In all the charts and documents that come with the Liberals’ 85-page platform, there’s a key word missing: deficit.
Eventually, when the Liberals get around to measuring the “platform fiscal projection,” it turns out that the deficit will almost double in size in quick order, from $14 billion in the 2018-19 fiscal year to $27 billion next fiscal year.
That’s despite some aggressive — and fairly creative — new taxation measures that will take aim at multinational corporations and Big Tech. Any ambition the Liberals may have once harboured to whittle the deficit down to zero has now completely disappeared, replaced instead by a continued fuzzy commitment to reduce the debt burden over time and a rejuvenated zeal to hit the rich for revenue.
The question for voters that arises from this plan is crystal clear: Is it worth taking on that extra debt — $94 billion over four years once baked-in and newly planned deficits are added together?
Over the course of a next mandate, the Liberals propose spending a total of $57 billion on top of what they set out in previous budgets — investing mainly on increased child benefits, old age security, student loans, health and income-tax cuts. But they would raise just $25 billion extra in offsetting revenue, and the margin of error around those revenue estimates is enormous.
Exhibit #1 is a new luxury tax, which the Liberals think they can raise more than half a billion dollars per year from. Anyone wanting to buy a car, boat or personal aircraft over the price of $100,000 will have to face a 10 per cent surtax.
At first glance, it sounds like easy pickings for the Canada Revenue Agency, but the Parliamentary Budget Officer’s independent assessment states that there is a “high uncertainty” that the money will come through as expected. Envision lots of swish cars for sale for $99,999.99.
The other big new idea is to impose tax on the tech giants — companies like Google, Facebook, Amazon and Apple — and raise more than half a billion dollars a year from that too. Essentially, the Liberals want to replicate the French government in unilaterally taxing Big Tech while waiting for the rest of the world to come to a consensus on how to all move together.
The PBO, once again, classifies such a measure as highly uncertain, mainly because it’s next to impossible to see clearly how much money Big Tech is making at a global scale.
The biggest new revenue source for the Liberals would be to close corporate tax loopholes — an exercise the Trudeau government has tried to do in the past, but they met with such great controversy that they backed away and revised substantially.
This time, the party wants to raise about $1.7 billion a year by capping the amount big companies can write off for interest payments and by preventing companies from global jurisdiction-shopping for tax avoidance purposes. The PBO notes high uncertainty here too, since the Liberals are taking on giant, well-versed firms.
A Liberal government would also find $3 billion a year by eliminating government waste — tough at the best of times.
The Liberals argue that running perpetual deficits is working. The economy is growing faster than the debt, and the extra spending leads to growth, jobs, rising wages and prosperity all around, campaign co-chair and former finance minister Ralph Goodale said Sunday.
Overall, an independent review done by the former parliamentary budget officer Kevin Page and his team at the Institute of Fiscal Studies and Democracy gives the Liberals good grades on transparency and fiscal management, but a yellow light on aligning fiscal policy with what’s going on out there in the real world.
And indeed, there are some major economic challenges on the horizon. Global growth is slowing and central banks around the world are bracing for rough times. On the climate front, a long-term move to a low-carbon economy will throw Canada’s traditional industries into turmoil. And automation is everywhere, with technological disruption fast becoming the next frontier for innovation.
The Liberals have clearly put some thought into these huge, global shifts that will fundamentally restructure the Canadian economy regardless of what fiscal policy we follow.
On top of throwing some sand in the gears of Big Tech, the platform has its eye on the effects of a digital economy on regular people. It proposes labour protections for gig workers such as Uber drivers, and it wants to implement a “right to disconnect” so that employees aren’t obliged to be on their work phones all the time.
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The Liberals’ idea of a “career insurance benefit” would help displaced workers figure out a new plan to find productive work. And there are a number of measures meant to encourage decarbonization, including a corporate tax break for companies that embrace clean technology.
But if there’s a major global slowdown, all bets are off.