Canada budget brings changes to old age security; GG to pay taxes

REPRODUCED FROM THE CANADIAN BROADCASTING CORPORATION cbc.ca

Finance Minister Jim Flaherty delivered a budget today that cut less than the government warned, but didn't spare Old Age Security from planned changes while also taking on civil service and MP pensions.

The budget cuts $5.2 billion in spending over the next three years, at the low end of the $4 to $8 billion range Flaherty had prepared Canadians for.

Among the departments hardest hit by the cuts are the Department of Finance, the Privy Council Office - the civil servants who provide administrative support to the Prime Minister’s Office – as well as Transport Canada and the Treasury Board. National Defence lost the most money overall, with cuts hitting $1.1 billion by 2014-15.

Finance Minister Jim Flaherty says his 2012 federal budget is about jobs, growth and long-term prosperity, despite billions in spending cuts. (Adrian Wyld/Canadian Press)

Flaherty said the budget was created for the long-term and it offers few of the targeted tax credits his government usually includes.

Changes to the age of eligibility for OAS will start in April 2023, rising gradually to age 67 from 65 by Feb. 1, 2029, affecting those born after April 1, 1958. Those who choose to work longer will be able to defer their OAS for up to five years, giving them a higher pension later. And the government will start enrolling seniors automatically for OAS and GIS, rather than making them apply, a move the NDP suggested earlier this month.

CHARTCanada's deficits and surpluses from Pearson to Harper

There were also targeted moves to appease taxpayers, such as increasing the amount people can spend cross-border shopping before paying duties, which will bring the limits into line with those of the U.S. Under the measure, Canadian travellers will be able to bring back $200 in goods after 24 hours abroad and $800 after 48 or more hours outside the country as of June 1, 2012. The current limits are $50 after a day, $200 after two days, up to $700 for a week.

And Canadians will lose the iconic but costly penny, as the Mint stops production before next fall. It can still be used, but no more will be introduced into circulation.

Some other measures in the budget:

• The governor general will start paying income taxes, but the salary will be increased to cover the difference.
• Canadians will be allowed to take more temporary work before the government claws back Employment Insurance payments.
• Ottawa will align its income assistance program with the provinces for on-reserve First Nations workers and encourage job training.
• People who applied to come to Canada under the Foreign Skilled Worker program will get refunds for their $400 application fee.
• New categories will be added to a list of recognized foreign qualification jobs, including licensed practical nurses, doctors and teachers.
• Elections Canada funding will be cut by $7.5 million a year, starting in 2012-13.
• Foreign aid and international development assistance across several departments and agencies is being cut by $377 million by 2014-15, with the Canadian International Development Agency to bear the brunt of the cuts at $319.2 million.
• The Canadian Coast Guard will get $5.2 billion over 11 years.

The CBC also got hit, with its base funding cut 10 per cent over three years, meaning a reduction of $115 million by 2014-15. But an annual $60 million programming top-up has been folded into the base funding to which the 10 per cent cut applies.