LILLEY: Trudeau budget expected to have job-killing tax hikes in it

LILLEY: Trudeau budget expected to have job-killing tax hikes in it

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Portrayed as making the rich pay their fair share, the NDP plans Trudeau is embracing will only kill jobs. Get the latest from Brian Lilley straight to your inbox Published Apr 15, 2024  •  Last updated 5 hours ago  •  3 minute read

NDP leader Jagmeet Singh and Prime Minister Justin Trudeau on Parliament Hill in Ottawa. SunMedia

There will be no tax hikes on the middle class in Tuesday’s budget but expect tax hikes that will affect the middle class. The Trudeau government has been signalling for weeks that tax hikes are coming to deal with their massive spending increases, they just don’t plan to tax the middle class.

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Article contentInstead, driven by demands from the NDP and Trudeau’s junior coalition partner, Jagmeet Singh, we are going to see tax increases on high-income earners and corporations.
Article contentSingh, who seems to be running the government rather than Trudeau these days — dictating key policy decisions — has been calling for an “excess profits tax” for some time. It’s unclear what such a tax would look like in practice, but New Democrats were boasting this week to Radio Canada, CBC’s French division, about looming corporate tax hikes.An unnamed source, speaking confidentially, said that the NDP would like the corporate tax rate to rise from the current rate of 15% to 22% calling it essential for a more equitable society.“We could close half of the gap gradually over the next few years. If we reach 18%, that means $9 billion  more in state coffers,” an unnamed NDP source told Rad Can.
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Article contentThis is why Rad Can wrote what we will see on Tuesday will be “A budget written in orange ink.” It’s a great line, especially when you consider that the Trudeau Liberals are taking tax advice from the economically illiterate Singh NDP.Once upon a time, Canada’s corporate tax rate stood at 28%, but in 2000, then-prime minister Jean Chretien began lowering it down to 22%. When Stephen Harper took office in 2006, he lowered it to the current 15%.While critics claimed this would make the government poor, the opposite happened, revenue from corporate income tax stayed steady or went up each year. A study by the Montreal Economic Institute in 2018 detailed corporate tax revenues using inflation adjusted 2017 dollars and found no significant decrease other than in years when recessions were taking place.The reason is that a lower tax rate makes Canada a more attractive place to do business. More companies investing in equipment and jobs here means more economic activity and more revenue for the government.

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We apologize, but this video has failed to load.A lower tax rate makes Canada a more attractive place for foreign investment. Pushing the corporate tax rate up to 22%, as the NDP would prefer, would put Canada’s corporate tax rate higher than the United States.For more than a century, Liberal and Conservative governments have maintained a lower corporate tax rate in Canada as a key economic policy to attract investment.

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Now that we have a defacto NDP government in place, perhaps that is out the window. Plenty of people have called Justin Trudeau a socialist over the years, but his decision to adopt NDP economic policy gives some credence to those claims.That’s why it was funny to hear Trudeau speaking to the Canadian Chamber of Commerce on Monday and warning about taking too much out of the pay cheques of Canadians.“When too much take home income is going towards housing costs, that’s money not spent in the broader economy, money not invested in starting a small business, money that’s not stimulating or spurring our economy,” Trudeau said.It’s great to hear Trudeau embracing trickledown economics when it comes to housing costs, but why won’t he do that on taxation?

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Article contentIf he increases taxes on high-income earners, they will have fewer meals out, hurting the cooks, the waiters and restaurant owners. They will cut back on what they order in, hurting Canadians trying to keep a side hustle going, delivering food as a second job.They may cut back on the household services provided by small businesses, from landscaping to security services.The same holds for businesses facing higher tax pressures.Hiring will freeze, capital spending on equipment and productivity will slow down. New investment from outside firms will hit pause or be directed elsewhere.Trudeau is pitching his budget as something to cure what ails us. Instead, he’s likely to make things much, much worse.
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