So what would an NDP government do?

drummindiver · June 19, 2015

EI under Harper was until now running a deficit, financed by general revenue and borrowing.

Why?

Because the Libs raped it for 55 billion?

I thought they had surpluses due to the extremely stringent requirements needed to collect, brought in by the Liberals.

Give us your money, Canadians, but when you need it the most.....

drummindiver · June 19, 2015

It is a normal function of parliament. It is used supposed to be used to allow time to get on with new business. Not as a way of evading the judgement of the commons as Harper does.

lol

Caues that's what Chretien et al did/do

overthere · June 19, 2015

Mean, back in Alberta, pretty much the first acts of the new NDP govt have been to increase personal and corporate taxes, rolled back planned revenue increases, rolled back civil service cuts and spent an additional $624 million on health care and education.

Tax and spend. No time wasted.

And Notley had to pay some political debts.......teachers, nurses, public servants....

They'll be quiet now until around the federal election in the fall. It's an absolute certainty that Notley, Topp and Mulcair will be running up some big long distance bills and have each other on speed dial.

Evening Star · June 19, 2015

Mean, back in Alberta, pretty much the first acts of the new NDP govt have been to increase personal and corporate taxes, rolled back planned revenue increases, rolled back civil service cuts and spent an additional $624 million on health care and education.

Tax and spend. No time wasted.

And Notley had to pay some political debts.......teachers, nurses, public servants....

They'll be quiet now until around the federal election in the fall. It's an absolute certainty that Notley, Topp and Mulcair will be running up some big long distance bills and have each other on speed dial.

This basically means that they're keeping their promises, right?

Evening Star · June 19, 2015

Absolutely. The ability to compare various parties or PMs based solely on surpluses or deficits is inane. There are many factors that affect the outcome of a budget and one of the largest one affecting Canada is the FX since we are a net exporting country. Look at those years that the Liberals were getting the surpluses and you will see FX rates of 1.4-1.6 since the US was doing quite well at those times. Since the recession, the FX was around 1.0 -1.05....even dipping to 0.95 which hits the bottom line a lot harder. Even the most recent balanced budget is going to be achieved by the FX heading back to 1.2-1.3. All of which, no PM has any direct control over.

Sure; also, the economic impacts of policies might not be seen immediately. I guess I feel like while these are all good reasons to question the idea that the NDP are the best fiscal managers, they are equally good reasons to be sceptical that they have done nothing but "[run] various provinces into the ground", especially considering that NDP governments have been re-elected numerous times in SK and MB.

overthere · June 19, 2015

This basically means that they're keeping their promises, right?

They never promised to run up debt in the first couple of weeks.

They did not admit to having a few hundred thousand people to buy off in the first weeks.

Some people wonder why they'd undertake this when the province is in an economic slide, and the NDP have no grasp of the economy yet. It would be impossible for them to have any idea of what is going on, since they have not have any time and have no expertise yet in any case. So why commit to this new spending now, in advance of having a clue?. The answer of course is that they have political bills to pay to a number of groups, and this is a really expensive but by no means competed progress payment.

Others are comfortable with their govt running up bills that they certainly cannot pay in the near term.

Of course, there was no need to employ a psychic to know that they will spend our future. It's their way.

especially considering that NDP governments have been re-elected numerous times in SK and MB.

Perhaps you'd like to choose some other examples.

Saskatchewan was not well served by the NDP. Don't confuse popularity with good management. Mr Blakeney was a really nice man, but failed to diversify the SK economy despite a long run in charge. He was foiled by himself and his insistence/ policy that every industrial project required the SK government as major partner. That crushed many possibilities of jobs and development. Policy. Romanow wasn't much better, another nice guy who got little done.

Manitoba is an embarassment, a province with a lot going for it that still depends heavily on equalization payments to balance a budget. The main reason their unemployment rate has dipped in recent years is they export their workforce to SK and MB, hence a lower rate locally.

Vancouver King · June 19, 2015

Mean, back in Alberta, pretty much the first acts of the new NDP govt have been to increase personal and corporate taxes, rolled back planned revenue increases, rolled back civil service cuts and spent an additional $624 million on health care and education.

Tax and spend. No time wasted.

