TEMPORARY GST RELIEF PART OF MACKAY PLAN
Conservative leadership candidate Peter Mackay has released his plan for economic recovery and job creation coming out of the COVID-19 pandemic and it includes the idea of reducing or eliminating the GST temporarily for hard-hit sectors such as restaurants and the tourism industry.
The plan, announced on Wednesday, puts some policy ideas on the table in a leadership race that has seen relatively few of them. That’s largely because of the pandemic, which disrupted the race in March and April and caused the cancellation of multiple scheduled debates. The party still plans to hold debates, but it has not yet announced any dates.
Erin O’toole — the other frontrunner in the race — is also set to introduce a plan later this week for Canada’s recovery from the pandemic and his campaign says it will soon roll out a full policy platform.
Mackay’s economic plan has eight sections but it contains little detail about the policies and does not include any costing.
“Justin Trudeau’s response to COVID-19 has been to open the financial floodgates for individuals, but he has failed to provide the supports and conditions that employers need to keep jobs alive,” Mackay said in a statement. “As Prime Minister, I will move quickly and decisively and focus on areas where Canada can regain its global leadership in natural resources. Canada will become a technology powerhouse of the north and a place where advanced manufacturing provides high-paying, sustainable jobs. Our tax system will be transformed from a hindrance to a driver of job creation and growth.”
Many of the ideas in the plan are standard Conservative positions, including repealing Bills C-69 and C-48 (Liberal legislation on environmental reviews and tanker bans), scrapping the federal carbon tax, rejecting Huawei’s participation in Canada’s 5G network, and rolling back reforms the Liberals made to small business tax planning practices.
The plan includes a section on getting government finances “under control,” but it is a vague goal with no specifics attached. The section promises to “roll back special powers given (to government) under COVID-19,” “control growth in government bureaucracy,” and “put Canada on a path to return to balanced budgets,” but it does not provide a timeframe for balancing. A campaign spokesperson said it’s too soon to say until the full effect of the pandemic is known.
However, Mackay floats some new ideas in sections on boosting the small business sector and stimulating economic recovery.
Mackay says he would “assess temporarily reducing or eliminating the GST for some of the hardest-hit industries such as restaurants, hotels and tourism businesses as well as raising the meal and entertainment expense deduction from 50 per cent to 100 per cent.” The GST rate is currently five per cent on sales, after having been reduced from seven per cent by Stephen Harper’s Conservative government.
Another policy idea is to allow Canadians to make a $10,000 tax-free withdrawal from RRSPS for two years. “This creates no bureaucracy, no government debt and lets people decide how to spend their money,” the plan says. This proposal was earlier pitched by the C.D. Howe Institute’s Alexandre Laurin and the University of Waterloo’s Nick Pantaleo as an “an immediate and cheap source of financial assistance” for Canadians suffering from the pandemic’s economic fallout.
In the small business section, Mackay also proposes to “allow small business owners to invest their RRSP funds into their enterprises.”
This is all on top of another RRSP policy Mackay promoted in March, which is to allow first-time home buyers to withdraw unlimited money from their RRSP for the home purchase and then never have to pay it back. Currently, Canadians can withdraw up to $35,000 from their RRSP to buy a home, but repayments must begin two years later and it has to be fully paid back within 15 years. The section also promotes having Canada adopt the NATO target of spending two per cent of GDP on the military, as that would have research benefits and create “more jobs in our aerospace, defence and technology industries.”
Voting in the leadership race will take place this summer by mail-in ballot, and is scheduled to conclude Aug. 21. Candidates are Mackay, O’toole, Leslyn Lewis and Derek Sloan.