The NDP says it can raise $130-billion in new revenue over four years by hiking taxes on corporations, high-income Canadians and by closing offshore tax loopholes.
The NDP released its costed platform Friday as advance polls open across the country.
At an event in Ottawa, NDP Leader Jagmeet Singh unveiled his party’s detailed costing plan for how his party would pay for its big-ticket spending promises in areas like national pharmacare and billions for affordable housing and public transit.
“We know we can do these things. We know we can invest in housing and make these choices. We can also ask the wealthiest to pay a little bit more so we can make these investments in people,” Mr. Singh told reporters.
The NDP’s plan involves raising the corporate tax rate by three percentage points, increasing the tax rate on income above $210,371 from 33 per cent to 35 per cent and numerous efforts to eliminate corporate tax write offs and close avenues for offshore tax avoidance.
When asked about the prospect of wealthy Canadians using the help of accountants to help skirt his proposed tax hike, Mr. Singh said it is “a real fear that people have raised,” but added that his party was advised it would cost more to try to hide money than it would be to pay the tax.
The NDP platform includes a line comparing its numbers to the Liberal Party platform. The figures show an NDP government would run smaller deficits than what the Liberal Party is proposing in its platform.
The main difference between the two party platforms is the size of new spending and tax increases. The NDP’s four-year spending plan of $130-billion is more than double the $56.9-billion proposed by the Liberals. The NDP’s plan to raise $130-billion in new revenue is more than five times the $25.4-billion the Liberals plan to find through tax increases and spending reductions.
However, the NDP’s fiscal plan totals are less than half the size of what the Green Party is proposing. The Green platform promises $293-billion in new spending over four years and $288-billion in new revenue over that time.
The NDP’s revenue-raising plans are supported by individual estimates prepared by the Parliamentary Budget Officer. However most of those PBO reports caution that there is a high degree of uncertainty when predicting revenue gains from higher taxes on the wealthy and corporations, because research shows that such policies tend to generate accounting efforts to avoid paying the higher taxes.
For instance, one PBO report analyzes the NDP’s plan to raise the portion of capital gains income – such as the profit earned from buying and selling stocks or investment properties that are not a primary residence – that is taxable from 50 per cent to 75 per cent on corporations and individuals.
The PBO said this measure alone would raise over $8-billion a year in new federal tax revenue. However it also cautioned that such calculations are challenging.
“This estimate has high uncertainty due to the likelihood of aggressive tax planning and evasion,” the PBO states. “Tax literature suggest that higher income individuals are more responsive to tax policy changes. Depending on the timing and final design of this policy, there could be significant volatility in personal and corporate income tax revenues particularly in the short term.”
In an effort to acknowledge that uncertainty, the NDP offers two sets of numbers: one that set asides aside about $20-billion over four years as a contingency fund in case those revenue projections fall short, and then a bottom line that does not include the contingency.
Under both scenarios, the federal debt-to-GDP would decline each year.
Including the contingency, the NDP would add $21.6-billion in deficit spending above the PBO’s projections for the status quo. In contrast, the Liberals proposed $31.5-billion in additional deficit spending over four years.
The Institute of Fiscal Studies and Democracy, which has been assessing the fiscal credibility of election platforms, found that the NDP platform costing merited an overall “pass” on realistic economic and fiscal assumptions and responsible fiscal management and a failing rating with respect to transparency. The group said the NDP costed platform should have been released before the official debates and well before advance polls opened.
Mr. Singh also faced questions about the fate of the Trans Mountain pipeline under a New Democratic government, which the Liberal government purchased last year for $4.5-billion. He said that he is opposed to the pipeline but would have to wait to decide whether to shut it down until his party forms government.
“What do we do with it? It’s a complicated question. I wouldn’t have bought it and I’m really clear on that. I definitely don’t believe in expanding it. I’m clear on that. What we do with the asset is something that is kind of confusing,” he said.