Beyond The Commons

Aaron Wherry covers all the goings-on in and around Parliament Hill. Follow Aaron on Twitter: @aaronwherry

Categories: Beyond The Commons, Capital Read

What a New Democrat wants

by Aaron Wherry on Thursday, January 13, 2011 5:09pm - 39 Comments

David Akin reviews Jack Layton’s demands.

“New Democrats are fighting to make sure stronger public pensions are part of the next budget. We’re looking for practical steps here. Like a modest increase in the guaranteed Canada Pension Plan. And an increase to the GIS, so seniors can afford the everyday basics they need … New Democrats have called on Mr. Harper work with us to drop the 5% federal sales tax on your home heating. We’d also bring back the eco-renovation tax credit — so families can make their homes more efficient to cut their bills even further.”

Tags: Budget, Canada Pension Plan, economy, GST, guaranteed income supplement, hst, Jack Layton

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Richard_S_Argent

Damn tax and spend socialists! When will they learn?!!?
Emily

Lemme see now….on the one hand 'pensions', and on the other hand 'fighterplanes'.

Pensions, fighterplanes….hmmm

Tough decision. Not.

Neil from Calgary

Ah, the old "Guns V Butter" debate

Emily

And people will choose 'butter' everytime, having no use whatever for 'guns'.

Poker Face

Neville Chamberlain, of course, needed some butter for his scones.

Emily

Well since Chamberlain lived in the last millennium, its pointless to quote him now.

Cons really have to update their calendars.
Horatio

*Farting Noise*

Okay, we get it. You don't like Harper.

Just so we have it straight, Pension Premiums up (resulting in decreased wages) and no fighter planes. Probably no to prison upgrades too right?
Emily

Why is it Cons are crude….poor upbringing is it…….

No, I dont like Harper…or any other neo-con

Hint…people are much more interested in pensions, elder care, jobs, education….than they are on useless fighterjets, mega-prisons, corporate tax breaks, and invading stone-age countries.

Crit_Reasoning

According to economist Stephen Gordon, the NDP budget demands are "markedly less silly" than those of the Liberals. Although he thinks the heating tax cut is a bad idea, he considers it "less dumb" than the Liberal position on corporate taxes.

Dot

Yes, it's obvious you follow his continuous twitter feed. And he is obviously at the core a conservative supporter. hence why he was earlier advocating the Conservatives enter into a war of attrition in the fall when there are a number of provincial elections.

Had you bothered listening to his radio interview he linked to in an earlier feed about corporate taxes? It was obvious he doesn't understand at a basic level how executives are compensated – one of his talking points also on twitter. He claims executives don't benefit from corporate tax cuts because their salaries are deducted before taxes are applied. yeah, duh. Executives are increasingly compensated through stock options and profits of a company. When a corporations taxes are cut (and the savings are not invested) what happens? The profits increase, the P/E ratio adjusts and the stock price/profitability rises. And who benefits?

This is but one example – but it requires some basic understanding of how companies really work – not suitable for the 10 second clip, and the twitter crowd who embrace simplistic thoughts in 140 characters or less…

Crit_Reasoning

Heh. Somehow I knew you'd reply, Dot. Must have something to do with your grudge that led Stephen Gordon to banish you from his blog.

Yes, Mr. Gordon is among the hundreds of people whose tweets I sometimes follow on TweetDeck, during moments of idleness. I'm surprised to hear you claim that he's "at the core a conservative supporter". He's always seemed scrupulously nonpartisan to me. Indeed, it was Mr. Gordon who led the charge against Tony Clement and the census decision, and he has been an outspoken critic of the GST cut and some policies of the current government.

All this is beside the point, though. Stephen Gordon hardly needs a non-economist like me to defend him from the slings and arrows of anonymous cranks. His views on corporate tax cuts are shared by a majority of economists.

