From a lot to a little, party leaders dish baloney in English language debate

Oct 8 2019, 1:39 pm

When they weren’t talking over each other or trying to land political body blows, the six federal leaders who squared off in an English-language debate Monday night each made statements with varying degrees of accuracy.

The Canadian Press Baloney Meter, which is a dispassionate examination of political statements culminating in a ranking of accuracy on a scale of “no baloney” to “full of baloney,” has weighed one claim from each leader.

Liberal Leader Justin Trudeau

“We’re moving, again, forward with a tax break for low- and middle-income Canadians and nothing for the wealthiest, unlike Mr. Scheer’s universal tax credit.”

The Liberals are fond of saying that one of the first things they did when coming to office in late 2015 was increase taxes on the wealthiest individuals in the country, and give a break to the middle class.

Unsurprisingly the Liberals have made a key part of their re-election campaign another tax cut for low- and middle-income earners, hoping to sideswipe Andrew Scheer’s Conservatives, who have pledged a tax cut of their own.

The Liberals have proposed increasing the “basic personal amount” to $15,000, meaning you wouldn’t be taxed on any income you make until you reach that mark. The Conservatives have proposed reducing the tax rate to 13.75% from 15% for all income between $12,069 (the current basic personal amount) and $47,630.

Economists first point out that the very lowest-income earners, who don’t pay any income taxes, won’t see any change from either policy.

So what about those who do?

First, there is the change at the individual level, and then at the family level.

For individuals, the Liberal tax cut is completely phased out by the time you hit the top tax bracket at $147,000 of income, which roughly means those in the top one per cent, said Kevin Milligan, an economist at the University of British Columbia. The Conservative tax cut applies equally to all high-income earners, he said.

At the family level, the top 10% of families would make as much, if not more, than the middle income brackets under both plans, although the Conservative plan delivers more as income level rises, said David Macdonald, senior economist at the Canadian Centre for Policy Alternatives. The reason, Milligan said, is that at the family level there may be a lower-income person married to a higher-income person and their joint household would still potentially get some benefit from the Liberal plan.

Both agreed that on the whole, people in the highest income ranges do better under the Conservative plan than the Liberal plan, but there’s still something going to high-income earners under the Liberals’.

For that reason, this statement gets a rating of “some baloney,” because Trudeau is partly accurate, but important details are missing about how each plan helps higher-income earners.

Green Leader Elizabeth May

“In our platform, we call for taxes on the e-commerce companies, the virtuals, the Amazons and the Googles and the Facebooks that mine billions of dollars out of this country and pay virtually no tax.”

Green Leader Elizabeth May, like other leaders sharing the debate stage with her, has made some big spending promises to court Canadian votes this campaign and proposed one way about how to pay for it all: Go after online companies to pony up cash to federal tax collectors.

During the debate, she said that these internet-based companies suck billions in profits out of the country without paying much, if any, tax.

There are two issues in May’s comment: sales taxes and corporate taxes.

Foreign-based streaming services without physical presences in Canada don’t have to collect or remit federal or provincial sales taxes unless they have an agreement with the federal government. Netflix, for instance, has publicly said it would appreciate such an agreement in Canada, and has signed similar deals in other jurisdictions.

Absent a deal, it is up to consumers to pay the sales tax to tax collectors, but this rarely happens.

So far, Quebec has taken up Netflix on its request for a tax agreement, asking similar payments from Amazon, and Facebook has begun collecting taxes on ads taken out in Canada. (Given that May’s comments came in response to a question from Bloc Leader Yves-Francois Blanchet, it’s easy to see that going after these companies, as the Liberals have promised to as well, could play well politically among Quebec voters.)

An August 2017 paper from the C.D. Howe Institute that looked at the digital economy and associated tax policy estimated that Netflix revenues from subscriptions in Canada likely exceeded about $620 million, meaning about $31 million in lost GST revenue. For Spotify, the figures were estimated at $126 million in revenues for $9.4 million in lost GST revenue. Putting it all together, the companies looked at in the report were calculated to have not collected between $85.8 million and $107.3 million in GST.

