Policies of the Federal Parties in Personal Finance Perspective. Part 1.
This the first of four blog posts I intend to post in the next few weeks on the election platforms of the various parties that seek to put up candidates in every province of Canada and also have MPs currently elected to the House of Commons.
The emphasis on these posts is to present the platforms and policies of the parties that will directly affect household income and wealth. While many policies have a broad impact on the economy which will ultimately affect our personal financial accounts, I want to focus on those policies that explicitly and directly affect “home economics,” one might say.
Part 1. The Green Party of Canada
As I write this, I do not see an election platform for 2021 on the Green Party website. However, the 2019 platform is still available and there is an additional document published in 2020, entitled Reimagining Our Future, so I will work from those documents.
The titles for each of these sections are taken from the platform section headings.
Establish an arm’s length Federal Tax Commission to analyze the tax system for fairness and accessibility, based on the principle of progressive taxation.
Close tax loopholes that benefit the wealthy:
The stock option loophole is one of the most expensive and unfair tax loopholes. Executives with stock options as part of their remuneration package only pay half the rate of income tax on this portion of their income.
The capital gains loophole allows people and corporations to only add half of their capital gains to their taxable income, while those with only employment income pay taxes on their entire income. Over 90 percent of the value of this tax break goes to the richest 10 percent, and about 85 percent goes to the top one percent.
End offshore tax dodging by taxing funds hidden in offshore havens and requiring companies to prove that their foreign affiliates are actual functioning businesses for tax purposes. Provide adequate funding to the Canada Revenue Agency (CRA) to collect tax revenue hiding in offshore tax havens. Several Auditors General have recommended that the CRA should focus on people who hide vast wealth, rather than conduct random audits of ordinary Canadians.
Apply a corporate tax on transnational e-commerce companies doing business in Canada by requiring the foreign vendor to register, collect and remit taxes where the product or service is consumed. The e-commerce sector – giants like Netflix, Facebook, Amazon, Google, and Uber command a significant share of the Canadian market but pay virtually no tax.
Impose a financial transactions tax of 0.5 percent in the finance sector as France has done since 2012. This tax will only apply to stock purchases made by large, publicly-traded financial institutions.
Increase the federal corporate tax rate from 15 to 21 percent to bring it into line with the federal rate in the United States, our biggest trading partner. Mark Carney, former Governor of the Bank of Canada, said corporations are holding “hundreds of billions of dollars in their bank accounts,” rather than reinvesting in the economy. This dead money needs to be mobilized for the transition to a green, renewable economy.
Maintain the current level of taxation for small businesses.
Charge a five percent surtax on commercial bank profits. Commercial banks accumulate huge profits – $43.15 billion for the five largest banks in 2018 alone. Credit unions, caisses populaires, and co-ops will be exempt.
Prohibit Canadian businesses from deducting the cost of advertising on foreign-owned sites such as Google and Facebook which now account for 80 percent of all spending on advertising Canada.
Eliminate the 50 percent corporate meals and entertainment expense deduction, which includes season tickets and private boxes at sporting events.
Increase the tax credit for volunteer firefighters and search and rescue volunteers.
Apply a one percent tax on net (family) wealth above $20 million.
Institute a 10 percent tax on sugary drinks, before other sales taxes, to discourage their consumption. Sugar-sweetened beverages are a leading cause of obesity and certain types of diabetes.
Capital Gains. I would guess that most Canadians hold their investment assets inside RRSPs or TFSAs. Generally, only those who have maximized their contributions inside these account types would be forced to use a non-registered account. Even so, many would not view themselves as particularly wealthy who nevertheless have non-registered assets subject to capital gains tax. They would find the elimination of the 50% capital gains inclusion rate to be troubling.
Both the Financial Transactions Tax and the Wealth Tax were feared by many Canadians as being anti-investment. That these taxes would only apply to large financial institutions or families with wealth over $20 million may help settle those fears.
Several other items are relevant to small business owners or business start-ups.
Managing Technological Change
Bring in a Guaranteed Liveable Income to reduce anxiety as the world of work is disrupted in ways we cannot predict.
Eliminate tuition to increase education and trade level skills to adapt to change.
Institute a tax for large corporations that is the equivalent to the income tax paid by employees who have been laid off due to AI. Small businesses will be exempt.
Use this tax revenue to fund educational and transition programs for laid-off workers, including trade schools.
Track automation in different sectors and non-automatable jobs. Fund job creation, emphasizing a secure future in meaningful work.
This is mostly about protecting people from the rapid changes taking place in our economy.
Enact Right to Repair legislation that requires producers to provide consumers or repair shops with replacement parts, software and tools for diagnosing, maintaining or repairing their products, for a fair price, and to reset any electronic security that may disable the device during diagnosis, maintenance or repair.
Limit credit card interest rates to a maximum of 10 percentage points above the Bank of Canada prime rate.
Limit ATM fees to $1 per transaction and prohibit financial institutions from charging their own customers ATM fees.
Amend CRTC regulations to increase competition in the provision of cellular and internet services to consumers and decouple payments for cell phones from cell services.
Enact provisions to protect consumers and investors from fraud and theft in the cryptocurrency spheres, and direct Revenue Canada and law enforcement agencies to develop practical methods for preventing the use of cryptocurrencies for money laundering and funding terrorism.
These all seem reasonable rules to impose. I do wonder, however, where the companies impacted will go to make up the revenue. Will product manufacturers simply raise initial prices on products? Will credit card issuers demand minimum annual spending on premium credit cards? Will the banks raise monthly account fees?
