The NDP is calling on the Liberal government to hike taxes on big business and the wealthy in its first budget to cover the cost of new spending in areas such as national pharmacare.
The party’s finance critic, Peter Julian, said in an interview that the 2005 budget deal between Liberal prime minister Paul Martin and NDP leader Jack Layton should be a model for the new Parliament to follow.
In that deal, which came several weeks after the government unveiled its budget, the Liberals agreed to abandon planned corporate-tax cuts in exchange for $4.6-billion in new spending on NDP priorities including affordable housing, education and public transit.
New Democrats have long labelled the 2005 deal – which Canada’s business community sharply criticized – as the “Jack Layton budget.”
“I think they should be looking for the same kind of approach, working with us, in the budget coming forward in the spring,” Mr. Julian said. “It’s a time to revamp the nation’s finances on a much sounder footing, which means investments in Canadians and stopping the massive handouts to big corporations.”
The 2005 deal between the Liberals and the NDP occurred during a time when federal finances were in surplus. Now, Ottawa is in deficit, and the Liberal Party’s 2019 election platform included running annual deficits of at least $20-billion over the next four years.
The Liberals did not promise any changes to the corporate-tax rate, which dropped from 21 per cent to 15 per cent under Conservative prime minister Stephen Harper. It did include plans to raise $25.4-billion in new revenue over four years through targeted tax increases and spending reductions. The promises included a “comprehensive review of government spending and tax expenditures" and to “crack down on corporate-tax loopholes,” among other options.
The NDP platform called for $130-billion in new revenue over four years to pay for new spending. Its promises included raising the corporate-tax rate to 18 per cent, a “superwealth tax” for individuals with a net worth of more than $20-million, and ending tax breaks for companies such as deductions for corporate meals and entertainment.
NDP Leader Jagmeet Singh told reporters on Tuesday that he raised the issue of a wealth tax when he met with Prime Minister Justin Trudeau last week, but added that his party has proposed several options for raising taxes on wealthy people and big business to pay for NDP priorities such as a pharmacare program.
Conservative finance critic Pierre Poilievre said the NDP’s comments support his party’s campaign warning that a Liberal minority government would be beholden to the NDP and would lead to higher taxes. He said the Conservative Party’s budget requests will focus on reducing taxes and controlling spending.
“Conservatives will be the voice of taxpayers in the House of Commons, and our budget demands will reflect that role," he said. “We want the government to reject radical spending splurges that threaten the financial security of families and social programs and commit to a time frame to gradually phase out the deficit.”
Pierre-Olivier Herbert, a spokesman for Finance Minister Bill Morneau, said the Liberal government will reduce taxes for the middle class and work with all parties.
“In their plan, the NDP has made clear their desire to raise a number of taxes. On the other hand, we have released a credible, fully costed plan to fight climate change and make life more affordable for Canadians,” he said in a statement that did not rule out any future action.
Liberal MP Wayne Easter, who chaired the House of Commons finance committee in the previous Parliament, said the Liberals will have to compromise when it comes to budget making.
Mr. Easter said he does expect the Liberals will hold the line on ensuring that the federal debt-to-GDP ratio remains on a declining track.
He also said all parties must acknowledge that projections for economic growth – and federal revenues – are weaker now than they were in June, when the Parliamentary Budget Officer produced forecasts that were used as the foundation of all party platforms.
“I can’t emphasize this enough,” Mr. Easter said. “We also have to factor in where the economy is currently at. … Things are substantially different from when the platforms were developed.”