OTTAWA (Reuters) - Canada’s left-of-center New Democratic Party, which is leading opinion polls ahead of October’s election, would not enact surprise corporate tax hikes if it takes power and has “great confidence” in Bank of Canada policies, its finance critic said.
The NDP, viewed as the furthest left among major political parties, is suddenly the center of attention as its tops the polls, opening the possibility that it could form a federal government for the first time.
With that in mind, Nathan Cullen, 42, who would be a candidate for finance minister in an NDP government, said in an interview that his party realizes its views leave it with a higher bar to meet to persuade voters it will be fiscally responsible.
Party leader Thomas Mulcair took the same tack as he laid out the NDP’s economic platform on Wednesday, pledging more support for the middle class and manufacturing.
“We, in a sense, think we have to do better than the other parties when it comes to costing and the veracity of our offering, and that’s fine,” Cullen said.
The former small business owner said the NDP would institute corporate tax hikes, but stressed “there won’t be any surprises”, though he declined to give a figure.
The NDP said in the 2011 election campaign that it would raise the federal corporate tax rate to 19.5 percent. It is now 15 percent.
Mulcair has said the party would bring corporate taxes closer to the average of the Group of Seven leading industrialized nations, while keeping them competitive.
The average G7 federal corporate tax rate is 24.5 percent, more than nine points higher than Canada’s federal rate. However, the tax rates, once non-federal taxes are included, are closer: 26.3 percent in Canada and 29.9 percent as a G7 average.
But Mulcair made factual errors about tax rates in a Wednesday radio interview, and his opponents quickly jumped on them to reinforce the view that the NDP is weak on the economy.
“That is typical of the NDP. It does not know what the taxes are; it just knows everybody’s taxes have to be higher,” Conservative Prime Minister Stephen Harper said in Parliament.
A Reuters estimate of the spending proposals the NDP has released so far would put the federal budget close to balance. This calculation excludes as-yet unspecified increases in foreign aid, future campaign promises, as well as higher corporate taxes.
In the 2011 campaign, the party also promised to raise C$21.5 billion ($17.8 billion) over four years from a cap-and-trade program to limit carbon emissions. But this plan has been complicated in the interval by some of Canada’s provinces going forward with their own plans.
“Federal leadership is required to bring the provinces together...and seek ways to make a program as efficient and effective as possible,” Cullen said.
While the NDP has never formed a federal government, it has been the government in several provinces and took power in Canada’s oil-rich Alberta last month, ending a 44-year Conservative reign. The NDP victory in Alberta, once unthinkable, has set the stage for a strong challenge to Harper, whose Conservatives have been in power in Ottawa for nine years.
As the NDP rises in the polls, Cullen has seen an increase in corporate visitors to his office, eager to talk about the party’s economic plans.
“When I sit with business leaders and offer the full suite (of policies), we spend the least amount of our time on the corporate tax rate,” he said.
Cullen said he backs the Bank of Canada, but he would not say whether Canada’s 2 percent inflation target should be raised or whether he preferred a weaker Canadian dollar.
”Overall, we have great confidence in the way the bank has been handling things,“ he said. ”Obviously this is a conversation we will have with the governor, if we were to form government, when the (inflation target) review comes up.
“But in general we have satisfaction and confidence in the governor’s targets and estimates, so we don’t foresee any significant change, but it’ll be a conversation we’ll have.”
He also said housing prices in some cities have become “dislocated from reality” but said the party is not contemplating fresh measures to cool the market.
Reporting by Randall Palmer; Editing by Peter Galloway