And Notley had to pay some political debts.......teachers, nurses, public servants....

They'll be quiet now until around the federal election in the fall. It's an absolute certainty that Notley, Topp and Mulcair will be running up some big long distance bills and have each other on speed dial.

Don't forget hiring ex Bank of Canada governor David Dodge for spending advice. Oh, does "rolled back planned revenue increases" mean cancelling Conservative tax increases?

Evening Star · June 19, 2015

Try this:

https://en.wikipedia.org/wiki/Solow%E2%80%93Swan_model

I'll admit that I skipped around in this and looked for explanations of this model that were even more dumbed down but I did not see anything that explicitly discussed the merits of corporate income taxes vs personal income taxes vs consumption taxes. Could you explain how it applies?

overthere · June 19, 2015

You're from B.C., so you can explain 'tax and spend' better than me through your vast experience..

The new govt won't explain, they are now going to stay relatively quiet until the federal campaign starts.

The very best way they can help Mulcair now is to not pop their heads above the parapet.

There is no need yet for them to prove what we all know: the $624 million this is only the beginning. They can also pretend for a while that they didn't know that the 2% increase in corporation tax and dropping flat taxes for a few people won't make much in the way of new bucks.

Luckily , the AB credit rating is really strong, so there is ample room to borrow.

Argus · June 19, 2015

Which is btw the 'american-style system' (at least comparatively). But don't tell the NDP this, they won't like it.

Not quite. The US system has lotteries, and while you can sponsor a relative it's not as loose as here. Here the family reunification doesn't take education, job skills, language skills, or anything else into account. And they sure aren't planning on bringing in 1% of their population every year. That would be nuts.

Probably. But are the liberals and conservatives better options? And personally, I'm tempted to vote NDP because it would be interesting to see how much damage they can do. Aren't you curious?

Well, to be honest, yes. But with both them and the Liberals promising to change the electoral system to eliminate FTTP I think we might well find that no matter how much damage they do we won't be able to get them out very quickly. Remember that almost a third of the voters don't pay income taxes and the Liberals, for one, want to make it mandatory for them to all vote. They aren't going to be upset at higher taxes, that's for sure. And they'll love all the extra spending. I suspect that if Harper doesn't get a majority we're going to see a coalition government where Trudeau and Mulcair raise taxes, raise spending, and pour as much of it into Quebec as they can. The federal government has been all about Quebec PMs raiding the till to feed money to Quebec since the mid 1960s. Harper has been the only exception to that and I'd rather not go back to more Quebec PMs siphoning off my tax dollars to fund their 'homeland'.

Edited June 19, 2015 by Argus

WWWTT · June 20, 2015

I can't offhand think of anything they haven't promised extra money for.

LOL!

Then you don't know where your tax dollars go!

Are they making military spending promises?

WWWTT

-1=e^ipi · June 20, 2015

Not quite. The US system has lotteries

I meant with respect to greater emphasis on family reunification.

Well, to be honest, yes. But with both them and the Liberals promising to change the electoral system to eliminate FTTP

I don't really trust the liberals on this with respect to properly eliminating FPTP. Either the liberals want the status quo, or they want to introduce STP because it would benefit them (and judging from comments by people like Trudeau or Garneau; they don't feel a referendum on the issue is necessary). STP would basically create eternal liberal governments and parties like the green party would have an even harder time obtaining representation. The NDP's position is far more reasonable (referendum first, then try to move towards proportional representation).

I think we might well find that no matter how much damage they do we won't be able to get them out very quickly.

One option is to simply leave the country. Then you can both satisfy your curiosity and not be greatly harmed by the economic policies. It's win-win.

Canada_First · June 20, 2015

Actually Canada's economy is now the #16 in the world!

How far down before do we slide before Canadians "get it"?

WWWTT

So raising taxes and spending will save our economy is your position. OK how will it do that?

Canada_First · June 20, 2015

Which is btw the 'american-style system' (at least comparatively). But don't tell the NDP this, they won't like it.

Probably. But are the liberals and conservatives better options? And personally, I'm tempted to vote NDP because it would be interesting to see how much damage they can do. Aren't you curious?

Canada will become like Greece. I have no desire to see that.

