The Liberals, Conservatives and NDP may not seem to agree on much, but when it comes to squeezing more money from tax dodgers, the parties are in perfect sync.
It’s just that they have slightly different views of who those dodgers are.
All three parties are counting on revenue gains of billions of dollars from giving the Canada Revenue Agency hundreds of millions of dollars to beef up its enforcement efforts.
The Liberals propose to spend $2.5-billion over four years, for a net revenue gain of $11.9-billion, according to a costing estimate from the Parliamentary Budget Officer. Meanwhile, the Conservatives would give the CRA $1.6-billion over four years, delivering a net gain of $7.7-billion during that time, according to the PBO. The NDP, already proposing other hefty tax hikes, would increase CRA funding by a relatively paltry $500-million over five years, for a net gain of $2.1-billion over that time.
The math is similar, but the parties’ rhetoric diverges. The Liberal platform talks about the need “to combat aggressive tax planning and tax avoidance that allows the wealthiest to avoid paying the taxes they owe.” The NDP say their new funding for the CRA would be focused on “international and corporate taxation, to ensure that companies can’t evade new measures.”
For their part, the Conservative platform criticizes the CRA for being overly aggressive with individual taxpayers and small businesses. Their funding, the Tories say, is aimed at “stronger enforcement of taxation for multinational firms, taxation of large corporations, international taxation, and other tax evasion.”
One more thing all three parties have in common: They may be counting on revenue that may not materialize. In its costing note for each party, the PBO notes that there is some uncertainty with its estimates, since the CRA has already received significant funding increases for its tax compliance efforts in the past decade, and it is unclear whether the agency “can continue to absorb new cash inflows in a timely manner.”
And, the PBO notes, it’s not clear whether those new billions of dollars for enforcement will prove to be as efficient as flushing out tax dollars as existing efforts.
Taxing questions
Reacting to Globe coverage of the Thursday leader’s debate, one reader asked in a tweet what the Conservative child care plan would do to expand the number of spots.
That has been one of the big criticisms of the Tory plan to introduce refundable tax credits for parents. It would replace the Liberal strategy of providing billions of dollars to the provinces to reduce fees and build up subsidized spots.
The party argues, without much detail, that its plan would induce the expansion of capacity, since it puts more money in the hands of parents.
An analysis published last week by the C.D. Howe Institute gives some heft to that argument, pointing out that Quebec’s refundable child care credits – nearly identical to the Tory proposal – led to a sharp increase in child-care capacity.
The province introduced subsidized child care in the 1990s, but there remained a shortage of spots so many parents were paying much higher fees for non-subsidized care. To reduce that disparity, Quebec expanded its refundable tax credit in its 2009-10 budget.
The number of non-subsidized spaces shot up in the following 11 years, rising to 70,083 by the end of fiscal 2021 from just 6,954 at the end of fiscal 2009.
Quebec’s experience is proof that payments to parents can indeed increase the supply of child care, the Institute argues.
Line item
Liberals get top fiscal grade: The Institute of Fiscal Studies and Democracy has rendered its assessments of the Liberal, Conservative and NDP platforms, with both parties getting a thumbs up. The Liberal platform gets a ranking of “good,” with an overall score of 15.5 points out of 18 while the Tories garner a mere “pass” from the IFSD, with 11.5 points. The NDP also get a pass, but with a lower score of 10.5 points.
Both the Liberals and Conservatives fare well on the measures of transparency, and on realistic economic and fiscal assumptions. But the Tories lose marks on responsible fiscal management, in part because of failing to have a medium-term fiscal target (promising to balance the budget a decade hence doesn’t cut it, in the IFSD’s view). Another demerit point is the Conservative promise to increase the Canada Health Transfer by at least 6 per cent a year, a move that will push the federal budget into unsustainable territory, the IFSD believes. The institute gives the NDP a fail mark on transparency, in part because the party did not detail the expected economic fallout from its significant proposed tax increases.
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