By Greg Quinn
(Updates with tax measure in sixth paragraph, environment in 10th paragraph.)
April 3 (Bloomberg) -- Canada?s opposition Liberal Party leader Michael Ignatieff proposed C$8.23 billion ($8.54 billion) of programs over two years while cutting the deficit to 1 percent of the country?s economy in releasing his campaign platform for the May 2 election.
The programs would be mostly paid for by reversing Conservative Prime Minister Stephen Harper?s reductions to the corporate income tax rate, generating C$8.32 billion over two years, the party said in a plan released in Ottawa. The Liberals reiterated social spending pledges made last week, and said they double Canada?s deficit reduction fund to C$3 billion a year.
?We are bringing a new level of economic stability to Canadian families by helping them with cost of post-secondary education, child care, family care, saving for retirement and energy-efficient home improvements,? Ignatieff, 63, said today in Ottawa.
Ignatieff contrasted his plans for new social spending with Harper?s business tax reductions and narrowly based personal tax cuts. Harper, who today pledged to double a fitness tax credit for children and extend it to adults, warned that even if Ignatieff wins fewer seats next month he will undermine a fragile economic recovery by seeking to form a ?reckless? coalition government with the socialist New Democratic party and with Quebec?s separatist Bloc Quebecois.
Repeated Commitments
The Liberals? 94-page document repeated commitments for three programs each costing about C$1 billion -- to create early child education spaces, boost benefits for people caring for sick or elderly relatives and grants for postsecondary education. Another C$700 million a year would go to seniors living in poverty.
The Liberals would also raise C$615 million over two years by setting a C$50,000 annual cap on deductions that employees take against income from stock options. Three-quarters of the deductions are claimed by about 8,000 ?high earners,? the report said.
The plan also repeats the Liberals? intention to reverse the government?s plans to acquire 65 of Bethesda, Maryland-based Lockheed Martin Corp.?s F- 35 Joint Strike Fighter jets.
Conservative Lead
Harper called the election after his government?s March 22 budget was rejected by all opposition parties, who then ousted the Conservatives in a non-confidence vote. Polls suggest the Conservatives would win the most seats in the election, although it isn?t clear if they would win a majority of seats in the House of Commons. The Conservatives were supported by 40.7 percent of decided voters, followed by 29.4 percent who supported the Liberals, according to a CTV/Globe/Nanos election survey published today and taken over the three previous days. The telephone survey of 1,200 people has a margin of error of plus or minus 2.8 percent.
The Liberals? platform also said the party would find new money by immediately canceling a tax break for companies developing oil sands deposits concentrated in the province of Alberta, and by ending funding for private-public construction partnerships.
The Liberals would also develop a national cap-and-trade system for greenhouse gas emissions, covering all industries, which will be ?equitable? to all regions of the country. They affirmed a target of cutting greenhouse gases such as carbon dioxide by 80 percent below 1990 levels by 2050, and pledged C$400 million a year in tax credits for home renovations that benefit the environment.
Deficit Elimination
The Conservative budget reiterated a plan to eliminate a C$40.5 billion deficit by 2015, faster than other Group of Seven nations. It also included C$7.7 billion of new measures including enhanced seniors? benefits that were requested by the opposition and a C$2,000 tax credit for people taking care of sick relatives. It also introduced a tax credit for families with children in arts classes and C$400 million for homeowners who carry out energy-saving renovations. Earlier today, Harper pledged to double a tax credit for children?s fitness, and said he would extend it to adults.
The Liberal platform didn?t say when the deficit would be eliminated.
The Canadian dollar has appreciated 1.2 percent against its U.S. counterpart since the election was called, and the country?s 30-year government bond yield has increased to 3.77 percent from 3.70 percent. The election probably won?t shake ?market confidence,? Canadian Imperial Bank of Commerce economists Avery Shenfeld and Warren Lovely wrote in a March 31 report. The election likely won?t do much to change the commitment to deficit reduction, they wrote.
--With assistance from Theophilos Argitis in Ottawa. Editors: Paul Badertscher, Joe Sabo.
To contact the reporter on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net.
To contact the editors responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net; David Scanlan at dscanlan@bloomberg.net.
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