COST OF LIBERAL ELECTION PROMISES AS OF AUGUST 26
The Table below provides cost estimates for most of the Liberal election promises as of August 26.In some cases, it has not been possible to provide estimates since not enough detail has been provided.
Panel 1 summarizes the announced Liberal commitments, including the middle-income tax cut, increased funding for childcare and for the environment – the latter was only partially costed. In addition, they have promised increased support for Aboriginal programs; the most important being a commitment to eliminate significant “gaps” between Aboriginal and non-Aboriginal Canadians. So far, they have provided no costing, but stated they would remove the existing 2% annual cap on spending. Paul Martin, in his Kelowna Accord, which amounted to $5 billion over five years, made a similar commitment to eliminate “gaps”. It would be difficult for Trudeau to commit less. Assuming this to be the case, the new Aboriginal commitment could result in a financial commitment of about $1 billion annually.
Recently they have announced a number of initiatives to provide increased support for veterans at a cost of $300 million annually. One of these initiatives relates to providing injured veterans the option of a lifetime pension. The fiscal impact of this future liability would be booked in 2015-16.
The cost of Liberal promises amounts to $1.8 billion in 2015-16 rising quickly to almost $9 billion in 2017-18.
Panel 2 provides estimates of how the Liberals plan to pay for their election promises. The Liberals have indicated that they would eliminate the Conservative promise of income splitting for families with children under eighteen and introduce a new tax rate for anyone earning over $200,000. They have also indicated that they would keep the maximum annual contribution to the TFSA at $5,000. These three revenue reallocations would raise about $1.3 billion in 2015-16 rising to $5.5 billion in 2019-20.
Panel 3 provides an estimate of the net impact of the proposed spending and revenue increases on the post election budget balance. There would be a small increase in the deficit in 2015-16. In subsequent years the impact would be to raise any projected deficit by about $3.5 billion annually. This would amount to only 0.02% of GDP.
Mr. Trudeau has said that in the current economic circumstances the Liberal Party would be prepared to run deficits. In addition until he finds out the “fiscal mess” the Conservatives have left he is unable to set out when he would expect a return to a balanced budget.
|
2015-16 |
2016-17 |
2017-18 |
2018-19 |
2019-20
|
($ millions) |
|
|
|
|
|
|
|
|
|
|
|
1. Uses of Funds |
|
|
|
|
|
Reduce 22% tax to 20.5% |
750 |
3,000 |
3,000 |
3,000 |
3,000 |
Canada Child Benefit |
1,000 |
4,000 |
4,000 |
4,000 |
4,000 |
Environmental Plan |
|
416.5 |
416.5 |
416.5 |
416.5 |
Support for Aboriginals |
|
1,000 |
1,000 |
1,000 |
1,000 |
Compassionate care benefit |
|
190 |
190 |
190 |
190 |
Increase support for veterans |
? |
300 |
300 |
300 |
300 |
Total Uses of Funds |
1,750 |
8,606.5 |
8,906.5 |
8,906.5 |
8,906.5 |
|
|
|
|
|
|
2. Sources of Funds |
|
|
|
|
|
Cancel income splitting |
499 |
1,995 |
2,050 |
2,100 |
2,165 |
Introduce fifth bracket |
750 |
3,000 |
3,000 |
3,000 |
3,000 |
Reduce TFSA limit to $5,000 |
85 |
160 |
235 |
295 |
360 |
Total |
1,334 |
5,155 |
5,285 |
5,395 |
5,525 |
|
|
|
|
|
|
3. Net Impact |
-416 |
-3,452 |
-3,622 |
-3,512 |
-3,382 |
Add new comment