Ignatieff to pay for strategic investments by freezing corporate tax

MONTREAL — Michael Ignatieff laid out Sunday his prescription for what ails Canada and, for the first time, spelled out how he’d pay for it.

Liberal leader Michael Ignatieff gestures following his closing speech at the Canada 150 conference in Montreal

Liberal leader Michael Ignatieff gestures following his closing speech at the Canada 150 conference in Montreal

MONTREAL — Michael Ignatieff laid out Sunday his prescription for what ails Canada and, for the first time, spelled out how he’d pay for it.

Wrapping up a three-day policy renewal conference that painted an almost uniformly grim picture of the future, the federal Liberal leader promised to make “a very few, strategically chosen investments” to help the country cope with an aging population, shrinking workforce and soaring health care costs.

To pay for it all, Ignatieff announced that a Liberal government would freeze the corporate tax rate at 18 per cent, indefinitely deferring a planned cut to 15 per cent until it’s affordable.

A spokesman for Prime Minister Stephen Harper immediately denounced Ignatieff’s promise “to raise job-killing business taxes.”

But Liberals said the move would save the government $5-6 billion a year.

“We’re not the NDP here,” Ignatieff told the roughly 300 conference delegates.

“We believe passionately in competitive corporate tax rates. We’re telling you though, we can’t afford them now. There’s just too much we have to do to get our fiscal house in order and make the investments that will make us a productive society.”

He said those necessary investments include a national learning and education strategy — from national child care to skills training — that will help ensure companies don’t face a severe shortage of skilled labour as baby boomers hit retirement age.

“Corporate Canada, for whom I have the greatest respect, needs more tools than just the corporate tax to keep us competitive.”

Ignatieff said a Liberal government would also invest in green technologies, illness prevention programs and homecare.

But he said the party’s eventual election platform — which he wants ready and fully costed by the end of the summer — won’t include any new program that can’t be financed without increasing the record $54 billion deficit.

Once in office, he pledged that a Liberal government would reduce the deficit to one per cent of GDP — roughly $18 billion — within two years of taking office. And it would continue paring the deficit every year after that until fiscal balance is restored.

“Unless we can convince Canadians that we know how to get them out (of the fiscal hole), they’re not going to listen to anything else we say,” Ignatieff said.

He reminded Liberals that “we’ve been here before,” when Jean Chretien promised to reduce a $42 billion deficit in 1993 to three per cent of GDP.

Chretien’s government exceeded its target and erased the deficit entirely within four years.

The latest Liberal target is very similar to the deficit reduction plan laid out in the Harper government’s recent budget, which projected a deficit of $17.5 billion in 2012-13.

Liberal finance critic John McCallum said the deficit can easily hit the one per cent of GDP target without massive cuts, simply because the one-time infusion of stimulus spending will come to an end next year.

Harper’s spokesman Dimitri Soudas ignored the Liberal deficit reduction plan and zeroed in on the corporate tax freeze.

“After being gone for 34 years, (Ignatieff’s) come back to Canada with a reckless plan to raise taxes. Ignatieff’s tax hikes will kill jobs, put the brakes on our recovery and set Canadian families back,” Soudas said.

Soudas and other Conservatives pointed out that the idea of imposing a carbon tax, an initiative that blew the Liberals out of the electoral water in 2008, also seemed popular at the conference, demonstrating that Ignatieff is a “tax and spend Liberal.”

However, Ignatieff argued that, thanks to years of Liberal and Conservative reductions, Canada’s corporate tax rate is already 25 per cent lower than in the United States. He said that leaves some room to defer the scheduled cut to 15 per cent by 2012, without hurting competitiveness.

He argued that his approach is far preferable to Harper’s, which he characterized as “a long dark tunnel of cuts, austerity and … not only a diminished role for government but a diminished set of expectations for Canada.”

As for a carbon tax, Ignatieff did not directly say what he thought for the apparent conference interest in the idea. Asked about it at a wrap-up news conference, he simply said investing in renewable energy and green technologies is the way to go.

Conference speakers gave Ignatieff other politically explosive advice, including the need to allow two-tier public-private health insurance. The leader didn’t directly respond to that idea either, saying his promised strategies to prevent illness and allow the sick and elderly to be cared for at home are “key to reducing health care costs.”

Ignatieff seemed bemused by suggestions that the conference was pessimistic, even though it amounted to three days of stark warnings about the dire state of the country’s workforce, health system, pension system and diminished influence in the world — not to mention diplomat Robert Fowler’s assessment that the Liberal party is in danger of “losing its soul.”

“I didn’t hear the word doomed once. I heard much more hope than pessimism, honestly,” Ignatieff said.

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