MONTREAL – A Liberal government will use a new approach to tackle Canada’s fiscal, learning, economic security and global leadership deficits, Liberal Leader Michael Ignatieff said at the closing of the Canada at 150 conference.
“Everything I heard this weekend says we need a new kind of federal leadership,” said Mr. Ignatieff in his closing speech. “We can’t address the challenges we face by commanding and controlling. We need to convene, to bring the players together in a network for action, with shared objectives and a commitment to results.”
“With the deficit Stephen Harper has left behind, we can’t do everything at once – but we can’t afford to stand still as a country,” said Mr. Ignatieff. “If we make smart fiscal choices, we can start moving forward again. Without raising taxes, we will create the fiscal room that will allow us to invest in our future.”
Drawing on Canada at 150’s discussions in Montreal, with thousands of Canadians online and through over 70 satellite events, Mr. Ignatieff pledged to move forward with investments in:
• Learning and innovation through a pan-Canadian learning approach spanning early childhood development and care, aboriginal education, workforce literacy, language training for New Canadians, and access to higher education and training;
• Social and economic security through pension reform to look after our aging population and support for families caring for loved ones; and
• Strengthening Canada’s place in the world through clean energy innovation and constructively engaging global partners.
The Liberal Leader also set out a balanced and credible fiscal approach to tackle the deficit while investing in Canada’s priorities that includes:
• Deficit reduction by committing to a deficit to GDP target of 1% within the first two years of a Liberal government and further decline every year thereafter until the budget is balanced;
• Fiscal prudence by restoring a reserve as a buffer to achieve targets;
• Spending restraint by finding targeted, sustainable savings in partnership with the public service and proposing new programs in the Liberal platform only if they can be financed without adding to the deficit; and
• Freezing corporate income tax rates to their current level until Canada can afford to lower them further.
“Thanks to Liberal fiscal responsibility in the 1990s, we can keep our corporate taxes among the most competitive in the G7,” said Mr. Ignatieff. “We have a clear choice: tackling the Conservative deficit and starting to invest in our future, or giving further tax cuts to corporations before when we can afford them.”
“What we are proposing to Canadians is a different vision for the country,” said Mr. Ignatieff. “We can have a balanced approach that will deal with today’s problems while planning and acting for our future.”
Backgrounder:
I. Canada’s Federal Corporate Tax Rate Reductions
Mostly because of the actions of the previous Liberal government, corporate tax rates have dropped by more than one-third in the last decade:?
| Fiscal Plan | Federal Rate Change |
| Budget 2000 (Liberal) | 28% to 21% within 5 yrs |
| Fiscal Update 2005 (Liberal) | 21% to 19% within 5 yrs |
| Budget 2006 | … to 18.5% within 5 yrs |
| Fiscal Update 2007 | … to 15% within 5 yrs |
II. Freezing Federal Corporate Tax Rates at 2010 Levels
Freezing Canada’s corporate taxes at 2010 levels will free up between $5 – 6 billion annually in federal government revenues within a few years. These funds can be used to address the fiscal deficit and invest in Canada’s priorities.
Graph: Corporate Tax Rate, 2000-2015
Current Corporate Tax Rate Reduction Schedule
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | ||
| Tax Rate | 21% | 19.5% | 19.0% | 18% | 16.5% | 15.0% |
III. International Corporate Tax Rate Comparisons
In 2000, when the Liberal government began an aggressive corporate tax rate reduction strategy, Canada’s combined (federal and provincial) corporate tax rate was much higher than the United States’.??If Canada’s corporate tax rate is frozen at 2010 levels, by 2012 it will remain 25% lower than our biggest competitor, the United States.?
Graph: G7 Corporate Income Tax Rates 2000-2012
Source: Department of Finance, KPMG
