Taxes: whose cuts are the deepest? (An update)
By Ira Basen, CBC.ca Reality Check Team | Updated Jan. 17, 2006 | More Reality Check
Ever since CBC Reality Check reported on January 6 that a Conservative government plans to rescind income tax cuts that have been in effect since January 1, there has been much back and forth on the campaign trail about which party truly has taxpayers' interests at heart. The Conservatives issued a press release calling our report "misleading" and "false", but agreed that the Liberal cuts to personal income tax would indeed be rolled back by 2007.
On the other hand, our Reality Check promises chart confirms that the Conservatives are correct when they assert that Canadians will be paying less tax under a government led by Stephen Harper. In fact, it's not even close. As of Friday January 13, the Conservatives have promised $51.8 billion in tax cuts spread over the next five years, compared to $41.9 billion for the NDP and $33.3 billion for the Liberals.
What is intriguing about the Conservative cuts is that more than half of their total ($32.3 billion) comes from reductions to the GST, a consumption tax, rather than cuts to income tax. This is an approach that has long been favoured by many economists on the left, but condemned by most mainstream economists, a group that until recently, could claim Stephen Harper as one of its members.
Of course, tax cuts are only part of what the parties are promising to do for us. On the spending side, the picture looks much different, and rather more predictable. Based on our calculations (which are not always the same as those presented by the parties), the NDP leads in the spending parade with promises totaling $45.6 over the next five years. The Liberals are second with $31.1 billion in promised spending, followed by the Conservatives with $22.9 billion. Add it all up, and the NDP checks in as the party with the most expensive combination of tax cuts and spending over the next five years ($87.5 billon), followed by the Conservatives at $74.7 billon, and the Liberals at $64.4 billion.
Of course the campaign is not over yet and there is still time for more promises to be made. But here's something to keep in mind when evaluating all this spending and tax cutting. According to the federal Finance Department, as well as most economists, the projected federal surplus over the next five years will be between $55 and $68 billion, depending on how you calculate it. Balancing the books has become the holy grail of Canadian politics, and no party in 2006 would dare issue a platform that projects a deficit. In fact, it would be a form of political suicide to not show a rather healthy surplus. But it's important to look at the assumptions behind the numbers to determine if the party's projections are real, or they are just blowing campaign smoke. And that is precisely what we will be doing here at Reality Check in the days leading up to the vote.
At a Glance
NDP: tax cuts $41.9 billion ($17.3 billion of that is its proposed new child tax credit) and $45.6 billion in promised spending for a total of $87.5 billion over five years.
Conservatives: tax cuts $51.8 billion (at least $33 billion of that is the promise to cut the GST by one and ultimately two percentage points within five years) and $22.9 billion in spending for a total of $74.7 billion.
Liberals: tax cuts $33.3 billion and $31.1 billion in spending for a total of $64.4 billion.