In today’s part 2 of the Canadian Election Watch, I will be examining the Liberal Party’s tax goodies. You can check out yesterday’s first part focusing on the Conservative’s tax cut promises.

Increasing The Personal Tax Exemption
The basic personal amount of income exempted from taxation is $8,648 in 2005. Paul Martin and The Liberals promise to increase this amount to $10,000 over the next four years. Henry Choo Chong (CGA) states that this translates into approximately $500 of savings in an individual’s pocket, but does not elaborate on whether this is $500 per year, or over the four years. The increase will help all individuals in every tax bracket. My view: it’s going to be more compelling to split revenue with a spouse or pay family members if you are a small business owner! (Example: A small business generating $40,000 and spread it among 4 individuals, and you won’t have to pay a cent in taxes provided these individuals don’t have any other income sources.

RRSP Reform
The Registered Retirement Savings Plans are always fodder for The Liberals. They love to use it to show that they are doing something good for the Canadian people. This time, it just shows their lack of concern and innovation for the majority of Canada. The Liberals will increase the annual contribution limit to $22,000. This is hardly cause for celebration as more than two-thirds of Canadian can hardly scrape up enough to save up to half the current limit of $18,000! This is simply giving the well-to-do, the so called Liberal friends another way to shelter more money from taxation. Are The Liberals out of touch with what Canadians really need? The only good RRSP move of recent memory was the elimination of the foreign content rule. The Liberals won’t win me over with this type of policy.

Guranteed Income Supplement

Warning: The Editor has some controversial tangential opinions on this issue!
The Liberals continue their pledge to increase the Guaranteed Income Supplement (GIS) for seniors. Canada remains the envy of the world in terms of our senior social programs. However, what are we doing to keep these people in Canada? Many seniors are simply moving down south for much of the year, and still collect the GIS. It may not be a popular view, but I don’t believe that taking our tax dollars and spending it in another country’s economy serves the nation. I believe there should be a system (though however enforceable I do not know) to identify these situations and retain our tax dollars. But of course, if The Liberals did this, I would vote for them, but they will face the wrath of Canadian seniors spread throughout North America.

Childcare Credit
It says so in the classical political tax book that your tax policies should be geared towards the elderly and the infant. The Liberals are not breaking with tradition, making a crusade out of the long deserving Childcare Credit when they need support the most. Unfortunately, The Conservative agenda to un-restrict these credit uses have taken the wind out of the Liberal sail. I am still opting for a better solution that combines The Liberal’s checking system to prevent abusers and The Conservative’s simple approach. One day, this will be a valuable credit to my family. But how is the single young adult to judge these issues. I don’t have the qualified perspective to offer more insight.

Stay tuned for tomorrow’s last installment where we will review the New Democratic Party’s foray into financial policies