Oliver Says Canada Conservatives Plan More Tax Cuts If ElectedTheophilos Argitis and Josh Wingrove
Canadian Finance Minister Joe Oliver said his governing Conservatives will continue to cut taxes if they retain power in October’s federal election, even with levels at their lowest in generations.
The government’s debt-reduction efforts and projected surpluses will free up additional room to lower taxes in the future, Oliver said Thursday at Bloomberg’s Canada Economic Summit in Toronto.
“We want to keep taxes low, we want to make them competitive, and that’s a never-ending task,” said Oliver, declining to specify where any future tax cuts would be focused. “As the debt declines, and as debt payment declines as a proportion of expenditures, there’s more opportunity to provide tax relief and to provide other benefits to businesses and Canadian families.”
Prime Minister Stephen Harper’s tax record -- which has brought the federal government’s tax revenue as a share of GDP to the lowest in more than 50 years -- is poised to be a central issue in the October election, in part because it has fueled deficits. The opposition Liberal and New Democratic parties have also criticized the Conservative tax cuts for favoring the rich and undermining the federal government’s fiscal capacity.
“Not only are lower taxes more fair and they make life more affordable, but they also produce more economic activity,” Oliver said. “So we want to see that continue.”
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 2006 levels, the year Harper took power, federal revenue would be about C$35 billion ($29 billion) higher annually.
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.
The official opposition New Democratic Party has pledged to reverse Harper’s corporate income-tax cuts to finance new social programs, while the Liberals have put forward an alternative plan that seeks to raise taxes on high-income earners and cut them for the middle class.
Oliver, in his first fiscal plan since becoming Finance Minister last year, released a budget in April that projects a return to surplus in the current fiscal year, ending a seven-year run of deficits. Surpluses are projected to grow to as high as C$4.8 billion by 2019 as government income recovers.
On Thursday, Oliver took shots at the Liberal plan, saying the party’s numbers “don’t add up” and will raise marginal tax rates in Canada above 50 percent for some earners, calling it “confiscatory.”
“Where’s he going to get the money,” Oliver said of Liberal Leader Justin Trudeau. “Is he going to pile on more debt, is he going to raise taxes, is he going to cancel more programs.”
Trudeau said this month he would raise taxes on Canadians with incomes exceeding C$200,000 in a move, raising C$3 billion to fund tax cuts for those earning below those levels.
Trudeau is also proposing changes to Canada’s child-benefit program that would boost payments for households with combined earnings of less than C$150,000, while curbing or eliminating benefits for those who earn more.
The Liberal plan would replace the universal child care benefit, and after canceling Harper’s income-splitting measures, the net cost of the revamped program would be C$2 billion. Oliver said Trudeau has miscalculated the savings from canceling Conservative programs, and the net cost would be C$1 billion higher. The Liberals dispute those claims.
“Again, Mr. Oliver doesn’t seem to have his facts straight,” Kate Purchase, director of communications for Trudeau, said in an e-mailed statement.