Background:
In 2006, the Conservative government inherited the strongest economy of the recent history of Canada. The projection of $100 billion of federal financial flexibility to the end of the decade existed to further reduce debt, decrease income taxes, to invest in social programs and provide financial capabilities for unexpected events or natural catastrophes.
In May 2006, the budget figures indicated that there would have been a $17.4 billion surplus if the Conservatives had not intervened.
In 2006, the Conservative government reduced the GST to 6%, while spending has increased by $40 billion in just over 2 years. Presently, Canada’s debt has increased by $56 billion making Mr. Harper the “biggest” spending Prime Minister in Canada’s history.
Fluctuating world interest rates expose the Canadian government and Canada’s economic stability to substantial risk.
The Conservative fiscal update of November 2006 claimed they would repay the debt in 15 years yet the national debt continues to increase.
Action Required:
That the Liberal Party of Canada commit to a strategy to reduce the national debt over a calculated timeframe.
Policy Recommendation:
That the Liberal Party of Canada continues with the Liberal record of fiscal responsibility.
Liberal Party of Canada (Manitoba)
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The National Policy and Electoral Platform (NPEP) Committee had initiated a review of the current policy process prior to the Spring 2011 federal elections. Part of this review was a pilot exercise for a new resolution format.
The Liberal Party of Canada (Manitoba) Association has piloted a new resolution format based on feedback from previous policy conventions. Your comments on this new format will be greatly appreciated and should be sent to policy@liberal.ca with the subject line “new resolution format”.
Pretty good idea. However, since the Conservatives created the GST during the Mulroney days this country has been trying to tax itself into prosperity no matter who was at the helm. It is grand time to give the Canadian people the purchasing power that will push the economy in the right direction and with proper fiscal responsibility (by this I mean a government with willpower to stop the waste that has plagued all governments of this country in the past 40 years). We must take a very close look at how the administration of this country is being done and make not only the politicians accountable for their actions, but more specifically the highly paid behind the scenes individuals that counsel politicians, lobby that is corrupting this country into financial jeopardy and tax breaks for the supposed elite of this country that keep on getting richer and the rest of the citizens that keep this country going with their income tax and other taxes that contribute to make them poorer by the minute.
This should be our top priority. One of the major problems with the last two elections is that the fiscal conservative liberal was entirely alienated. This has been a boon to the conservatives, who captured of enough of us to get their majority. As an opposition we literally forced deficit financing and then promised indefinite deficit financing in the last election, giving Harper full reign over fiscal conservative territory — also allowing Harper to paint the deficit on opposition forces, even though there was global pressure to do this anyway. Ultimately, this made “right-leaning” Liberals cringe as they had to decide between logical fiscal policy (the conservatives) and logical social policy (the liberals).
Looking forward, the conservatives created structural revenue short falls and have made expensive promises such as their crime bill and military spending. Just a couple of weeks ago, a TD economist wrote that the conservatives will be at least two years behind target in balancing the books. If the Liberals can take advantage of this and position themselves as the financially sound party (as happened after Mulroney), this would be a major asset to the party.
I couldn’t agree more. One could argue the reason for the Liberals’ relative unpopularity these days is due to our departure from the principles of Chrétien and a shift to public spending. And it’s not even about popularity — it’s about doing what’s right. We don’t want to go down the path of US- or Euro-style spending… let’s get back to fiscal sanity, I say.
We need to balance the budget quickly and no tax breaks until they can be paid for out of surpluses.
A progressive tax system also needs to be in place where the rich and corporations are made to pay their fair share. Loopholes and subsidies must be eliminated. The nexus of power and money needs to be broken. One dollar, one vote for campaign donations.
The GST/HST is the most progressive tax as the more one consumes, the more they pay. I would like to see it increased along with an increased benefit for low income earners.
Who really needs an
This should be one of our foremost priorities. We need to remind the nation the Liberals set up the banking system that has seen us through this global mess (a system the Liberals under Chretien and Martin preserved, but which Harper now runs around taking credit for, though at the time he supported scrapping it), and in the 1990s we started attaching the outrageous debt piled up by the “borrow and spend conservatives”. The conservatives are back at borrowing money.
This is a motherhood and apple pie resolution that ignores the realities of a government’s short-term spending priorities. I agree with the resolution’s premise that the Conservative government drove Canada into substantial deficits during a period of growth. They were also unwilling–in the name of fiscal responsibility–to initiate stimulus spending until the threat of a coalition government from the opposition forced their hand.
The substance of the resolution itself–”reduce the national debt over a calculated time frame”–is vague and offers no policy guidance in my opinion.
