The New Democratic Party vowed it would increase Canada’s corporate tax rate by two percentage points, and repeal some other tax cuts by Prime Minister Stephen Harper’s government, to finance its platform spending.
If it wins the Oct. 19 vote, the NDP would increase the corporate rate to 17 percent, from 15 percent, raising an annual C$3.7 billion ($2.8 billion) in additional revenue, according to a four-year fiscal plan released Wednesday in Ottawa. Total incremental revenue under the party’s plan would average C$7.5 billion over the next four years.
The NDP, the most left-leaning of the country’s three main parties and seeking to form government for the first time, is trying to convince Canadians that its pledges for new social spending won’t come at the expense of fiscal responsibility and a balanced budget. The Liberals, the NDP’s main opponent in seeking to unseat Harper, are financing their platform with deficits, claiming the nation’s economy requires the additional stimulus.
“We have a stable, long-term funding plan that will favor growth, affordable housing and jobs,” NDP lawmaker Peggy Nash said at a press conference.
The costing of its platform Wednesday, which is based on the Conservative government’s 2015 budget, was announced a day before leaders debate economic policy in Calgary, the heart of the Canada’s struggling oil patch.
The revenue-raising plan comes as the NDP -- which polls show is the top threat to unseat Harper -- moderates its socialist roots under Leader Tom Mulcair. The party, for example, is backtracking on a call to raise taxes on capital gains, even though its 2013 policy book proposed they be taxed fully as income. In addition to higher corporate taxes, the New Democrats have also pledged to close a stock option tax loophole for executives, while cutting the small-business rate.
The party projects it will continue to run surpluses of between C$3 billion and C$4 billion through the planning period.
Canada’s federal corporate tax rate has dropped steadily in recent decades. It was 28 percent in 2000 under a Liberal government, 21 percent in 2006 when Harper’s Conservatives took power and reached 15 percent in 2012. The combined corporate tax rate -- including provincial levies -- is 26.3 percent, second-lowest among Group of Seven nations, according to data from the Organization for Economic Co-operation and Development.
Mulcair is the only leader of Canada’s three major parties calling for a corporate tax increase and had said his proposed rate would be below the average of what it was under the Conservatives, which is 17.5 percent.
“We’re going to make sure that Canada’s largest corporations start paying their fair share,” Mulcair told reporters Tuesday in Lethbridge, Alberta.
Mulcair’s party has regularly held a thin yet persistent lead in the election campaign. According to the latest national averages compiled by polling aggregator ThreeHundredEight.com, the New Democrats have 32 percent support, with Harper’s Conservatives and Justin Trudeau’s Liberals close behind at 30 percent each.
The NDP is proposing a national program of subsidized childcare, a 20-year transit plan and expanded transfers to municipalities, among other pledges. New spending spending will total C$5.8 billion in 2016, before rising to C$11.3 billion in 2019, according to the plan released Wednesday.