“It’s beyond me why the federal government hasn’t acted on this,” said Toby Sanger, president of Canadians for Tax Fairness.

The other thing, he said, is corporate income taxes that are paid by online companies in other jurisdictions that have favourable tax policies. If they were Canadian companies, Sanger said, they would be paying taxes in Canada. The Canada Revenue Agency estimated in a June 2019 report that large corporations avoided paying between $6.7 billion and $7.9 billion in taxes in 2014, but that figure didn’t specifically look at online companies based elsewhere.

So just how much is the government missing out on? Sanger says we don’t have that information.

The Green platform talks about collecting $258 million in sales taxes and $781 million in corporate taxes from foreign-based e-commerce companies, a very small portion of the Greens’ overall revenue-raising plans.

So the statement has “a little baloney,” the statement is mostly accurate, but more information is required.

Bloc Quebecois Leader Yves-Francois Blanchet

“Those 3,400 people (at SNC-Lavalin in Quebec) have done nothing wrong. Now, the value of the shares are going down, their employees are leaving, the clients are leaving, and they are losing it all because of you.”

Andrew Scheer was hoping his attack on Justin Trudeau over the SNC-Lavalin affair would land well in Monday night’s English-language leaders’ debate. But it was Bloc Leader Yves-Francois Blanchet who decided to turn the tables on Scheer, attacking the Conservative leader for going after the Montreal-based engineering giant.

The company is facing criminal prosecution over alleged bribes to Libyan government officials while pursuing business in that country. Federal prosecutors have said the company shouldn’t receive a remediation agreement, which would allow it to avoid a criminal trial.

Under existing rules, a conviction means exclusion from federal contracts for up to 10 years.

The company’s stock price had its single-biggest price drop over the last year on Jan. 28 when the company announced that it was on track to miss its 2018 profit targets because of a serious problem found related to a single project in its mining and metallurgy business. In addition, SNC said it was experiencing worse than expected trading challenges in its oil and gas business in the Middle East, and Saudi Arabia in particular.

It was only a few days earlier that Jody Wilson-Raybould was shuffled from her cabinet role of attorney general and justice minister to the veterans affairs portfolio, but the first hints of the scandal that would envelop Justin Trudeau’s government didn’t appear until days later.

On Feb. 7, the Globe and Mail newspaper first reported that Trudeau’s office pressured Wilson-Raybould to offer the company a remediation agreement. SNC-Lavalin’s stock was already declining.

The bad news continued for the company over the ensuing months, and in early August it announced it was cutting its quarterly dividend by 80% and getting out of the business of fixed-price construction contracts, where the company eats any cost overruns, which the company’s CEO said was the “root cause of the company’s underperformance” for the quarter.

The company’s reports to investors have pointed to issues in its oil and gas segment as among the business reasons why it is shrinking its workforce. Previous chief executive Neil Bruce also said that company lost out on $5 billion to $6 billion in contracts over the last five to seven years because of the ongoing corruption case.

It’s not entirely clear the political scandal surrounding Trudeau and his government has been the source of declines in the company’s stock value, and loss in workforce, and even fuzzier is the link to Scheer’s commentary.

Also, over the course of the last month, the stock price has gone up.

For all the above reasons, Blanchet’s statement gets a rating “a lot of baloney” because there are elements of truth, but they are few and far between.

Conservative Leader Andrew Scheer

“Your tax policy has meant that 80 per cent of Canadian families pay higher taxes today than when you first took office.”

Scheer lobbed that argument at Liberal Leader Justin Trudeau, a talking point the Conservatives have used for quite some time.

The party says the source for that statistic is a 2017 study from the Fraser Institute, a right-leaning think-tank. The study explored how fiscal changes the Liberals made in their first two years in office were affecting the middle class.

They concluded, after examining the impacts of tax cuts but also the elimination of various tax credits, there would be higher income taxes for 81% of Canadian families with children whose incomes fall between $77,089 and $107,624.

But the study failed to take into account other fiscal measures that considerably bolstered families’ bottom lines, several economists point out. Among them, the major Canada Child Benefit.

