OTTAWA -- Long the whipping boys of revenue-hungry governments, Canadian smokers are now the target of the Conservative crusade against the deficit.
The Tories are making a $700-million tax grab by what it politely describes in the 2014 budget as "restoring the effectiveness of the excise duty on tobacco products.''
In other words, it's boosting excise taxes on tobacco that will increase the price of a carton of 200 cigarettes by $4. The initiatives also essentially end the discount on smokes sold at duty-free stores.
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Finance Minister Jim Flaherty's budget predicts a deficit of $2.9 billion for the fiscal year. But Ottawa technically balanced the books when you take into account its $3 billion contingency fund. Flaherty said he didn’t want to push too aggressively, wanting a “nice clean surplus” next year.
Canada-U.S. Price Gap
The federal government says it will crack down on companies that charge consumers more for their products in Canada than in the U.S. Using a fictitious example, Flaherty said if Walmart charged Canadians more for Cheerios than it did Americans, and didn't have an explanation, like higher trucking costs, then they should be punished. (It's not clear how they are going to do this but they plan on giving the Competition Bureau more tools to do this and more details will be announced in the coming months).
'Made In Canada'
The federal government plans to develop a 'Made in Canada' branding program, work to establish more low-cost bank accounts and increase transparency on credit card merchant fees.
Public Service Cuts
The lion's share of spending cuts -- $1.5 billion -- will be targeted at the public service. The tories aim to cut $7.4 billion over the next six years from the public service compensation budget. Ottawa will drop its contributions to retired public servant health care plans from 75 per cent to 50 per cent.
Immigration Investor Program Scrapped
The federal government is scrapping the investor immigration program that allowed immigratns to "buy" their way into Canada with investment into the local economy. It was unclear initially whether the provincial investor programs will also be scrapped.
Credit Card Bills
The feds say they will ban banks from charging customers money to receive their credit card bills in the mail. Ottawa says it might do the same for wireless companies too.
Auto Industry Support
Ottawa said it will spend an additional $500 million for the Automotive Innovation Fund, essentially to bail out Chrysler, while announcing it is selling its stocks in GM, which it received when it bailed out the company in 2009.
Tobacco Prices Going Up
Ottawa plans to raise the cost of cigarettes by more than $4 on a carton of smokes. The cigarette tax would bring $685 million in new money next year.
The Conservatives are pressing ahead with the controversial Canada Job Grant program. The program covers up to $15,000 for training. When it was announced in Budget 2013, Ottawa said it would be funded in three ways split equally between the federal government, the province and the employer. But Ottawa hasn't been able to get an agreement with the provinces who are upset the federal government plans cut millions from their training budget and direct that cash towards this program.
Ottawa plans to create more than $100 million interest free loans through the Canada Apprentice Loan program, an expansion of the Canada Student Loans Program. It will also review the Youth Employment Strategy to provide real-life work experience in science, technology, engineering, mathematics and skills trade. The federal government says it will also dedicate more money towards internships. The budget includes a new Canada Apprentice Loan program, offering $4,000 interest free loans to students.
Ottawa will invest $305 million over five years to extend high-speed broadband to some 280,000 homes.
Tuesday's federal budget pushed $3.1 billion in planned capital spending off into the distant future, making badly needed new equipment on the Canadian military's shopping list little more than a wish list over the next three years. - CP
New Windsor-Detroit Bridge
Ottawa is giving a boost to southwestern Ontario's battered manufacturing sector with more than $1 billion in spending over the next two years to help the auto industry and build a new bridge to the U.S. at Windsor, Ont. The federal budget Tuesday called for spending $631 million over the next two years to help build a new Detroit-Windsor crossing. -CP
"This measure also includes corresponding increases in the rates of excise duty on other tobacco products," the budget states, citing cigars, chewing tobacco and fine-cut tobacco for roll-your-own cigarettes.
The government expects the anti-smoke move will increase federal tax revenues by $685 million in 2014-15 -- a major piece of the puzzle in Tory efforts to balance the books over the next two years.
The excise levies will be tied to the Consumer Price Index, and will be automatically adjusted every five years.
"Reducing tobacco consumption is an important health objective, and a key tool in achieving this objective is the excise duty on tobacco products," the budget says.
As the government cracks down anew on smokers, it's providing funding to initiatives aimed at cracking down on highly addictive opioids.
The Tories are committing $44.9 million over five years to expand the focus of the National Anti-Drug Strategy from illicit street drugs to prescription drug abuse as well.
"Canadian consumption of prescribed opioids has risen by 200 per cent since 2000," the budget document states. "Closely tied to this increase in usage is an increasing rate of prescription drug abuse."