The cryptocurrency concerns are legitimate and need to be addressed.
Expand the single-payer Medicare model to include Pharmacare for everyone as well as free dental care for low-income Canadians.
As someone who had a kidney transplant five years ago and dealt with declining health over the previous decades, I am well-acquainted with the healthcare system and the cost of drugs. Indeed, as I was preparing for the transplant, one of the questions my wife and I had to put to our group benefits providers where we worked was whether they would cover the cost of the drugs that I would be required to take. It is rather odd in my view that we can be diagnosed with a treatable condition without paying out of pocket, but that we may not be able to afford the treatment without insurance in place.
Establish a universal Guaranteed Livable Income (GLI) program to replace the current array of income supports, such as disability payments, social assistance, and income supplements for seniors.
Payment would be set at a “livable” level for different regions of the country. Those earning above a certain total income would pay the GLI back in taxes.
Establish the federal minimum wage of $15 per hour.
Work with the Council of Canadian Governments and Statistics Canada to set municipal minimum wages in accordance with the differential costs of living across the country.
Even if these policies will not directly affect most, given the patchwork of welfare programs that we already pay taxes for, a Guaranteed Livable Income has the potential to simplify the bureaucracy, reduce costs, and increase access to assistance that will always be necessary for some people. Reducing poverty also has positive spinoff effects in reducing the costs of healthcare and crime, to name two areas, and increasing economic productivity.
Safe Affordable Housing
Legislate housing as a legally protected fundamental human right for all Canadians and permanent residents.
Appoint a Minister of Housing to strengthen the National Housing Strategy. The target would be 25,000 new and 15,000 rehabilitated units annually for the next 10 years.
Eliminate the first-time home buyer grant.
Are these the most effective policies for the affordable housing issues that Canada and many other countries are facing? I am not sure.
The first-time home buyer grant is a bit unclear to me. There are two federal policies that may be meant. The first is the Home Buyers’ Amount which allows you to claim $5,000 for the purchase of a qualifying home. This is a tax credit. The second is the ability to withdraw up to $35,000 from your RRSP under the Home Buyers’ Plan (HBP) without having to pay withholding taxes. To avoid taxation, you need to pay back the amount withdrawn over a maximum 15-year period. The argument is that both of these policies allow potential first-time buyers to generate a down payment. One negative is that they may exacerbate the increase in house prices. A second is that money that has been set aside for retirement is now no longer compounding inside an HBP user’s RRSP, which may set back their retirement savings goals. If anything, I would encourage legislators to consider eliminating the HBP more than the Home Buyers’ Amount.
Taking Care of Canada’s Children
Universal childcare is fundamental for women’s equality –the “ramp to equality in the workplace for women.”
Canada must dedicate additional resources to making a universal, affordable, early learning and child-care (ELCC) system a reality.
Ramp up federal childcare funding to achieve the international benchmark of at least one percent of GDP annually, adding an additional $1 billion each year until this benchmark is reached with a mature ELCC system. We will eliminate GST on all construction costs related to child-care spaces.
Preparing financial plans for young couples with children or who are planning to have children reminds me that the costs of childcare are significant. Something needs to be done.
Investing in Post-Secondary Education
Make college and university tuition-free for all Canadian students. This would be financed by redirecting existing spending on bursaries, tuition tax credits, saved costs of administering the student loan system, and the hundreds of millions of dollars of student loan defaults written off every year. Tuition scholarships provided by colleges and universities can be redirected to offset other student costs.
Eliminating existing student debt above $10,000.
Remove taxes on the sales of textbooks.
Ensure access to tablets, computers, and high-speed internet.
This is fraught with controversy. What about those former students who diligently paid off their student loans? Nevertheless, costs of post-secondary education are rising significantly faster than general inflation rates. Funding an RESP so that parents or grandparents can help out their (grand)children is now standard for many households. I don’t know what precise policies should be enacted, but reducing costs is essential in my view.
Respecting and Supporting Seniors
Ensure the Canada Pension Plan (CPP) remains robust and adaptive to changing needs and circumstances by increasing over time the target income replacement rate from 25 percent to 50 percent of income received during working years.
Support innovative home-sharing plans and other measures to allow people to stay in their own homes as long as possible. Create more long-term care beds in neighbourhood facilities.
Protect private pensions by amending the Bankruptcy and Insolvency Act and Companies’ Creditors Arrangement Act to establish the preeminence of pensioners and the pension plan in the creditor hierarchy during company insolvency proceedings.
Eliminate private ownership of seniors’ care and living in favour of public and/or non-profit management structures.
I follow a couple of social media forums on retirement. Many seniors find that they are having difficulty making ends meet. Regardless of the circumstances that led them to that situation, I don’t think that Canadians want to see retirees living in poverty.
I will note that the current enhancements to the Canada Pension Plan are taking the income replacement target from 25% to 33%. Shifting the target to 50% will decrease the importance of personal savings and employer-sponsored pension plans. However, it may still not be adequate for those who have spent their careers in low-income jobs and who have therefore contributed relatively little to their CPP.
I tend to agree with the idea of eliminating private ownership of seniors’ care homes. The profit motive can lead to a variety of positive actions; I’m not sure that is appropriate in this arena.
The Green Party has many more items in its policy platform, but I believe these are among the most salient for personal financial matters.
This is the 112th blog post for Russ Writes.
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Disclaimer: This blog post is intended for general information and discussion purposes only. It should not be relied upon for investment, insurance, tax, or legal decisions.
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