-1=e^ipi · June 20, 2015

So raising taxes and spending will save our economy is your position. OK how will it do that?

Magic! The magic of cognitive dissonance and belief! If people believe hard enough that everything is magically better than the NDP then it will happen... in their minds.

Edited June 20, 2015 by -1=e^ipi

Topaz · June 20, 2015

You know the Tories have grandfathered so many expensive items, that governments are going to have a tough time making ends meet in the near future.

-1=e^ipi · June 20, 2015

I'll admit that I skipped around in this and looked for explanations of this model that were even more dumbed down but I did not see anything that explicitly discussed the merits of corporate income taxes vs personal income taxes vs consumption taxes. Could you explain how it applies?

Sure I can explain the basic intuition behind the idea.

Firstly, in society goods and services are produced. How much goods and services are produced depend on many factors such as the number of people working, how much education or experience the people have, how much technology your society has, or how much physical capital there is. I'll focus on the physical capital aspect (because that is what is relevant in the context of your question). Basically, physical capital encompasses non-human things that are bought for the purposes of production. It can include tools, cars, or buildings. For example, a hammer is a form of physical capital; if I have a wooden mallet, I can hammer things faster than if I use my bear hands; if I have an iron hammer I can do more hammering that with a wooden mallet; If I have some sort of electronic hammer the I can do more hammering than with the iron hammer. Another example is a computer. If I have an old DOS computer, I can generally do more work than with no computer at all. However, if I have a windows7 computer, then I can do more work than with the DOS computer. As a 3rd example, I will do a building. It is easier to do office work in a mud-hut than outside; but even easier to do work in someone's living room; and even easier to get work done in an air-conditioned office building.

So physical capital is used in the production of goods and services, it costs money (usually), and if you have more physical capital, you will generally be able to produce more goods and services. In our society, people save money in banks or in bonds or in the stock market or wherever. Banks then take that money and invest it (in bonds or stocks or wherever). That money is then lended to companies to purchase physical capital. For example, a construction company might use it to by a bulldozer, a tech company may use it to buy a computer, or a trucking company may use it to buy a truck. That purchase of capital is then used to make goods and services which the population then benefits from. If a society has more savings then it will get more investment, which leads to a greater production of goods and services (which results in a richer society). Some taxes (such as consumption taxes) discourage consumption and encourage saving, where as other taxes (such as a capital gains tax) discourage saving and encourage consumption. Thus different taxes will affect the long run production of goods and services differently.

I'll point out that there is such a thing as saving too much. If you were to save 100% of what you produce then you would have nothing to consume, which would mean that you would have a very low standard of living (because what ultimately matters is consumption of goods and services; investment is a means to an end). There is an optimal amount of savings for a society. However, in the case of Canada or the USA, we are way under this optimal value so could benefit from more savings (some countries are arguably above the optimal, such as Japan).

WWWTT · June 20, 2015

So raising taxes and spending will save our economy is your position. OK how will it do that?

Good question!

First off, not everyone is going to get a tax hike. Only those that have been getting off from paying their fair share up to this point such as corporations. The middle class already pay their fair share!

As far as the spending part goes it has become alarmingly obvious our country is desperate need of infrastructure development and industrial development for decades now and is lagging far behind many countries!

WWWTT

Evening Star · June 20, 2015

Sure I can explain the basic intuition behind the idea.

Firstly, in society goods and services are produced. How much goods and services are produced depend on many factors such as the number of people working, how much education or experience the people have, how much technology your society has, or how much physical capital there is. I'll focus on the physical capital aspect (because that is what is relevant in the context of your question). Basically, physical capital encompasses non-human things that are bought for the purposes of production. It can include tools, cars, or buildings. For example, a hammer is a form of physical capital; if I have a wooden mallet, I can hammer things faster than if I use my bear hands; if I have an iron hammer I can do more hammering that with a wooden mallet; If I have some sort of electronic hammer the I can do more hammering than with the iron hammer. Another example is a computer. If I have an old DOS computer, I can generally do more work than with no computer at all. However, if I have a windows7 computer, then I can do more work than with the DOS computer. As a 3rd example, I will do a building. It is easier to do office work in a mud-hut than outside; but even easier to do work in someone's living room; and even easier to get work done in an air-conditioned office building.

