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The Progressive Economics Forum

The Ontario NDP Platform

Pollsters tell us that Ontario’s New Democrats may double their seat total in next month’s provincial election. It’s also entirely conceivable that they could be part of a coalition government at Queen’s Park. But what’s actually in the party’s election platform?

One central feature of the NDP’s proposals is to implement a tax credit for companies that hire new workers. The tax credits would be valued at 20 percent of wages to a maximum of $5,000 per worker. This only applies to the creation of full-time, permanent jobs.

The NDP also proposes to: remove the HST from electricity and home heating; remove the HST from gasoline by one percentage point a year; reduce the small business tax rate; and implement a Buy Ontario policy.

In terms of actual spending, the NDP proposes to increase funding for public transit, on condition that municipalities freeze transit fares. It also proposes to invest more in acute long-term care beds, increase home care hours, increase the minimum wage to $11/hr. (and then index it to inflation), open 50 new family health clinics , implement a new housing benefit for low-income households, create new affordable housing units, and bring in an emergency dental care program.

On the revenue side, the cornerstone of the current platform is to generate approximately $2 billion in additional annual revenue by increasing the corporate tax rate.

I have six concerns about the platform.

1. Scale. Annual provincial government revenue in Ontario currently stands at roughly $100 billion. Thus, the NDP is proposing to finance the bulk of its new spending commitments with roughly a two-percent increase in annual revenue. In light of how much tax rates have decreased in Ontario since the mid-1990s, I find this a bit timid.

Some critics will argue that further increases in corporate taxation might drive away business investment. But when fellow PEF blogger Erin Weir appeared on TVO’s The Agenda recently, I thought he did an effective job of countering such criticism. Furthermore, corporate taxes aren’t the only kind of taxes that the NDP could propose to increase, and that brings me to my next point.

2. Taxing The Rich. The NDP’s platform shies away from proposing changes to personal income tax rates, even for the highest-income households. I think wealthy Ontarians could and should pay more, especially in light of rising health care costs and the work that remains on the poverty-reduction front. As the CCPA’s Bruce Campbell argued earlier this year, 25,000 Canadians—a great many of whom live in Ontario—have an average annual income of $1.5 million. What’s more, over the past three decades, this group has more than doubled its share  of national income. Finally, this group pays less tax overall as a portion of its income than the poorest 10 percent of Canadians. 

3. Priorities. From where I stand, the commitments in the platform that carry the biggest price tags are the ones that would seem to have the most populist appeal. For example, the single most expensive item in Year 4 is the removal of the HST from gasoline.  And according to the platform document, removing the HST from home heating (natural gas and heating oil) would cost 10 times as much (on an annual basis) as the platform’s new commitments to home care.

4. Environment. As indicated above, the NDP is proposing to remove the HST on electricity, home heating and gasoline. When criticized for making proposals that would make it cheaper to pollute, some New Democrat supporters have defended the proposals on the grounds that these same proposals would assist low-income households, especially those living in rural areas. I would argue that, insofar as the NDP is concerned about low-income households, it would be more sensible to keep the HST in place and use the revenue to fund green-energy programs for low-income households. (Incidentally, for more on this issue, check out Brendan Haley’s excellent CCPA paper on the “politics of energy cost,” looking at the Nova Scotia context.)

5. Poverty. A single adult (without dependents) on welfare in Ontario currently receives less than $7,900 a year. Could you live on that? In real terms, this figure is roughly 35 percent less than it was in the mid-1990s. Yet, the NDP is proposing that social assistance benefit levels stay at this level and be indexed to inflation. What’s more, the new housing units promised are planned over a 10-year period and are conspicuously absent from the actual platform document (which is 48 pages long). Likewise, the new housing benefit and the emergency dental care program do not appear in the platform document. Nor does the platform document make any mention of the NDP creating more child care spaces. Given that the platform costs out the major proposals, I find it unsettling that the anti-poverty measures are left out of it. Does that mean money would only be spent on them during a second mandate?

6. Post-Secondary Education. As I’ve blogged about before, tuition rates in Ontario are the  highest in Canada. Ontario’s NDP is proposing to freeze them at these levels. It also proposes to eliminate the interest on the provincial portion of student loans, which, for a student with a $25,000 student loan, would amount to an annual savings of $60. In my mind, this pales in comparison with the undergraduate tuition grant being proposed in the current election campaign by the governing Liberals, which would be worth $1,600 per year for a full-time undergraduate university student.

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Comments

Comment from David Langille
Time: September 20, 2011, 7:12 pm

Nick, I agree with much if not all of what you say here.

I am particularly concerned to see the NDP jumping on the bandwagon that is calling for tax cuts.

That might get us a few more votes in the short term but it will hobble our ability to fund public services or reduce poverty.

The bottom line is that we will need taxes to expand public services so we’d better not make things more difficult for ourselves down the road.

The way towards a more just and fair model is to ‘make the rich pay’ more by making our income taxes more progressive…

I agree that the HST, like the GST before it, is an attempt to shift the tax burden off corporations and onto consumers.

And it is not a particularly progressive tax. So you won’t hear me advocating in favour of the HST.

But I am very anxious that we strengthen the role of government as a provider of public services and a means of income redistribution — both of which depend on a system of fair taxation.

That’s why I helped establish Canadians for Tax Fairness — http://www.taxfairness.ca/

Best,

David

Comment from Erin Weir
Time: September 20, 2011, 7:45 pm

Thanks for the good word, Nick.

On post-secondary education, the Canadian Federation of Students prefers the NDP platform over the Liberal platform.

The NDP is not proposing to keep social-assistance benefits at current levels, but is deferring somewhat to the Comprehensive Social Assistance Review currently underway in Ontario. In the meantime, it would boost benefits to cover incremental inflation.

On anti-poverty measures being “left out” of the pre-campaign platform and its costing, please note that the NDP has made other important policy announcements (including the job-creation tax credit) during the campaign.

It will obviously need to present a comprehensive costing at some point. Stay tuned!

Comment from Matt Fodor
Time: September 23, 2011, 12:25 pm

Excellent critique. It’s remarkable that tax relief now trumps making the case for a positive role for government.

As for the HST, while there is a basis of truth in terms of it being a tax shift away from business, the solution is not to get rid of it on a few things or abolish it. The solution is to raise corporate and personal income taxes significantly, and use the revenue from the HST etc. to bolster tax credits/rebates targeted specifically to the most needy.

And “reward the job creators” could have been a slogan used by Harper or Hudak.

Comment from Michael Mendelson
Time: September 25, 2011, 5:23 pm

By implication Nick raises another question: what will the result be if there is a minority Liberal government as looks likely? One of you people who write here need to start a thread on this topic.

Comment from Erin Weir
Time: September 29, 2011, 7:16 pm

As I am sure Nick and others have already noted, the NDP has indeed released its comprehensive platform costing.

Comment from Verla
Time: December 19, 2012, 8:51 pm

I’m curious to find out what blog platform you are working with? I’m experiencing some minor security problems with my latest website and I’d like to find something more safe. Do you have any suggestions?

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