Iggy likely short on cash for campaign promises
Liberal Leader Michael Ignatieff looks at a photograph of former Canadian Prime Minister Pierre Elliot Trudeau at Kelekis restaurant in Winnipeg on March 31, 2011. (REUTERS/Fred Greenslade)
OTTAWA — A corporate tax hike won’t cover Liberal campaign promises, two economists warn.
The Liberals figure if the corporate tax rate is increased to 2010 levels, the federal treasury would get a $6-billion windfall.
Ron Kneebone, economics professor at the University of Calgary, doesn’t think that figure is credible.
“It’s demonstrably untrue,” he told QMI Agency.
Kneebone says the fat revenue figures are based on old projections anyway, and even if you raised the rate back up, you wouldn’t just get back the revenue you gave up.
“Companies will pull away,” he said. “And so you lose revenue.”
Stephen Gordon, economics professor at Laval University in Quebec City, agrees.
“It’s the worst tax to raise if you’re looking to raise revenue,” he said.
At best, Gordon figures raising the corporate tax rate to 18% from the current 16.5%, as the Grits want to do, would only lead to $1 billion more for the treasury.
That could create a political problem for Liberal Leader Michael Ignatieff.
“If we defer corporate tax reductions until the country can afford them, we will have the revenue necessary — the billions of dollars necessary — to pay down the deficit and make a few very few strategically chosen investments,” Ignatieff told a policy conference in Montreal last March.
Ignatieff has taken that strategy into the election campaign, basing billions of dollars worth campaign promises — spending on family care, daycare, pensions, and universities — on a corporate tax hike.