'Fiscally conservative, socially progressive'

Globe and Mail Update
Wednesday, October 25 – Online Edition, Posted at 8:54 PM EST

The Progressive Conservatives unveiled an election platform yesterday that included a five-year, $56-billion tax-cut plan weighted toward the lower middle-class and those who earn money from investments.

The Tory tax-cut plan will affect all those who pay taxes, going deeper than those proposed by the governing Liberals, but not as far as Canadian Alliance plans — but they are weighted differently. Low-income earners would save more under the Conservative plan, as would those who invest in stocks and mutual funds.

"One, it is designed to make Canada much more competitive in the world," Tory Leader Joe Clark said. "We simply have to start using fiscal policy as a means to make Canada a leader again in the world. And secondly, it is far broader, it is far fairer."

While the Canadian Alliance has proposed deeper tax cuts for the middle-class, especially salaried upper middle class, the Tories sought to differentiate themselves from their rivals on the right with more emphasis on social issues such as education and the environment.

They include a proposal to set national standards on clean drinking water through a Safe Water Act — addressing a hot issue in Ontario where an outbreak of e-coli bacteria killed seven last spring in Walkerton, Ont.

The platform focused on a theme of making Canada compete better in the world, including stemming the so-called brain drain by making Canada more attractive through tax cuts and social policy. Their key education proposal, for example, is to create a tax deduction for the principal paid on student loans over 10 years, a proposal they say will encourage students to go to university and remain in Canada after they graduate.

It did not include any major, stand-out plank that had not already been detailed by the party — an approach that could prove too prudent for a party trying to gain attention that will boost its flagging fortunes. Mr. Clark said he was not trying to hit home runs, but going for balance.

"I don't know that this election will be decided by home runs. I think that people are going to take a look at the candidates, and the platforms, and the leaders, and the circumstances that Canada has to face. And they're going to ask the question, 'On balance, which group of men and women can we best trust to guide the future of the country?'"

That approach left the Tories offering only limited new spending, although they pledged to focus more than the Alliance on social policy. They pledged to restore all money cut from federal transfer payments for health and guarantee stable funding.

While Mr. Clark described the platform as "socially progressive and fiscally conservative," it did include more conservative planks on some social issues, notably justice. The Tory justice proposals call for a law-and-order approach, pledging more money for the RCMP, tougher justice for young offenders, a national sex-offender registry, and giving victims a right to speak at parole hearings.

On taxes, the Tories propose to raise the basic personal exemption over five years to $12,000 from $7,241, a measure they say would remove 2.3 million Canadians from the tax rolls. The deduction for spouses — which applies to one-income couples — would similarly be raised to $12,000. They also proposed a $1,176 child deduction.

The Conservatives would also immediately eliminate the tax on capital gains paid by those who earn profits on investments, a cut which favours the wealthy who tend to have more investment income. The Conservatives argue it increasingly affects people who earn stock options, and the elimination of the capital-gains tax would increase investment in high-technology and small business.

What the Tories did not include was a proposal to reduce the tax rates that now stand at 17 per cent on taxable income under $30,000, 24 per cent on income between $30,000 and $60,000 and 29 per cent on income over $60,000. They said it would be too costly, and would squeeze out $7.4-billion in new spending and $25-billion in debt reduction over five years.

The Tory tax proposals mean that a single-income family of four earning $44,900 would pay no federal income tax — while they would pay $337 under the Alliance proposal and $889 under the Liberal plan. A two-income family of four earning $75,000 would pay $1,280 less than under the Liberal plan and $310 less than under the Alliance plan — but if the same family had a $10,000 capital gain, they would would save $2,605 more than under the Liberals, and $1,385 more than under the Alliance.

Higher-income earners who do not have investment income would pay more under the Tory plan than either the Liberals or the Alliance, however. Salaried individuals earning more than $75,000 would pay more than under the Liberal plan, while an individual earning $36,000 or more would pay less under the Alliance plan.

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