NDP leader said New Democrat government would cut small business tax rate to nine per cent from current 11 per cent
OTTAWA—Tom Mulcair has nailed down three more planks in the NDP election platform, unveiling promises of tax relief for small business and manufacturers.
The NDP leader announced that a New Democrat government would cut the tax rate for small businesses to nine per cent from the current 11 per cent.
It would also extend for an additional two years the accelerated capital cost allowance for machinery or equipment used in manufacturing, a tax break that is scheduled to expire this year.
And it would create an innovation tax credit to encourage manufacturers to invest in machinery, equipment and property used in research and development.
“With strategic investments and a concrete plan, we can provide the squeezed middle class with a stronger economy and better shock absorbers to ensure they weather the storm in the coming months and years ahead,” Mulcair told the Economic Club of Canada.
An NDP backgrounder estimates that reducing the small business tax rate to 10 per cent immediately would cost $600 million a year, with the final drop to nine per cent coming when finances permit.
The innovation tax credit would cost about $40 million a year, while extending the capital cost allowance would cost $1.2 billion over two years.
That’s on top of previous commitments Mulcair has made to create a national, $15-a-day child care program, reinstate a $15-per-hour federal minimum wage and restore the annual six-per-cent increase in health care transfer payments to the provinces.
He began unveiling platform planks last summer—before oil prices nosedived—in a bid to reverse sagging NDP fortunes.
Prime Minister Stpehen Harper has vowed that the oil price plunge won’t knock his government off its plans to balance the budget in the coming year and deliver on pricey promises of tax benefits for families with young children—including a controversial $2.4-billion-a-year income-splitting scheme which critics say would benefit less than 15 per cent of the wealthiest families.
Mulcair has promised to scrap the income-splitting plan.
He’s also pledging to reverse the Harper government’s tax cuts for big business, bringing the corporate tax rate closer to the average of G7 countries—which would mean a hike of as much as 4.5 percentage points from the current 15 per cent.
While Mulcair has denounced corporations as freeloaders who aren’t paying their fair share, he said small businesses, which create “80 per cent of all new jobs in this country,” deserve a break.
In the House of Commons, Harper characterized the small business tax cut as a “death-bed conversion” for the anti-business NDP.
Just last month, Harper said the NDP was demanding punitive taxes and regulations on an already-reeling oil and gas industry.
“That shows … how completely out of touch the NDP is with economic reality,” the prime minister said.
The parliamentary budget officer forecast this week that the federal government would run a deficit of $400 million this year if oil prices remain below US$50 a barrel.
While Mulcair has made it plain he has no confidence in the government’s assertion that it’s still on track to balance the books, he has dodged questions about whether an NDP government would be willing to continue running a deficit in order to stimulate economic growth as some economists have advocated.