Conservative Party of Canada leader Pierre Poilievre makes an announcement during an election campaign stop in Richmond, B.C., on April 19.Jennifer Gauthier/Reuters
Allan Lanthier is a retired partner of an international accounting firm and has been an adviser to both the Department of Finance and the Canada Revenue Agency.
On Tuesday, Conservative Leader Pierre Poilievre finally issued the party’s fully-costed election platform. The numbers are rosy compared with those of Liberal Leader Mark Carney’s platform, released only three days earlier. But how realistic are the Conservative numbers?
The Parliamentary Budget Officer has estimated a cumulative deficit of $141.7-billion for the next four years. Mr. Carney’s platform proposes additional deficits of $83-billion over that span, resulting in annual deficits-to-GDP of 1.98 and 1.83 per cent for the next two years, abandoning the last fiscal guardrail of 1 per cent used by the Trudeau Liberals.
On their face, Mr. Poilievre’s numbers are more disciplined. The deficit for the next four years would be reduced by $41-billion – a difference of $124-billion compared with the Liberal plan. The deficit-to-GDP would be less than 1 per cent, and the government would need to borrow about $100-billion to fund these deficits over the next four years, instead of the $225-billion proposed by the Liberals. But there are some catches.
The Conservative platform includes, without underlying support or analysis, “revenue gains” of more than $53-billion over the next four years; presumably, these will arise by turbocharging the Canadian economy as a result of other initiatives.
For example, federal government revenues would somehow increase by close to $13-billion as a result of “additional homes built.” And there would be another $13-billion as a result of “capital gains measures.” This presumably refers to the Conservative proposal to allow a deferral of capital gains tax until the end of 2026 – for both people and corporations – if the proceeds of sale are reinvested in Canada, a proposal the Conservatives called “rocket fuel for our economy.”
Other revenue gains relate to repealing the anti-pipeline legislation in Bill C-69, repealing Canada’s mandate for electric vehicles (under which 100 per cent of all light-duty vehicle sales must be zero-emission by 2035), and eliminating all carbon taxes as well as the emissions cap on oil and gas.
In addition to projected revenue gains, the platform includes additional tax revenue of $12.9-billion from ”cracking down on criminal tax evasion and overseas tax havens” – this, even though the Canada Revenue Agency has a bloated work force of close to 60,000 employees, many of whom are presumably already working to ferret out tax evaders.
Together, the revenue gains and the additional tax collected from tax evaders total $66-billion over four years, meaning more than half of the favourable difference with the Carney numbers may start to look questionable.
There are also some questionable tax proposals in the Conservative platform.
First, the platform says that, within 60 days of forming government, a tax reform tax force will be made up of “farmers, builders, entrepreneurs, economists and workers” to deliver a simple and fair tax code. There is no mention of tax specialists, and having such a diverse group – each with its own agenda – is a recipe for chaos and deadlock.
Second, the platform says a Conservative government will pass a “Taxpayer Protection Act” to ban new or higher federal taxes without first holding a referendum. I have been in the tax business for many years, and that is a new one to me.
The tax proposals that have already been announced during the election campaign – such as the $5,000 TFSA top-up if funds are invested in Canadian companies – are included in the platform. One new proposal is that people would no longer have to report the sale of a personal residence if they feel the gain is tax-exempt. This is a silly proposal with opportunities for abuse.
For example, if you sell your vacation property in Ontario’s Muskoka region, you may not report the sale if you feel the gain is exempt. But what about your home in Toronto, and the substantial gain you will realize down the road when you sell that property? Well, we can worry about that when the time comes.
The Carney platform was panned by many for its lack of fiscal discipline, and we had hoped for a large dose of restraint from Mr. Poilievre. However, exactly what we received will be a matter of some debate.