Canada’s Conservatives Pledge to Cut Taxes, Shrink Deficits

of}mbvpz(vuq3zd4yvesi{0t_media_dl_1.png Finance Canada, Liberal Party of

Article content

(Bloomberg) — Canada’s Conservative Party is promising to run smaller deficits than the incumbent Liberals as it bets heavily on tax cuts and deregulation spurring an economic boom, especially in the country’s energy sector. 

Article content

Article content

Pierre Poilievre’s plan would reduce the federal government’s shortfall to C$31.4 billion ($22.7 billion) this year, according to the party’s election platform released Tuesday. That compares to the C$46.8 billion estimated by the Parliamentary Budget Office in March. Over the next four years, the Conservatives’ cumulative shortfalls would total C$100.6 billion.

Article content

Article content

The document promises substantial tax cuts, which the Conservatives say will boost the economy sufficiently to partially offset the loss in revenue. They also include C$20 billion in revenues from retaliatory tariffs imposed on the US this fiscal year, matching the expectation in the Liberal Party’s platform, released Saturday.

Article content

Article content

The Conservatives have pledged to defer the capital gains tax on investments that are made in Canadian companies for the next two years, at a cost of C$12.7 billion. Getting rid of the previous government’s hike to the capital gains tax inclusion rate will cost about C$12.6 billion over four years. But the party expects these two policies to spur enough investment to raise revenues by C$13.1 billion over that time.

Article content

Axing the government sales tax on new homes under C$1.3 million will cost an average of C$1.9 billion annually. The Conservatives also plan to cut the lowest personal income tax rate by 15%, but the document points to a delayed implementation, with the break costing C$6.5 billion over the next two fiscal years before ramping up to an annual C$13.7 billion by 2028-29.

Article content

Article content

The platform leans on an assumption that tax cuts and deregulation will result in revenue gains, which were included in the platform estimates as a means of offsetting the net new spending costs. Measures to reduce taxes and lower the regulatory burden in the oil and gas sector are expected to bring in C$27.4 billion over the next four years.

Article content

The document offers no estimate for growth in gross domestic product, a key input for revenue estimates. Economists surveyed by Bloomberg expect GDP to expand 1.5% in 2025 in real terms, but analysts are consistently slashing their forecasts for growth as US President Donald Trump’s trade barrage persists.

Article content

Prime Minister Mark Carney’s platform showed his Liberals plan to run deeper deficits if reelected. The plan promised C$129.2 billion in net new spending over the next four years to cut income taxes and build infrastructure to reduce the country’s dependence on the US.

Article content

—With assistance from Mario Baker Ramirez and Melissa Shin.

Article content