March 15 (Bloomberg) -- Canada’s New Democratic Party would increase corporate income tax rates if it won power to invest in social programs while keeping sales and personal income taxes unchanged, its leader said.
Thomas Mulcair, speaking in an interview at Bloomberg’s headquarters in New York, said corporate tax cuts implemented by Prime Minister Stephen Harper’s government haven’t helped create jobs and have gone primarily to the largest companies such as Royal Bank of Canada.
Corporate income taxes were one of the main campaign issues in the 2011 federal election. Harper has cut the rate to 15 percent, from above 22 percent in 2007, a move opposition lawmakers have said wasn’t affordable at a time when the government was running deficits.
The biggest gainers “are the oil companies and the banks who didn’t ask for it and don’t need it,” Mulcair said, adding the governing Conservatives have “gutted the fiscal capacity of the state and we’re still running very, very high deficits.”
Lower corporate taxes helped fuel federal shortfalls that may be poised to top C$170 billion between 2008 and 2015, according to finance department projections released in November. Finance Minister Jim Flaherty said yesterday he will deliver a federal budget on March 21 that will eliminate the country’s deficit by 2015, primarily by controlling spending.
The additional revenue raised from the tax increases would be used for social programs to combat poverty, and to finance a reversal of the government’s plan to raise the retirement age for some pensioners.
Flaherty last year raised the eligibility for the Old Age Security income supplement to 67 from 65, with changes starting in 2023.
Flaherty criticized Mulcair for his comments, saying in a press release today the NDP policy would hurt “job creators at a time when the global economic climate is unstable and competition for business investment is fierce.”
Mulcair said he would not raise taxes for high-income earners because marginal tax rates in the country are already too high.
“Absolute guarantee it will never be part of my program,” he said. “It’s never been my policy and it never will be.”
Sales taxes also would not increase if he became prime minister because they hurt the poor disproportionately, he said.
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