In this short overview of the policies of the three parties in contention to lead Canada for the next 5 years, I’d like to first mention the cost of the election process. It is estimated by the Canadian a Taxpayers a Federation that the three parties will spend a total of about $500 million this year on the 11 week campaign. Elections Canada estimates that a typical 37 day campaign runs about $375 million, but at least all of that money will be spent in Canada providing goods and services by and to Canadians!
Right now, it appears that each of the parties are working to convince us that their solutions will lead to greater prosperity. Harper’s Tories will, if re-elected, increase and extend a tax credit for businesses that hire apprentices. The Apprenticeship Job Creation Tax Credit, introduced in 2006, would increase from $2,000 to $2,500, and would be applied to the third and fourth years of training. The recently announced tax credit for membership in a community service club is another plank in the Conservative platform. They have teased us with a home renovation tax credit of up to $5,000 but it won’t be implemented until “circumstances” permit. In fact, there is nothing too earth-shattering as Harper traverses the country with his “trust me” approach and promise to balance the budget.
On the other hand, Justin Trudeau stands ready to take the role as the 2015 incarnation of Robin Hood, by increasing personal income taxes for the “wealthy” so that the “middle class” can breathe easier. Trudeau will cancel tax breaks and benefits for the “wealthy”. Good rhetoric but we have yet to see the details of how much money cancelling policies like family income splitting will generate. Possibly, he’s meeting with Friar Tuck next week to iron out the details. There are a number of new initiatives proposed such as the Teacher and Early Childhood Educator School Supply Tax Benefit. Interestingly, this seems to be an acknowledgement that schools are underfunded and teachers have to spend their own money for classroom necessities. Maybe we’re missing the point?
Another “sure vote getter” is the Liberals’ plan to invest almost $6 billion in public transit infrastructure over the next 4 years and up to $20 billion over the next 10 years. The investments proposed for Green Infrastructure are identical so we’re looking at huge spending commitments without compensating revenue generation. At least he’s not still saying “the budget will balance itself” because his new approach will lead to deficits for a few years.
Now the New Democratic Party, lead by Thomas Mulcair has a “concrete plan” to get Canada on track. The NDP will lower the small business corporation income tax rate by 2% (now 15.5% in Ontario on taxable income up to $500,000) and try to create jobs in the manufacturing sector. They have also promised a national childcare plan similar to the system in Quebec, reforms to strengthen public pensions and increase health care spending. Current estimates put the budget shortfall at about eight billion dollars.
At Sloan Partners LLP, we tend to be somewhat cautious when it comes to the economy. We like it when businesses are growing, hiring more employees and earning more profit. We support initiatives that allow working families to look after their children and provide for their future. And we recognize that when entrepreneurs prosper, they don’t hoard wealth – they invest in the further growth of the economy. Governments do not provide private sector jobs, businesses do.
Our message for the upcoming election on October 19th is for you to get engaged. Be aware of the issues and most importantly, VOTE. Use this link to get more information and take advantage of the fact that Canada is the best country on Earth where your voice can be heard.
Jerry Paskowitz is a Partner with Sloan Partners, with over 30 years’ experience in all tax and financial matters. Contact Jerry for an appointment to discuss tax savings opportunities and financial strategies for your business.