The Liberal Party is targeting tax evaders and tax breaks in its plan return to a balanced budget by the end of a four-year mandate.
The party unveiled the full costing of its campaign platform on Saturday, which Liberal candidates described as “prudent” and “transparent.”
The Liberal plan didn’t outline precise details on where savings would be found, but the party says it plans to find billions in savings by replacing the universal childcare benefit, raising taxes on the wealthiest one per cent of Canadians, and cancelling family income-splitting and the Tax-Free Savings Account increase.
It lists potential examples such as ending various tax credits, “significantly reducing” spending on government advertising and setting a cap on how much can be claimed through stock option tax deductions.
The party also says it planned to bring in $6.5 billion in new revenue over four years through a “tax expenditure” and “spending review."
The party says it is not planning cuts to the public service.
Balanced books within 4 years
The Liberals plan to run a “modest” short-term $10-billion deficit for the next three years and is forecasting a balanced budget by 2019/2020.
“We’ve been bumping along, maybe in, maybe out of recession for a very long time,” Liberal candidate Ralph Goodale, the former finance minister under Paul Martin’s government, said at a news conference Saturday.
The party has promised to double the federal investments in infrastructure to immediately provide funding to provinces and municipalities for public transit, child care, social housing and green infrastructure.
The 15-page plan calls for at least $33 billion a year in new spending for infrastructure projects and a new monthly child benefit.
“Interest rates are low, so borrowing has never been cheaper for the federal government,” said Liberal candidate John McCallum, former finance critic and Royal Bank chief economist.
He added that Canada has a “massive” infrastructure deficit and “thousands and thousands” of Canadians are looking for work.
“The time to invest is not, not a decade from now,” he said.
According to the high-level document released Saturday, the Liberals would run a deficit of $9.9 billion in 2016-17, $9.5 billion in 2017-18, $5.7 billion in 2018-2019, before returning to a surplus of $1 billion in 2019-2020.
The Liberal plan is based on the latest available numbers from the Parliamentary Budget Officer and the Bank of Canada. McCallum said the party has accounted for a number of economic variables, such as low oil prices and a low Canadian dollar.
The Liberals are looking to the infrastructure spending to create jobs and spur economic growth. However, Liberal candidates said Saturday they are being prudent by not including any boost in economic growth from their planned infrastructure spending.
The party expects the investment will result in economic growth and create jobs, but that is not factored into the plan.
The plan also uses an annual contingency fund of about $3 billion that the federal government keeps on the books for unforeseen circumstances.
The party announced on Saturday that, if elected, they would add the costing of political party platforms to the Parliamentary Budget Officer’s mandate, which would allow Canadians to check the costing of any promises parties make during elections.
NDP slam Liberal plan
The NDP and the Conservatives both responded to the Liberals' fiscal plan on Saturday.
The New Democrats called it “bad math.”
“Mr. Trudeau’s team has delivered a plan that’s based on austerity, unfunded and broken promises and very simply bad math," NDP candidate Andrew Thomson said during a news conference.
Thomson warned that the Liberal plan would result in $6.5 billion in cuts over the next four years.
“These are cuts to services that Canadian reply upon,” he said.
Conservative candidate Pierre Poilievre suggested that "seniors and families should hold onto their wallets," saying there is a $6.5-billion "hole" in the Liberal's fiscal plan – a reference to the suggested spending review.
"Today, the Liberals admitted, even with these tax hikes and deficits, they still need to raise taxes by an additional $6.5 billion," said Poilievre. "They just won't come clean on which tax hikes they will bring in to find that money."
Poilievre said in order to fill these gaps, the Liberals will need to cancel pension income-splitting and raise other income taxes.
"The Liberals can't simply pull $6.5 billion out of thin air, they have to find that money somewhere," said Poilievre.
However, the Liberal Party has insisted it will not end income splitting for seniors.
Polievere added that the projected deficits in the Liberal budget are even larger than the party forecasts because it plans to eliminate the contingency reserve, except for $1 billion in its final year.
Poilievre said the Conservatives plan to soon release the full costing of its platform, though he said the numbers shouldn't be "very different" compared to those from the incumbent party's latest budget.
"It contains a balanced budget, low-tax plan and the additional promises we have made are "extremely modest and affordable," said Poilievre.
