The Conservatives are calling for lower payroll taxes, financial incentives to spur housing construction, and an end to deficit-spending and carbon tax hikes in the coming federal budget.
Conservative Leader Pierre Poilievre provided few details at a press conference on Parliament Hill Sunday, but repeated his past suggestion that any new spending should be equal to a spending cut elsewhere in the budget, rather than through more debt. He also said spending should be cut by defunding the CBC and “cutting back on high-priced consultants.”
Finance Minister Chrystia Freeland will release her government’s latest spending plan in about two weeks. The Liberals are promising to show fiscal restraint, while also budgeting for their new 10-year health spending plan and expanding on Ottawa’s response to the U.S. Inflation Reduction Act. The American bill includes hundreds of billions in tax breaks and other incentives to green the economy and slash emissions, which Canadian business groups say puts their ability to compete at risk.
For example, under a plan released last summer, Canadian tax credits for carbon capture and storage will cover 50 per cent of capital expenses through 2030. The comparable tax credit in the U.S. equates to about 85 per cent of project expenses. And a February report from think tanks Clean Prosperity and the Transition Accelerator found that the U.S. is now guaranteeing as much as 20 times more government backing for electric-vehicle battery factories.
In total, the Inflation Reduction Act earmarks US$369-billion for climate and energy programs, and represents the U.S.’s largest single investment in combatting climate change.
To respond to the American plan, Ottawa should cut regulations and taxes, Mr. Poilievre said Sunday. He noted that by the federal government’s own admission, it is taking too long to build new mines for critical mineral production – a key piece of the puzzle to transition to a cleaner economy.
“A Poilievre government will get rid of the red-tape and the gatekeepers,” he said, adding the Conservatives would reform the tax system to “bring home billions of dollars of mines, of resource development, and other production right here in Canada.”
He declined to answer whether he would support direct government subsidies for businesses to compete with the U.S.
Last year, the oil and gas industry said the federal government should increase its planned tax credits to ensure Canada’s sector isn’t put at a disadvantage.
In its pre-budget letter to the Prime Minister, the Business Council of Canada said the government should streamline approvals for new projects and reallocate already announced funding by “rationalizing” existing clean-technology support programs.
The 2023 budget follows three years of substantial deficit spending driven by the COVID-19 pandemic. As a result of those deficits, the federal debt-to-GDP ratio was 45.5 per cent last year, up from 31.2 per cent in 2019-20.
In a statement on Sunday, Ms. Freeland’s spokesperson, Adrienne Vaupshas, said the March 28 budget represents “a once-in-a-generation opportunity to build a made-in-Canada clean economy that creates good middle class jobs for Canadians, invests in our communities, and makes life more affordable for people.”
NDP finance critic and MP Daniel Blaikie said in a statement that Mr. Poilievre is proposing “more of the same: tax breaks for big business and less oversight for the corporations whose greed is pushing inflation higher.”
He said the budget should address the rising cost of living and include a “strong response” to the American government’s clean economy spending by “investing massively.”