Posted by Nick Falvo under climate change, corporate income tax, education, employment, energy, environment, fiscal policy, health care, housing, HST, income distribution, income support, income tax, investment, minimum wage, NDP, Nova Scotia, Ontario Election 2011, party politics, post-secondary education, poverty, progressive economic strategies, public services, public transit, social democracy, social policy, socialism, super-rich, taxation, user fees, wealth.
September 20th, 2011
Pollsters tell us that Ontario’s New DemocratsÂ may double their seat total in next month’s provincial election. It’s also entirely conceivable that they couldÂ be part of a coalition government at Queen’s Park.Â But what’s actually in the party’sÂ election platform?
One central feature of the NDP’sÂ proposals is to implement aÂ tax creditÂ for companies that hire new workers. The tax credits would be valued at 20 percent of wagesÂ to a maximum ofÂ $5,000 perÂ worker. This only applies to the creation of full-time, permanentÂ jobs.
The NDPÂ also proposes to: remove the HST fromÂ 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 OntarioÂ policy.
In terms of actual spending, theÂ NDPÂ proposes toÂ increase funding for public transit, on condition that municipalities freeze transit fares.Â It also proposes to invest more in acute long-term care beds, increaseÂ home care hours, increase theÂ 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,Â create new affordable housing units, and bring in an emergency dental care program.
On the revenue side, the cornerstone of theÂ current platformÂ is to generate approximately $2 billion in additional annual revenueÂ by increasingÂ the corporate tax rate.
IÂ have six concerns about the platform.
1. Scale. Annual provincial governmentÂ revenue in Ontario currently stands at roughly $100 billion. Thus,Â the NDP is proposing to finance the bulk ofÂ its new spending commitments with roughly aÂ 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 furtherÂ increases in corporate taxationÂ might drive away business investment. ButÂ 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 shiesÂ away fromÂ proposingÂ changes to personal income tax rates,Â even forÂ the highest-incomeÂ 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’sÂ Bruce Campbell arguedÂ earlier this year, 25,000 Canadiansâ€”a great many of whom live in Ontarioâ€”have an average annual income of $1.5 million. What’s more, over the past three decades,Â this group hasÂ more than doubledÂ its shareÂ of national income. Finally, this groupÂ pays less tax overall as a portion ofÂ its income than the poorest 10 percent of Canadians.Â
3.Â Priorities. From where I stand, the commitments in the platformÂ that carry the biggest price tags are the ones that would seem to have the most populist appeal. For example, the single most expensive itemÂ in Year 4 is the removal of the HSTÂ from gasoline.Â And according to the platform document,Â removing the HSTÂ from home heating (natural gas andÂ heating oil)Â would costÂ 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 theÂ proposalsÂ on theÂ grounds that these same proposalsÂ 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 beÂ more sensible toÂ 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’sÂ excellent CCPA paper on the “politics of energy cost,” looking atÂ the Nova Scotia context.)
5.Â Poverty.Â A single adult (without dependents) on welfareÂ inÂ OntarioÂ currently receives less than $7,900 a year.Â Could you live on that? In real terms, this figure is roughly 35 percent less than it was in the mid-1990s.Â Yet, the NDP is proposing that social assistance benefit levels stayÂ at this level and be indexed to inflation.Â What’s more, the new housing units promised are planned overÂ a 10-year period andÂ are conspicuously absent fromÂ the actual platform document (which is 48 pages long). Likewise, the new housing benefit andÂ the emergency dental care program do not appear in the platform document. Nor does the platform document make any mention of the NDP creating moreÂ 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 theÂ highest in Canada. Ontario’s NDP is proposing to freeze them at these levels. It also proposes to eliminate theÂ interest on the provincial portion of student loans, which,Â for a student with a $25,000 student loan,Â wouldÂ amount to an annual savings ofÂ $60. In my mind, this pales in comparison with theÂ undergraduate tuition grant being proposed in theÂ current election campaignÂ by the governing Liberals, whichÂ would be worth $1,600 per year forÂ a full-time undergraduateÂ university student.
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