Economic plan doesn’t hit ‘panic button,’ NDP says
Hiking corporate taxes, axing planned break for individuals key to balanced books: party
OTTAWA— The New Democrats intend to tap corporations and well-off Canadians to help pay for increased spending on public transit, health care and families and keep Ottawa’s books in the black.
New Democrats rolled out the numbers behind their election platform Wednesday, pledging to cancel Conservative tax breaks for individuals and hike the corporate tax rate to fund its plan and ensure four years of budget surpluses.
“Instead of focusing on helping the wealthiest Canadians as Stephen Harper is, the NDP will redirect these dollars to better priorities,” NDP candidate Andrew Thomson (Eglinton-Lawrence) told a news conference in Ottawa Wednesday.
New Democratic Party Leader Thomas Mulcair was in Calgary preparing for the Globe and Mail debate on the economy Thursday night.
The release of a seven-page booklet sketching out — in broad terms only — proposed spending and revenue during the four years of its first mandate was one way to help silence critics and reassure voters.
“This plan does stand in sharp contrast to the approach of our opponents,” Thomson said. “When it comes to our fiscal plan, we will not hit the snooze button as Stephen Harper has on the economy. And we will not hit the panic button like Justin Trudeau has on spending. We will take a prudent and responsible approach to balancing the budget."
The fiscal plan is as much a political document as it is a financial outline, as the NDP has always faced an uphill battle convincing voters a party that once embraced socialism and rejected free trade could be trusted with the economy.
Scrutiny has intensified in recent weeks as Mulcair has stuck by bigticket promises such as a $15-a-day national daycare plan while also committing to balanced budgets.
A big chunk of the needed revenue will come from corporations as the NDP vows to raise the corporate income tax rate to 17 per cent from 15 per cent. The party says that will bring in an extra $3.7 billion a year.
The resulting increase in federal tax revenues would be the largest component of a series of tax increases and savings that the party says would allow it to run a budget surplus in 2016 of $4.1 billion (including a $1billion rainy day fund), Thomson said.
The Conservatives have steadily lowered the corporate tax rate, which was 21 per cent when they came to power in 2006. After the proposed increase to 17 per cent, the combined federal-provincial corporate income tax rate would still be below the rate in the United States, the NDP said.
The party also expects to get a further $2.2 billion a year by rolling back the Conservatives’ incomesplitting plan, although the NDP says it will preserve income-splitting for seniors. That amount also includes savings realized by repealing the Tories’ pledge to double savings limits for tax-free savings accounts. Instead, the NDP says it would keep the TFSA saving limit at $5,500 a year.
The NDP has also promised a gradual reduction of the small business tax rate, beginning by cutting it to 10 per from 11 per cent, a move the party said Wednesday would cost Ottawa $375 million in foregone tax revenues in 2016.
Liberal candidate John McCallum, a former chief economist at the Royal Bank of Canada, accused the New Democrats of overestimating the revenue to be gained by the corporate tax hike while downplaying its effects on the business environment and potential for job losses.
And he said that promised spending on child care and infrastructure appears delayed.
“Mulcair has led Canadians to believe that help is on the way immediately. In fact NDP promises are back loaded . . . delayed for many years and significantly underfunded,” McCallum said.
“The whole costing plan is a mirage.”
The Conservatives charged that the corporate tax cut will put at least 150,000 jobs at risk.
“This will have huge repercussions for our economy,” the party said in a statement.
The Tories also noted that the NDP’s fiscal document is silent on their carbon-pricing plans, though an NDP official said Wednesday it would be revenue neutral.
Jim Stanford, an economist with Unifor, the union also representing Toronto Star employees, thinks the corporate tax hike is a modest increase that will have “no measurable impact.”
“I think an increase on that scale is modest, feasible and will help to fund some important social projects,” said Stanford.
But Jack Mintz, an economist at the School of Public Policy at the University of Calgary, called the increase “bad policy” that he predicts will lead to the loss of 150,000 jobs in Canada, with little to show for it.
“It is going to encourage companies to shift income outside of Canada to other jurisdictions, so you will get less profits here and that means the revenue pick-up you get is never as much as you think,” said Mintz.
The NDP said two-thirds of the platform had been released and that future campaign promises would fall within the spending outlined in the fiscal plan.
Yet to come, for example, is an announcement of increased foreign aid but NDP officials cautioned that it will fall short of the international goal of 0.7 per cent of gross national product.
“Obviously we need to work within the context of the current fiscal environment,” Thomson said.
Indeed, NDP candidate Peggy Nash (Parkdale-High Park) acknowledged the party’s election plan might not contain every promise her caucus had made to Canadians over the past few years, but said it was consistent with their values and vision.
Meanwhile, the Liberals dropped Alberta candidate Chris Austin, who was running in Sturgeon River-Parkland, after past comments brought to their attention were found to be “irreconcilable with the values of the Liberal Party of Canada,” the party said in a statement, but did not elaborate on those past comments.