B6 COVERSTORY O THEGLOBEANDMAIL| SATURDAY,OCTOBER19,2019
Economy: Nomattertheirdifferences,eachpartyis
countingonnewrevenuestreamstomakeanimpact
A negative
shock could
decimate
federal books;
already, the
major parties
plan to run
deficits over the
next four years.
Weighing policy
choices has
rarely seemed
as complicated,
or as fraught.
However it
shakes out,
here’s what
the next
government
is up against,
and how
the national
parties intend
to face those
challenges.
The front-runners have made a direct
pitch to Canadian wallets.
The Conservatives have proposed a
“universal tax cut,” a gradual lowering of
the rate on taxable income below
$47,630, from 15 per cent to 13.75 per cent.
This would cost in excess of $6-billion by
2024-25, the first fiscal year of a second
Conservative mandate.
Meanwhile, the Liberals have proposed
raising the basic personal amount – or,
what you can earn without paying taxes- to $15,000 by 2023, from the current
$12,069. That would cost nearly $6-billion
by the final year of a second Liberal term.
Broad-based measures such as these
are preferable to “targeted incentives that
just add more complexity to the [tax]
system,” says Jack Mintz, president’s
fellow at the University of Calgary’s
School of Public Policy.
Still, niche offerings are found in
spades. The Conservatives would rein-
state fitness and arts credits for kids,
along with those for public transit passes.
The Liberals would boost their Canada
Child Benefit for children under the age
of 1. The NDP would double the home
buyer’s tax credit to $1,500. And the
Greens would increase the tax credit for
volunteer firefighters and create one for
renovating heritage buildings.
And that’s just the shortlist. All told,
new tax cuts and credits will cost the
next government billions in revenue,
while new programs will add billions
more in new spending. That means
deficits for some time to come.
Each party, though, is counting on new
revenue streams to make an impact.
Notably, parties to the Tories’ left have
embraced various taxes targeting high-
income Canadians and corporations. The
NDP, for instance, would impose a 1-per-
cent annual tax on wealth above $20-
million. It would also raise the portion of
capital gains subject to tax, to 75 per cent
from 50 per cent. The Greens would go a
step further, taxing all capital gains. The
Liberals would impose a luxury tax of 10
per cent on purchases of cars, boats and
personal aircraft above $100,000.
Where does that leave Corporate Cana-
da? For years, it enjoyed a relative tax
advantage over the U.S., but that was
wiped out by President Donald Trump.
The NDP and Greens would deliver an-
other blow, with a hike on corporate tax
rates. It’s not a plan the Liberals and
Conservatives would match.
However, the Conservative platform
includes an olive branch to small-busi-
ness owners, who vocally opposed tax
changes brought in by the Liberals. For
one, the Tories would restore access to
the small-business tax rate for those
companies with more than $50,000 in
passive investment income in a given
year. Further, spouses over the age of 25
would be exempt from restrictions on
income splitting.
There is, however, one area of broad
consensus: cracking down on Silicon
Valley.
“It makes no sense that if I get stream-
ing services from Bell and Rogers, I pay
HST or GST, but if I buy Netflix streaming
services, I don’t,” says Mr. Mintz, noting a
digital-services tax is a “slam dunk”
move.
The Liberals would go a step further,
imposing a 3-per-cent tax on the revenue
of companies that sell digital advertising
and user data, such as Google parent
Alphabet Inc., and Facebook Inc. The
Tories would match that rate, targeting
the “largest companies” that offer social-
media platforms, search engines and
online marketplaces in Canada. They
project it would raise $2.5-billion over
five years.
Should Canada levy what amounts to
a corporate tax on U.S. tech firms, “I
think we’re going to be dealing with
potentially a very angry U.S.govern-
ment,” Mr. Mintz says. “It could invite
tariffs.”Whoshouldpay
highertaxes?
Whoshouldn’t?
THEGLOBE ANDMAIL, SOURCE:CANADAREVENUEAGENCY60%50403020100
$45,916
or
less$45,917
to
$91,831$91,832
to
$142,353$142,354
to
$202,800$202,801
or
moreDistributionofindividualCanadiantaxfilersbytaxbracket
For 2017 year‘Youneedapolicythat’sgoingto
drivechangesinAlberta,butyoualso
needtohaveapolicythatdoesn’t
imposedisproportionatecosts.’
No doubt, Alberta is suffering.
Five years after the oil-price collapse, the province’s
economy has yet to fully recover, and its resource sector is
a leaner version of what it was. As such, there’s a vocal
contingent of Albertans who feel isolated – even aban-
doned – at the federal level, and would like a little help
from pro-pipeline politicians.
At the same time, climate change has never been a
bigger issue with the wider electorate. When asked by
Nanos Research in September what issue would most
influence their vote, Canadians mentioned the environ-
ment most often.
The result is widely divergent energy policies, each
playing to a party’s base, and each likely to create its own
problems.
At one end, the Conservatives would scrap carbon pric-
ing, remove GST from home energy bills and repeal Bill
C-69, the review process for resource projects under federal
jurisdiction. In place of a carbon tax, there would be “emis-
sions standards” for major industries, although details are
limited. The Tories have also proposed tax credits for
homeowners undertaking energy-saving renovations.
Ultimately, the Tories say their policies would lead to
fewer emissions – a claim that’s raised some eyebrows.
“Every single policy [Mr. Scheer has] proposed is reducing
the incentives to reduce emissions,” says Andrew Leach, an
energy economist at the University of Alberta.
At the other end is the Green Party: Ban all fracking.
Shut down Alberta’s oil sands over the next 10 to 15 years.
End fossil-fuel subsidies. And cancel the Trans Mountain
pipeline expansion.
“You need a policy that’s going to drive changes in Al-
berta, but you also need to have a policy that doesn’t im-
pose disproportionate costs,” Mr. Leach says.
For its part, the Liberals have set deeper climate commit-
ments, pledging to hit net-zero emissions by 2050. They
will invest every dollar earned from the Trans Mountain
expansion into clean-energy projects and plant two billion
trees. The Liberals will also keep their carbon price in place- all but ensuring that federal-provincial relations remain
frosty. Further, the Liberals are in danger of missing their
2030 targets,government figures suggest.
Like the Greens, the NDP would cancel the Trans Moun-
tain expansion and end fossil fuel subsidies. Its emissions
targets are more aggressive than the Liberals’, and it aims
for net carbon-free electricity in just more than a decade.
“I think both [the Greens and NDP] haven’t accounted
for what the federalgovernment can and can’t do,” says Mr.
Leach, pointing to B.C. as one jurisdiction that could push
back.
“The idea that we can eliminate hydraulic fracturing
within 10 years and [have] no LNG facilities – ban, ban, ban - I don’t even think you’re going to get Premier [John]
Horgan to sign off on that.”
HowdowesupportAlbertawithout
bludgeoningtheenvironment?
THEGLOBE ANDMAIL, SOURCE:ENVIRONMENTANDCLIMATE
CHANGECANADAGreenhousegasemissionsbyregion
megatonnes of carbon dioxide equivalent250200150100500Alta.Ont.Que.Sask.B.C.Man.Atlantic
provincesTerritories1990
2005
2017FROMB1