The premise of the resolution is good if somewhat vague near the end- think we could do without the hoopla about the conservatives…
This is our bread and butter make it or break it issue!! It’s the economy. Harper’s deficits began when he got into power!! Hello shrinking surpluses should ring an alarm big time! we need to show we can reduce the national debt and that Harper has no respect for the taxpayer’s wallet!
It all sounds good, albeit vague. What I would say is that there can’t be too much reliance on past records. Voters won’t turn out because Jean Chrétien and the Liberals in the 90′s had an excellent record of fiscal responsibility. At the core must be a sound policy presented by the party leader that convinces moderates, the social advocates, and fiscal conservatives. Past records can compliment this but they can’t be the focal point.
And then there is the sponsorship scandal
This resolution is vague and toothless in the action it recommends. What is the point in officially declaring that we will continue with fiscal responsibility if it is already in place? Redundant, self-congratulatory resolutions like this simply shouldn`t make it onto the website, much less the convention floor.
clarification: when I say “already in place” I mean this resolution claims Liberals already do this.
I am the one who initiated this policy resolution. I was much more specific. It was re-written to be vague at the Manitoba provincial level. The original resolution, short version: treat the federal debt as a mortgage, pay the whole thing off, once gone abolish federal personal income tax.
Details:
- Reduce spending to the last Liberal budget. Keep transfers to provinces for healthcare and social programs as they are now, but for everything else reduce to the 2005 budget, and add a little for inflation, but only inflation. I use the inflation calculator from the Bank of Canada website.
- Replace childcare with the Liberal plan. The Conservative “childcare through the mailbox” costs $2.8 billion per year, but the Liberal plan would cost $0.5 billion the first year, rising to $1 billion in the fourth.
- The above actions together will reduce spending by $51.4 billion.
- Apply all the surplus to the principle of the debt. Then take that payment to principle plus interest, and ensure the total is a fixed total every year. As the debt comes down, interest charges come down. For every dollar of interest reduced, increase the payment to principle by the same dollar. That’s how the mortgage of a house works. If we started this on January 1, 2012, it would take 15 years to pay off the debt.
- If we started this in 2006, we would have had to postpone spending promises of the November 2005 fiscal update by a few years, but they would have begin by now. Debt repayment would have been 16 years, so we would be 6 years in by now, only 10 years left. Harper years are wasted years. Michael Ignatieff got that line from me; I’m quite flattered.
There are a few more catches to abolish income tax yet balance the budget.
- GST and corporate income tax will have to rise back to what they were in 2006. GST back to 7%, corporate income tax to 21%. Note: corporate income tax was 28% when Liberals were elected in 1993.
- Corporate capital tax and corporate surtax will stay gone. The surtax was 1.12% in 2006.
- EI and CPP premiums will stay. No increase, no decrease, they will stay exactly the same.
- Personal income tax is under authority of provincial governments, so there’s nothing we can do about that.
This still isn’t quite enough to balance the budget, so also:
- GST Credit is often called “GST Rebate”, but the CRA calls it “GST Credit”. That’s the GST cheques mailed out every 3 months. Replace that with a line item credit added to your paycheque, and prorate it to every paycheque. Employers would have to add a line to the pay stub to show employees that it was added. Expenses involved in mailing out these cheques would be eliminated, and personnel at CRA involved with the GST Credit would be drastically reduced. This cost saving would be passed on to taxpayers by doubling they total they get per year. We would not increase the number of individuals who receive the GST credit, just pay double what they get per year. However, when we abolish federal personal income tax, the GST credit will be abolished with it.
- The last change is to dividends. They used to be double taxed: charged both personal and corporate income tax. That was fixed by no longer charging corporate income tax. This was done by letting corporations deduct dividends from their taxable income. We would reverse this: Tell corporations they can no longer deduct dividends from taxable income, effectively charging corporate income tax. This would not be deducted from dividend cheques, corporations themselves would pay it. At the same time dividends would no longer be included in taxable income for personal income tax. However, foreign corporations do not pay income tax to Canada, so only dividends from Canadian corporations would be tax free. This creates an incentive for Canadians to invest in Canada. But the primary purpose is that when personal income tax is abolished, dividends will stay taxed.
Passed!!!
There are a lot of aspects of Robert’s plan that are, sorry to say, unworkable. In the first place the federal debt is not like a mortgage – that is a classic fallacy of composition. As long as our collective ability to pay off the debt is increasing, it is not a problem because the government owes the money to itself – us. The reason people buy savings bonds (lend money to the government) is because they know it is safe. Interest rates on ‘safe’ debt are low (especially now). I could and will go on later. If you counter with but what about the debt that China owns I urge you to read Paul Krugman on the topic. He has tried to explain this many times.