The oxymoron of "Government money"

Non-Canadian readers may be surprised by this article from the Toronto Star, which outlines how shameless the Harper government is in its zeal to buy this fall's election. This sort of thing is more or less par for the course here, but there's no doubt that the Harperites are taking it to a new level. Announcing the increase in child tax credits to take effect at the start of 2015, but then rolling up the increase so as to make a big deferred payment to the lucky recipients just ahead of the vote -- this week, in fact -- is fiendishly clever.

The author of the linked article, Carol Goar, is ferociously anti-Harper, which is a sine qua non if you want to work for the Star. Still. the article performs a useful service, even if it's depressing to acknowledge that this particular service is still needed. My late mother always believed that the government had money of its own to spend; maybe it doesn't say much about my skills as an economist that I could never quite convince her otherwise. If Harper's little scheme is successful, it will serve to prove that my mother's belief is still shared by a large proportion of the electorate. If Carol Goar can convince just a few voters that the money they are getting this week is coming from their fellow taxpayers, that would be a good thing.

There are, by the way, at least two other reasons why the Tories should be ashamed of their child tax benefit wheeze. First, the benefits are fully taxable in the hands of the recipients: a good chunk of the moolah that goes into your account this week will be spirited away again in the new year, when tax filing time comes around. Second, these benefits, and all the other largesse that the government is starting to spray about as voting day approaches, are undoubtedly pushing the Feds back into a budget deficit, especially with the economy so sluggish.

This means that the pre-election goodies are not a dividend for Canadians made possible by sound fiscal management, as the Tories would like to portray them: the Government is in fact giving away money it doesn't actually have.  Whether enough Canadians will wise up to that by election day, and deny Harper another term in office, is something we'll just have to wait and see.