I haven't listened to the radio interview, so I can't comment with regards to the executive compensation thing. However, it seems to me that tax policy which boosts investment, improves productivity and increases profitability is a good thing—not just for executives, but for the workers they employ and the Canadian economy as a whole.
Dot

His views on corporate tax cuts are shared by a majority of economists.

Particularly academic ones. And therein lies the problem. Believe me, I've tried getting down to the basis of this claim measured against actual Canadian economic performance. It doesn't withstand scrutiny.

You should try independent and critical thought – and quit just quoting people who support your political views on given topics. It's tiresome, and attracts "anonymous cranks".
Crit_Reasoning

Particularly academic ones. And therein lies the problem.

I'm puzzled. Do you imagine that "non-academic" economists (business economists, etc.) oppose corporate tax cuts?
Dot

No. What I am suggesting is that it is deeply rooted in theory. And academic economists are the purest theoretically, I find. Heck, they teach the stuff.

Economic theory has some pretty absurd assumptions about the real world that individuals (non economists I would suggest more than others) who have worked in the private sector would have difficulty accepting if they bothered to look into it further. But it forms the nucleus of what is "best".
madeyoulook

You generally end up with more of what you encourage through subsidy (or disinhibit through tax cuts), and you generally end up with less of what you discourage through taxation.

Hey Canada! Let's play Spot the Absurd Assumption!
shouldIsellyourwheat

The CPP and the defined benefit and contribution pension plans of Canadians are funded why holding a significant portion of their assets in the stock market and in corporate bonds. So those higher stock prices also fund Canadian pensions. Corporations with greater profitability are able to pay back their bonds to fund Canadian pension.

The so-called progressives seem to think that pensions are funded out of thin air.
Dot

But the rationale for CIT cuts, according to SG, is to create investment in equipment/productivity enhancing improvements. My point is that , over the past number of yrs, while taxes have been cut, these investments have not occurred. So, where did the $$$ go? I have largely argued to shareholders, as you seem to be doing. Some economists argue largely to employees and customers. I don't believe the evidence bears this latter argument out.
madeyoulook

Some economists argue largely to employees and customers. I don't believe the evidence bears this latter argument out. Really? Because the control group in the alternate universe helps you come to that conclusion?

I have largely argued to shareholders, as you seem to be doing. Shareholders who enjoy the dividends and the gain in value of their investment. And that reward for investing in a business is bad? Oh wait! Shareholders pay taxes, too!
TimesArrow

Ah the shareholders…now that's everyman isn't it? It might help to explain why there's so little real heat on executive over-compensaton? We're all pigs in clover these days it seems.
Dot

When your economy increasingly becomes resource based (as Canada's has over the past decade) then consumer prices are set by world demand for the commodity. So, no to cuts being passed onto consumers.

And, compare stock price gains in, say, the O&G sector over the same period with wages. Not even close.

I think you're missing the point. If the intent of CIT cuts is to increase productivity, then this policy appears not to be working. So, a different approach is warranted. Perhaps accelerated CCA.

Your comment about shareholders paying taxes is not relevant to this point.

Crit_Reasoning

Shouldn't this blog post be titled: "Conservative-NDP Coalition Watch"?
M_A_D_world

If Layton would stick to arguments such as these the NDP could gain in respectability. Clear, concise and meaningful policy debate. I'd add principled but I'm expecting them to implode once another party steals the spot light again.
madeyoulook

We’d also bring back the eco-renovation tax credit — so families can make their homes more efficient to cut their bills even further.

Uh, Jack, if it were such a brilliant and money-saving idea, we wouldn't need the tax credit.

Albert

And we certainly don't need to be subsidizing wealthy home owners! What about the poor renters?
Thwim

Some people can't afford the up-front costs to take advantage of money-saving ideas.

Tankless water heaters, for instance, will save you money in the long run. So why isn't everybody lining up to get them? Because to save money in the long run requires access to capital in the short run that you may not have.

