Eco­nomic plan doesn’t hit ‘panic but­ton,’ NDP says

Hik­ing cor­po­rate taxes, ax­ing planned break for in­di­vid­u­als key to bal­anced books: party

Toronto Star - - FRONT PAGE - JOANNA SMITH, LES WHIT­TING­TON AND BRUCE CAM­PION-SMITH OT­TAWA BUREAU

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.

FRED CHARTRAND/THE CANA­DIAN PRESS

NDP can­di­date Peggy Nash, with NDP can­di­date An­drew Thom­son, said the plan is con­sis­tent with party val­ues.

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