INTEREST RATES: Lock in those rates now!

As federal Finance Minister Jim Flaherty did some housekeeping by tying up loose ends with Stimulus Budget II: The Final Chapter, he gave a gentle warning of a storm lying ahead.

Far more foreboding was former CIBC World Markets chief economist Jeff Rubin, as he recreated the image of that robot from the old TV show Lost In Space, arms flailing, warning: "Danger, Will Robinson!"

"While the Department of Finance might think we've still got another 12 or 15 months, capital markets may force them and other governments to hit the brakes sooner," Rubin told BNN TV.

He railed about impending spending cuts and tax increases, from the federal to the provincial and the municipal levels of government.

"Record low interest rates and record high budget deficits are not a marriage that'll last very long. I recommend you get your borrowing in before the government does its, because I think we're going to see record bond issuance, and interest rates move a lot more rapidly than has been factored into this budget plan."

Rubin warned homeowners about mortgage-interest rates.

"I'd lock in now before the big boys start borrowing, because while the Bank of Canada can control the money-market rate, the Bank of Canada isn't going to be able to control five-year money to the extent that governments are going to be borrowing like they are."

He also sees property taxes soaring when federal spending cuts shrink transfer payments to the provinces.

"I see all taxes going up, and I see spending not just at the federal level but at the provincial and municipal level being affected. If there are painful cuts to be made on the spending side, or tax increases, the provinces are going to be sharing it.

"Next budget, at the end of the day, we're going to see huge property-tax increases as this deficit gets laid down to lower levels of government."

Some measures were taken to level the playing field among businesses and individuals, such as allowing credit unions to be incorporated and compete federally.

As for personal finances, there are three new rules for the taxation of employee stock options.

Until the end of 2014, people exercising the purchase option at one point and selling the shares later at a lower price will be taxed on the sale proceeds, which saves taxes.

On the other hand, employees will not be able to exercise options and defer the taxable benefit until shares are sold at a higher price. And employees will be able to claim the stock option deduction only at time of share purchase, and not if they cash out their options with their employer.

The idea is to allow the employer to claim a corporate deduction or the employee to claim a stock-option deduction, but not both.

TD Economics said of the budget: "While the government provided some guidance as to how it will restrain non-transfer spending, much of the specifics remain to be fleshed out."

But as even the usually dour Rubin said: "It's good that we've at least acknowledged what lies ahead."

(prepared by Ray Turchansky/Vancouver Province)