Current polls suggest that Canada will likely elect another minority government next week; neither the Liberals nor Conservatives are expected to reach the 170 House seats needed to form a majority government.
With no party in absolute control of the House of Commons the door is left open for the NDP, who has a ‘tax-and-spend orientation’. According to a report from The National Bank of Canada, that could lead to higher taxes and more fiscal spending.
Polls show Justin Trudeau’s Liberals are neck-in-neck with Erin O’Toole’s Conservatives, which could leave the balance of power with The New Democratic Party (NDP). “Canadian businesses, high income earners and the wealthy may wish to take note.” Warren Lovely, the bank’s chief rates and public sector strategist told investors in a recent report.
Jagmeet Singh and the NDP have a platform that includes higher taxes for top earners and investors, as well as a plan to increase corporate taxes. The NDP is proposing the capital gains inclusion rate be increased to 75% (up from 50%) to help pay for increased social spending.
Based on the bank’s calculations in a report comparing platforms written by Lovely, the NDP’s indicated level of federal spending would outpace the Liberals by 6% and be north of the Conservatives by nearly 10% by 2025-26. Lovely added, the party has promised $215 billion of new investments over the next five years.
However, in the past when the NDP held the balance of power in the House of Commons it did not lead to any radical changes in tax rates.
Furthermore, both the Liberals and Conservatives are also pledging significant fiscal spending over the next five years. The Liberals have promised $78 billion and the Conservatives $51 billion.
As we head to the polls next week, make sure you are fully informed. Below are links to resources where more detailed information can be found on each political party and their platforms.
Federal Budget 2021: Budget 2021
Liberal platform: Forward. For Everyone. (liberal.ca)
Conservative platform: 5ea53c19b2e3597.pdf (conservative.ca)
NDP platform: Ready for Better – NDP 2021 commitments.pdf
Bloc Quebecois: Bloc Québécois (blocquebecois.org)
Green Party: Green Party of Canada | People’s Party of Canada: Our Platform – People’s Party of Canada (peoplespartyofcanada.ca)
Have a great week,
Tracey
Sources: Original article by Shelly Hagan, By Bloomberg Sept. 14,2021, RBC The Navigator, Wealth Management Services Newsletter
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