely addresses any unexpected budget surpluses. The government can always spend it all during the budget and ensure that there isn’t anything left over for tax relief. Now, they can claim that they are cutting taxes, without actually having to do it! Very clever!
Even if the government does post a huge surplus like it did during the last fiscal year ($9.1 billion in surplus versus the budgeted $1.9 billion), it won’t translate into much of a tax relief. Let’s do the math: the unexpected surplus would be $7.2 billion. Subtracting the $3 billion contingency reserve and dividing the rest in three parts leaves us with $1.4 billion. Since there are about 15 million taxpayers, each of us can expect a princely sum of $93.33 back. What can I say? It is certainly not enough to cover the tab for a pizza dinner.