Today, Prime Minister Stephen Harper gets his legacy budget.
Finance Minister Joe Oliver releases a fiscal plan at about 4 p.m. Ottawa time that will end a seven-year run of deficits just in time for October elections, as the governing Conservatives prepare to run on their reputation as fiscally responsible tax-cutters.
Harper’s almost decade-long, three-term record of wholesale tax cuts had been marred by the run-up of debt totaling almost C$150 billion ($123 billion) since the 2008-2009 recession, forcing him to spend the past four years squeezing federal operating budgets to shore up the government’s fiscal credibility ahead of the vote.
“Canadians believe the Conservatives are strong on restraining government spending and balancing the books,” said Nik Nanos, an Ottawa-based pollster and president of Nanos Research Group. “To do well in the next election it is imperative they deliver on that.”
To press the point, Oliver today will wear a pair of New Balance sneakers while delivering the fiscal plan to parliament, keeping with tradition of finance ministers wearing new shoes on budget day.
At stake for Harper, 55, is the chance to become one of the country’s five longest serving prime ministers. Another win would mark the first time in more than a century a party leader has won four straight elections.
He’s being challenged by Liberal Party leader Justin Trudeau and Tom Mulcair of the New Democratic Party.
According to polling aggregator threehundredeight.com, the Conservatives hold a slight lead with about 32 percent support, compared with 31 percent for the Liberals and 22 percent for the NDP.
Tax cuts have been the mainstay of Harper’s run as prime minister, with tax revenue in 2011 and 2012 falling to 11.5 percent of GDP, which according to Bloomberg calculations on Statistics Canada data, is the lowest since 1940. Had the federal government’s tax take been left at levels of 2006, the year Harper took power, federal revenue would be about C$35 billion higher annually.
The cuts have been broad-based, from lower corporate- and sales-tax rates, to boutique credits for everyone from hockey moms to firefighters.
Lowering taxes on companies has been among his most controversial measures, winning Harper plaudits from businesses and investors while opposition parties have criticized it as costly and ineffective.
Under Harper, “probably the most significant change, a positive one, is the lowering of the corporate tax rate,” Albert Baker, global tax policy leader at Deloitte Canada in Toronto, said Monday in a telephone interview.
Harper held to his strategy even in the face of falling oil revenue. Late last year he unveiled an additional C$27 billion over the next few years in tax cuts and new benefits to families.
Yet much of Harper’s tax agenda has been financed by borrowing, threatening to erode some of the government’s fiscal credibility and opening him to further opposition attacks. The push for balance meanwhile has come at the expense of a slowing economy feeling the pinch of tighter government spending.
“Mr. Harper squandered Canada’s fiscal security,” Ralph Goodale, a Liberal Party lawmaker and former finance minister, said in an April 14 speech in Ottawa. “The recession made it worse, but it was Stephen Harper who made us vulnerable in the first place.”
The NDP and Liberals are criticizing Harper’s tax cuts as fiscally reckless, doing little to boost jobs and growth and good only for the well-off. Both parties are pledging to reverse some of those cuts if they take power.
Harper and Oliver counter those arguments by saying their goal is to give taxpayers back their money.
“If the other guys want to tell you they are going to take it away, good luck to them selling that message,” Harper said at a March 18 press conference. “Canadians want lower taxes, they don’t want higher taxes for their families.”
With today’s fiscal plan, he’ll seek to show he can do that while keeping the nation’s finances in the black.