“I think it should be considered part of any serious analysis of the fiscal program of the (Liberal) government,” said Kevin Milligan, an economist at the University of British Columbia.

At the same time, the idea that the tax credits cancelled by the Liberals, some of which the Conservatives have promised to return, had a dramatic impact on families’ tax burdens is questionable, said Jennifer Robson, a political-management professor at Carleton University.

She analyzed the boutique tax credits in question and found that a minority of families actually claimed the credits.

“Eighty per cent of families with kids cannot, by definition, be paying more taxes as a result of the cancellation of tax credits that were reaching between 10% and 32% of families with kids,” she said in an email.

For those reasons, the statement earns a rating of “some baloney,” the statement is partly accurate but important details are missing.

NDP Leader Jagmeet Singh

“We see with Mr. Trudeau he says nice words, but he gave $6 billion in corporate-loan writeoffs last year.”

Throughout the debate, the NDP’s Jagmeet Singh advanced his main theme of his party being the only one to stand up to corporate Canada.

His party sourced that example to media coverage of the federal government’s Public Accounts, the annual document published by the federal government that lays out in detail how and where it spends money.

In 2018, the Liberal government reported that it would not collect $6.3 billion in loans for the 2017-2018 fiscal year, nearly the double the amount it wrote off in prior years.

The jump in uncollected funds was due to a $2.6-billion writeoff that was part of a financing package the federal government supplied in 2009 to keep automaker Chrysler afloat and save thousands of jobs in the middle of the recession.

That deal was struck by the previous Conservative government, which never expected to get all the money back.

“At the end of the day, there’s not going to be full recovery of the taxpayers’ investments that were made back in 2008-2009, in the sense of cash recovery,” former finance minister Jim Flaherty said in 2011.

“But what is the value of preserving an industry? What is the value of preserving 52,000 jobs in our country? You have to put a value on those, which are pretty substantial values in my view.”

Singh’s figure on the Liberal government’s loan writeoffs is accurate but there’s much more to the story.

For those reasons, Singh’s statement earns a rating of “a little baloney,” the statement is mostly accurate but more information is required.

People’s Party of Canada Leader Maxime Bernier:

“Canada receives more immigrants per capita than any other western country, three times higher than the US. It is the equivalent of one Nova Scotia every three years, the population of Nova Scotia every three years here in Canada.”

In a segment of the leaders’ debate on immigration, Bernier argued that his is the only party willing to have a serious discussion on the impacts of immigration on Canada and the need for more focus on integration, citing two sets of statistics to bolster his argument.

Immigration levels in Canada are determined in three-year chunks, which is likely why Bernier used the time reference.

According to Statistics Canada, as of mid-2018, Nova Scotia’s population was 959,942.

The federal immigration plan for 2019-2021 aims to settle 1,021,800 people over three years. So, the plan is to take in slightly more than the population of Nova Scotia.

But that’s a red herring, points out Sharry Aiken, a law professor and immigration expert at Queen’s University.

Immigrants don’t just go to Nova Scotia, they go across the country.

“When we’re talking about immigration-absorption and capacity to integrate immigrants, we’re looking at not just absorption in Halifax, we’re looking at Quebec City and Montreal and Toronto and Ottawa … London and Windsor and Saskatoon and Edmonton, et cetera,” she said.

When it comes to how many immigrants per capita that Canada accepts, several experts on Monday night pointed to a 2019 World Economic Forum study examining United Nations data.

It found that in 2015, the U.S. has the highest number of immigrants, defined as foreign-born individuals, with 48 million, roughly six times the number in Canada, which that year has an estimated 7.6 million.

Put another way, foreign-born residents make up 15.1% of the US population, while in Canada it’s 21%.

In 2017, 1,127,167 people were granted permanent residency in the US, representing about 0.3% of the population. That same year, 286,479 people were granted permanent residency in Canada, representing about 0.8% of the population.

Again, said Aiken, what matters in developing policy is the trend line, and how the number relates to Canada’s total population, not how it’s seen in comparison to others.

For those reasons, the statement contains “a little baloney,” the statement is mostly accurate but more information is required.

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