Sav­ings key to Grit fis­cal plan

Would axe tax breaks and tar­get eva­sion

SundayXtra - - VOTE CANADA - By Jor­dan Press

OT­TAWA — The fed­eral Lib­er­als say they can add al­most $146.5 bil­lion in new gov­ern­ment spend­ing and tax cuts over the next four years, and still bring the bud­get back to bal­ance with a sur­plus of about $1 bil­lion by the end of a four-year man­date.

To get there, they say, a Lib­eral gov­ern­ment would seek out bil­lions in sav­ings from elim­i­nat­ing a num­ber of tax breaks, cut­ting back on gov­ern­ment spend­ing and crack­ing down on tax eva­sion.

The party’s most prom­i­nent fi­nan­cial lieu­tenants re­leased the full cost­ing of the Lib­eral cam­paign plat­form Satur­day, out­lin­ing the bil­lions in new spend­ing and rev­enues that would be in store for the next four years should a Lib­eral gov­ern­ment be elected Oct. 19.

They didn’t go as far as to out­line the tax cred­its and ben­e­fits that would go should they win, but they did hint that it would mean the end of bou­tique tax breaks that help Canada’s top one per cent of earn­ers — in par­tic­u­lar a stock- op­tions tax break for CEOs.

Noth­ing, how­ever, is off the ta­ble as the Lib­er­als scour the fi­nan­cial ta­bles for a com­bined $6.5 bil­lion in sav­ings over four years from gov­ern­ment pro­grams and tax breaks.

“We are con­fi­dent in our plan,” said Lib­eral can­di­date John McCal­lum, a for­mer fi­nance critic and Royal Bank chief economist.

The plan is based on the latest avail­able fig­ures from the Par­lia­men­tary Bud­get Of­fi­cer and the Bank of Canada, he added, but also al­lows for a num­ber of eco­nomic vari­ables, such as low oil prices and a low Cana­dian dol­lar.

“There are many coun­ter­vail­ing forces in both di­rec­tions that may make such fore­casts higher or lower, and we would ac­count for that,” McCal­lum said.

“We have al­ready put in pru­dence that could off­set a num­ber of fac­tors that could arise.”

The prom­ise of a bal­anced bud­get could easily be jeop­ar­dized if any of those mea­sures should fail to bring in the rev­enue the Lib­er­als are bank­ing on — and there are still more spend­ing prom­ises to come.

Lib­eral Leader Justin Trudeau has to an­nounce about $7.5 bil­lion in spend­ing prom­ises for the next four years that could touch on what the party plans to do for health-care spend­ing and cli­mate change.

The NDP, mean­while, dis­missed the en­tire plan as based on lit­tle but “aus­ter­ity, un­funded and bro­ken prom­ises” and “bad math.”

Fo­cus­ing in on the Lib­eral pledge to hunt down sav­ings in gov­ern­ment spend­ing, NDP can­di­date An­drew Thom­son — a for­mer Saskatchewan fi­nance min­is­ter — said the Lib­eral plan would lead to “deep cuts in the ser­vices that Cana­di­ans rely on.”

The Con­ser­va­tives seized on the $6.5 bil­lion in sav­ings the plan re­quires, warn­ing of po­ten­tial tax hikes that should make Cana­di­ans “hold onto their wal­lets.” Con­ser­va­tive can­di­date Pierre Poilievre said the Lib­er­als couldn’t “pull $6.5 bil­lion out of thin air,” and they would have to find the money through cuts or tax in­creases.

The plan calls for a deficit of just un­der $10 bil­lion in the next two fis­cal years, the re­sult of a plan to add more than $33 bil­lion in the next fis­cal year and $36 bil­lion the year af­ter in new spend­ing for in­fra­struc­ture projects and a new monthly child ben­e­fit.

The deficit drops to $5.7 bil­lion in year three, with the books creep­ing into bal­ance by the fourth year.

The Lib­er­als are hop­ing in­fra­struc­ture spend­ing in par­tic­u­lar helps prod eco­nomic growth in Canada to help in­crease tax rev­enues and pad gov­ern­ment cof­fers just in time for their promised bal­anced bud­get.

Vet­eran Saskatchewan Lib­eral Ralph Goodale, a for­mer fi­nance min­is­ter un­der Paul Martin, said it’s im­por­tant to note the plan — while in­clud­ing “man­age­able, mod­est deficits” — in­cludes a con­stantly de­clin­ing debt ra­tio and is de­signed to foster eco­nomic growth.

“Our ma­jor pol­icy thrust is in­vest­ing in growth,” Goodale said. “That’s the fun­da­men­tal thing that is so lack­ing in the Cana­dian econ­omy to­day.”

The party, how­ever, has not counted any of the ex­tra rev­enues from those in­vest­ments — known as a mul­ti­plier ef­fect — into their bud­get cal­cu­la­tions. Nor has the party counted any tax rev­enue the gov­ern­ment could ac­crue from the le­gal­iza­tion of mar­i­juana.

The plan also ex­hausts an an­nual con­tin­gency fund of about $3 bil­lion the fed­eral gov­ern­ment keeps on the books for un­fore­seen cir­cum­stances.

The Lib­eral plan wouldn’t bring the con­tin­gency back into play un­til the fourth year of its man­date, at which point it would start at $1 bil­lion — the amount the party is bud­get­ing for its sur­plus.

The Lib­er­als also say they would ex­pand the man­date of the Par­lia­men­tary Bud­get Of­fi­cer to al­low it to check the cost­ing of any prom­ises par­ties make dur­ing fed­eral elec­tions.


Lib­eral eco­nomic spokesper­sons John McCal­lum (from left), Jean-Yves Du­c­los, Ralph Goodale and MaryAnn Mi­hy­chuk with the party’s eco­nomic pol­icy pa­per Satur­day.

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