So physical capital is used in the production of goods and services, it costs money (usually), and if you have more physical capital, you will generally be able to produce more goods and services. In our society, people save money in banks or in bonds or in the stock market or wherever. Banks then take that money and invest it (in bonds or stocks or wherever). That money is then lended to companies to purchase physical capital. For example, a construction company might use it to by a bulldozer, a tech company may use it to buy a computer, or a trucking company may use it to buy a truck. That purchase of capital is then used to make goods and services which the population then benefits from. If a society has more savings then it will get more investment, which leads to a greater production of goods and services (which results in a richer society). Some taxes (such as consumption taxes) discourage consumption and encourage saving, where as other taxes (such as a capital gains tax) discourage saving and encourage consumption. Thus different taxes will affect the long run production of goods and services differently.

I'll point out that there is such a thing as saving too much. If you were to save 100% of what you produce then you would have nothing to consume, which would mean that you would have a very low standard of living (because what ultimately matters is consumption of goods and services; investment is a means to an end). There is an optimal amount of savings for a society. However, in the case of Canada or the USA, we are way under this optimal value so could benefit from more savings (some countries are arguably above the optimal, such as Japan).

OK, that seems straightforward enough. It would seem that the variables would include: what the optimal level of savings actually is, the extent to which an x% increase in different tax rates would impact the levels of savings and consumption, and perhaps the extent to which economic growth and a "richer society" should be prioritized above other considerations. It's still not clear to me from this explanation why corporate income taxes would necessarily discourage savings more than other non-consumption taxes, e.g. your example of capital gains taxes.

Paul Krugman, who is also a Nobel-winning Ivy League economist, advocates raising both income taxes and consumption taxes, so I still wonder if there is consensus among economists on these points. Has Solow expressed a view on this (on the specific question of how people should be taxed in the present day)? I ask because I thought he was considered a fairly left-leaning economist.

If it is true, as you mentioned earlier, that consumption taxes are progressive, why is it that I never heard social activists who advocate for low-income communities advocate in favour of consumption taxes? It seems unlikely that it is purely out of economic ignorance?

(My own untrained intuition, fwiw, would be to favour lower business taxes and higher personal income taxes, which I gather is how it is done in Nordic countries. Also to scrap most of the vote-buying tax credit schemes the Cons have come up with.)

Freddy · June 20, 2015

I've been glancing through the NDP policy manual, something I suspect very, very few Canadians have done. There's an AWFUL lot of stuff there about increasing spending on almost everything, and there's a lot of suggestion of increased taxes in many areas which haven't gotten a lot of airplay.

Let's start with the impact of NDP policies on business. After all, the primary economic duty of a government is to provide a stable and business friendly environment so that business can grow and flourish - thus hiring lots of people who will then pay lots of taxes instead of consuming them as social assistance.

The first thing which we can take note of is a promise to increase taxes. They aren't specific here. As was noted in the Post they first promised to bring it in line with the OECD average until they found out we already were. Then they used the G7 but we're in line there too. So lately they're just saying we'll be below the Americans. The American rate is way above ours, giving them lots of room to raise corporate taxes by 5-6-10% if they want. The thing is the EFFECTIVE rate is much different, in the US than the posted rate. That's how some corporations make billions but pay no tax

Most economists seem to feel this is a bad way, even the worst way to raise money, by the way, preferring consumption taxes.

On top of the corporate tax increase the NDP promise a revenue raising emissions scheme, ie, a cap and trade tax which raises money for the government. So this would be an additional tax on corporate Canada as well.

There's something in there about 'regulating the flow of international capital' and a bunch of things about increasing oversight, banning vertical integration, and making sure bigger companies are 'fair' in how they deal with small business, and banning mergers in the financial sector.

Oh, and they'd tax capital gains at the same rate as salaries. This would have a simply ENORMOUS effect on not merely corporate investment, but foreign investment in corporations. It would also have an ENORMOUS effect on Canadians who are trying to save for retirement by investing in the stock market. Right now only 50% of capital gains are taxed. The NDP would effectively be doubling the rate.

And if you like having your pension gains taxed at a higher rate you'll love their promise to "the enhancement of the Gas Tax Fund transfers to municipalities." How do you enhance that when you're broke? By increasing gas taxes. No other way to do it.

