News

Federal budget hikes tobacco tax, sets up surplus

Finance Minister Jim Flaherty delivered a 2014 budget that calls for another deficit this year before a healthy surplus in 2015. - Government of Canada
Finance Minister Jim Flaherty delivered a 2014 budget that calls for another deficit this year before a healthy surplus in 2015.
— image credit: Government of Canada

A new search-and-rescue tax credit honouring "quiet heroes" like revered North Shore rescue leader Tim Jones who died last month is among the measures unveiled by the federal government Tuesday as part of the 2014 budget.

Eligible ground, air and marine search-and-rescue volunteers will be able to claim a 15 per cent non-refundable credit on up to $3,000 if they perform at least 200 hours of service a year.

It's largely a stand-pat budget that modestly shrinks overall federal spending, records a $2.9-billion deficit this year and sets up a projected $6.4-billion surplus in 2015 when the the Conservatives are expected to seek re-election.

Federal finance minister Jim Flaherty conceded some may see the budget as "boring" but added he takes that as a compliment.

There are no notable tax cuts, but the the tobacco tax is going up, adding $4 to the price of a carton of cigarettes or about 40 cents to a $10 pack. That will generate $685 million extra per year, while more than $90 million over five years will help the RCMP battle tobacco smuggling.

The Harper government released few details in the budget on what it will do next on two fronts of concern to consumers – its past promises to inject competition into the mobile phone market and to reduce the temptation of cross-border shopping.

Flaherty said Ottawa will temporarily cap domestic wireless roaming rates until there's a decision by regulators on further rules to protect customers.

He also pledged legislation to address the price gap between cheaper consumer products in the U.S. and what Canadians pay at home.

How that will work is unclear, but the minister told reporters the Competition Bureau would be empowered to investigate and punish unjustifiable price discrimination.

"When Canadian families spend their hard-earned money, they should be confident that they are being treated fairly in a competitive marketplace," he said in the budget speech.

Ottawa reduced tariffs on baby clothes and some sports equipment last year, but is still assessing whether retailers actually passed those savings along to customers.

Flaherty also pledged $1.5 billion over 10 years for post-secondary research and innovation in areas that create long-term economic growth.

Job training continued to be a major theme, as the Tories seek ways to fix the skills mismatch between what the unemployed can do and what employers need.

Flaherty said the contentious $300-million-a-year Canada Job Grant program will roll out April 1, regardless of whether provinces and territories agree to participate.

In law-and-order policy measures, the government signalled it will regulate the use of Bitcoin virtual currency to thwart its criminal use for money laundering or financing terrorism. It also pledged to create a DNA-based missing persons index.

Savings in the budget are to largely come from charging federal retirees more for health benefits and through a freeze on departmental spending.

Canadian Taxpayers Federation director Greg Thomas said this year's budget may turn out to be balanced already since Flaherty inserted a $3-billion "revenue adjustment for risk" provision that gives padding that may not be used.

He noted Ottawa is forecasting $30 billion in cumulative surpluses over the next five years, setting the stage for promised tax cuts starting next year.

Federal government budget video

We encourage an open exchange of ideas on this story's topic, but we ask you to follow our guidelines for respecting community standards. Personal attacks, inappropriate language, and off-topic comments may be removed, and comment privileges revoked, per our Terms of Use. Please see our FAQ if you have questions or concerns about using Facebook to comment.

Community Events, July 2014

Add an Event

Read the latest eEdition

Browse the print edition page by page, including stories and ads.

Jul 17 edition online now. Browse the archives.