Now, a tax-credit certainly isn't as good as a rebate, but to say that if any idea is a good one then it shouldn't need a tax-credit to happen is simply naive.

shouldIsellyourwheat

When is the mainstream media going to call out Layton on the blatant hypocrisy of removing the taxes on home heating oil when he is a staunch believer in human-caused climate change?

http://myblahg.com Robert McClelland

When are you going to learn the meaning of hypocrisy?
Dot

This was also a talking point of right leaning economists a few months back.

Got any evidence that home heating consumption went up during the period when the GST was cut by 2%?

I bet the answer is no. And hence why I doubt a 5% chop in taxes would have any significant effect either on consumption.

madeyoulook

You think a price reduction will encourage less consumption?

People, it's a broad-based consumption tax for a reason. It should still be at 7%, maybe higher. There is already a rebate for lower income Canadians. Layton's drivel is somewhere close to the retail politics garbage of Harper's variety of mini-credits for Novice Hockey and bus passes. It's just plain dumb.

Dot

Home heating fuel demand is 'less elastic". For fuel for transportation, I'd agree with you.

Thwim

You really think people are going to go, "Hey Martha! Our heating bill is $20 cheaper than last month.. get out your bikini, I'm turnin' the thermostat up!"

TimesArrow

True…but a more generous rebate would make a whole lot more sense. No need to give a tax cut to those who don't need it – they might well turn the thermostat up. Why are we so addicted to these kinds of broad based [ call them universal?] tax measures – lets target the people who need the help most – why is that such a problem for us to grasp?

klem

You're right about that. Though a reduction of 5% would not increase consumption (a cold winter will do that), the point of Layon’s beloved Cap&Trade was designed to drive up the cost of home heating oil, it was actually designed to drive up the cost of all products with oil in their price. In other words, everything. So I agree, Layton is being a hypocrite. But Layton also knows that the climate change war is now dead, that the public is suffering "issue fatigue" with respect to climate change, so it is off his agenda now. Even the media does not say the term 'climate change' anymore, instead they fill the airwaves with bad weather scare stories, with out mentioning the word. Oooh it’s flooding in Australia, oooh it’s windy in New Brunswick, oooooh it’s snowing in London.. Oooh be scared! Lol!

EvInOz

I'm still in my 20s, and I don't see any reason to believe that I stand to get anything from the Canadian Pension Plan. So as a young-ish voter, why would I vote NDP? Let's be realistic, anyone in my generation is likely going to be working at least until they are 80, and any pension will be based on what we were lucky enough (or rather smart enough) to save during the previous 60 years.

If the NDP really wants to make gains on the Conservatives and Liberals, they are going to have to better than to pander to people who remember the good old NDP days of the 60s and 70s.

klem

I agree, the NDP should be sucking up to the 20 somethings. Fortunatly the 20 somethings don't vote.
Leo

Hope you opened up your TFSA – one of the nicest gifts from the conservatives :-)

EvInOz

The TFSA is a nice thing, though it is only advantageous if you already earn enough to top it off after paying off other obligations. That is something that I am not in a position to do at the moment, and I doubt many people in their 20s are either.

And to reiterate, I don't see any political party trying to reach out to people under the age of 40, which is a big reason they don't vote. The baby boomers are the largest voting bloc, so political parties will keep pandering to them even if it will eventually bankrupt the country. The NDP better be careful on their policy, because I don't see many young people turning to them, and I imagine the party will eventually fade away.

AT1

The NDP policy of reducing heating costs is directly at odds with its intent to get individuals to increase home energy efficiency through renovation rebates.

Both are laudable goals individually. But when government makes something cheaper, it generally increases consumption of that commodity.

klem

My understanding is that oil is priced in US dollars. The USA is printing money hand over fist, devaluing their dollar. Since it requires more of these devalued dollars to buy a barrel, the price of oil will gradually rise. This is in effect a tax on carbon. When interest rates rise again, the price of oil will fall, reducing the effective tax. Either way, the only people hurt by this will be low and middle incomers, the wealthy will continue to not notice. You all seem to want this to happen, good luck with this folks.