There's also a promise to increase immigration to 1% of the population, that would be a substantial increase, and to focus immigration not on skilled immigrants but on family reunification. That's the same priority which got our public housing projects jammed with immigrants in the eighties and nineties. Bringing in hundreds of thousands of illiterate third world people who have little or no chance to successfully participate in Canada's job market at anything below unskilled labour levels. In fact, they would even allow the sponsorship of relatives who aren't members of the family class, say a distant cousin.

There's a bunch of stuff in there about recognizing Quebec is special, and giving it all kinds of new powers and options to opt out of federal programs while still being paid, supporting Quebec in protecting French, enhancing the powers of the Official Languages Commissioner, enhancing minority language services and improving bilingualism rates in all areas of Canada right down to local community services. You can sure tell this is a party which is Quebec based, much like the old time Liberals.

All in all it's a massive collection of changes, and much of it is not well-defined. I've only dealt with the ones which are obvious. This manifesto looks like it was written by lawyers to allow many passages to mean anything they decide they want them to mean.

Here is the NDP policy manual . http://xfer.ndp.ca/2013/policybook/2013-04-17-PolicyBook_E.pdf

They have every feminist interests group lobbying them. Electing the NDP will result in 4 years of women's rights legislation.

Argus · June 20, 2015

Good question!

First off, not everyone is going to get a tax hike. Only those that have been getting off from paying their fair share up to this point such as corporations. The middle class already pay their fair share!

The problem is taxing corporations reduces their profits. Reducing profits means they don't invest in expansion. And yes, the middle class will get tax increases. To start with, increasing the capital gains tax from 50% to 100% will affect any Canadian who has a pension plan, public or private, or who invests their own money in the stock market. The government will be taking a lot more of the profits of their investments. Then there's the new gas tax, how big we don't know, and the new C02 emissions tax, which will also certainly affect the price of gas, and likely electricity and natural gas. But even all that isn't anywhere near enough to pay for all the NDP promises. Which means either they won't carry through on a lot of their promises, or there will be additional tax increases.

Edited June 20, 2015 by Argus

overthere · June 20, 2015

Which means either they won't carry through on a lot of their promises, or there will be additional tax increases.

Let us not forget the ease with which many billions can be borrowed as well.......

GostHacked · June 20, 2015

Taxes are not paid while these companies move their operations to another nation with lax labour, environmental laws that provide very very cheap labour.

Raising taxes will get them to move that notion along more and faster, and you will see companies move their HQ somewhere else. But this started 30 years ago, so I am not sure how that will turn around in a 4 year term under ANY future short term government.

overthere · June 20, 2015

Taxes are not paid while these companies move their operations to another nation with lax labour, environmental laws that provide very very cheap labour.

Raising taxes will get them to move that notion along more and faster, and you will see companies move their HQ somewhere else. But this started 30 years ago, so I am not sure how that will turn around in a 4 year term under ANY future short term government.

Not worried about corps moving their HQ from Canada, there are not many to begin with.

I'd be more worried about them moving production and manufacturing elsewhere.

Ontario has already has a dose of that. Alberta next I reckon.

Anybody planning on retiring in this country in the next 20-30 years better do some hard thinking and planning now. That generous social contract we have now is going to get much, much tougher to fund soon.

WWWTT · June 20, 2015

The problem is taxing corporations reduces their profits. Reducing profits means they don't invest in expansion. And yes, the middle class will get tax increases. To start with, increasing the capital gains tax from 50% to 100% will affect any Canadian who has a pension plan, public or private, or who invests their own money in the stock market. The government will be taking a lot more of the profits of their investments. Then there's the new gas tax, how big we don't know, and the new C02 emissions tax, which will also certainly affect the price of gas, and likely electricity and natural gas. But even all that isn't anywhere near enough to pay for all the NDP promises. Which means either they won't carry through on a lot of their promises, or there will be additional tax increases.

You know Argus? You just sit there and let Canadians decide what's better for a chance instead of the corporate elite.

Don't like how Canadians are going to vote? Then go out there and knock on doors and yell at voters then!

That should change their mind!

WWWTT