NDP platform to offer tax relief for small business, manufacturers
Unlikely NDP leader Tom Mulcair will promise to do away entirely with 11 per cent federal small business tax rate
OTTAWA—Tom Mulcair is poised to nail down more planks in the NDP election platform, unveiling promises of tax relief for small business and manufacturers.
The NDP leader is to announce the latest proposals in a speech to the Economic Club of Canada scheduled for Jan. 27.
They’re part of a bid to show that New Democrats have a plan to goose the sputtering economy that’s in sharp contrast to the approach taken by Prime Minister Stephen Harper’s Conservatives in the face of plunging oil prices.
But they’re also likely to raise more questions about how Mulcair intends to pay for his promises at a time when the collapse of oil prices is sucking billions from the federal treasury and stunting economic growth.
Harper has vowed that the oil price plunge won’t knock the 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-per-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 scheme; he’s also promising to reverse the Harper government’s tax cuts for big business, bringing Canada’s 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, insiders claims he will champion a tax cut for small businesses, which New Democrats contend are the real job creators.
According to insiders, the move is inspired by Manitoba’s NDP government, which slashed its small business tax rate to zero from eight per cent in 2010.
The Canadian Federation of Independent Business (CFIB) lauded the measure for allowing small businesses to keep more of their profits to reinvest in their companies and employees.
It’s unlikely Mulcair will promise to do away entirely with the 11 per cent federal small business tax rate.
In the 2011 election, the NDP promised to reduce the rate to nine per cent, at a cost of $1 billion a year to the federal treasury.
“For us, it’s a priority to continue to look at the creation of good middle-class jobs, permanent jobs, full-time jobs,” Mulcair said this week, foreshadowing today’s announcement.
“So, for example, the creators of jobs in our country are mostly the small and medium-sized businesses. They’re the ones who should be getting the break. Instead, Mr. Harper has given mostly the largest corporations in Canada $50 billion in tax reductions.”
Mulcair is also expected to promise to extend the accelerated capital cost allowance for machinery or equipment used in manufacturing, a tax break that is scheduled to expire this year.
“We’ve lost almost 400,000 well-paid manufacturing jobs since the Conservatives came to power,” Mulcair said.
“Let’s start creating the next generation of well-paid middle-class jobs in our country.”
In a bid to reverse sagging NDP fortunes, Mulcair began unveiling platform planks last summer, more than a year ahead of the election scheduled for this October and before oil prices began nosediving.
Among other things, Mulcair has promised that the NDP will create one million new day care spaces that can be accessed for no more than $15 per day—at a cost of $5 billion annually to the federal treasury, once fully implemented over eight years.
He has also promised to reinstate a $15-per-hour federal minimum wage and to restore the annual six per cent increase in health care transfers to the provinces, which could cost upwards of $30 billion over nine years.
While he made it plain he has no confidence in the government’s assertion that it’s still on track to balance the books, Mulcair would not say if an NDP government would be willing to continue running a deficit in order to stimulate economic growth, as some economists have advocated.