OTTAWA (Reuters) - Re-election with a strong majority allows Canada’s Conservatives to press ahead with an agenda that includes corporate tax cuts and a balanced budget, winning early plaudits from the business community.
The Conservatives, who won 167 of the 308 seats in the House of Commons in Monday’s federal election, have long planned to cut the corporate tax rate to 15 percent next year from 16.5 percent. Their goal: to help Canadian business compete in a global market.
They say other tax breaks, including a family-friendly plan that will lower tax rates for couples with children, will follow once the government eliminates Canada’s record-breaking budget deficit. They promise that will happen within four years.
“Our first job will be to implement what we set out in our budget -- our plans for jobs and growth without raising your taxes,” Prime Minister Stephen Harper said at his victory party early on Tuesday.
The election polarizes the Canadian political scene, leaving just two parties with a significant number of seats in Parliament. The left-leaning New Democrats won 102 seats to become the official opposition.
The Conservative agenda is a plus for Canada’s business sector, which had fretted at the possibility of the pro-labor New Democrats forming a minority government, supported by the Liberals. The New Democrats had promised to eliminate subsidies for the oil industry and bring in environmental curbs.
“By getting a clear (Conservative) majority in the Parliament, markets are able to handicap investment opportunities better,” said Stephen Wood, chief investment strategist for North America at Russell Investments in New York. He said oil and gas shares will probably get a boost, as will tax-sensitive and interest-rate sensitive sectors.
”The outcome of this election gives certainty for a policy continuity and it allows fundamentals to drive investments more.
Canada emerged from the global financial crisis in better shape than most other economies, helped by its strong reliance on energy and commodity exports. Canada is the largest supplier of energy to the United States.
Harper will also eliminate the Canadian Wheat Board’s monopoly position on wheat and barley exports from Canada’s western provinces, and eliminate public financing for political parties, something that may cripple opposition parties less adept at raising funds than the Conservatives.
His government is more likely to approve foreign investment in Canada than the New Democrats would have been, boosting the chance that the London Stock Exchange’s takeover bid for its Toronto rival, TMX Group, will win a Canadian green light.
Opponents say Harper, from the west of Canada, is beholden to social and religious conservatives who want to curb abortion rights and scrap gay marriage laws.
Harper says he has no plans to reopen the abortion debate and would work to block anyone who tried to do so. Abortion is legal in Canada.
Roger Gibbins, president of the Canada West think tank in Calgary, Alberta, said western conservatives generally believe the federal government should be smaller and more focused on the economy.
“I think he would be perhaps more assertive in trying to find common border security with the United States, common energy agreements with the United States, and I think that probably makes economic sense,” he told Reuters before the election.
Gibbins predicted a Harper government would be less vigilant about policing the Canada Health Act, which underpins the creaking state-funded health care system and limits the role of the private sector.
Additional reporting by Ka Yan Ng; editing by Peter Galloway