Pierre Polyvencic, MP for Carleton and Shadow Finance Minister on Budget 2018, joins me to talk about the Trudeau government's $18B deficit and $500B surplus, and the impact on the middle class and local businesses.
00:00:00.000Today on The Blueprint, Canada's Conservative Podcast, we will be hearing from Pierre Polyev, Carleton MP, and Shadow Finance Minister on Budget 2018.
00:00:10.520Stick with me, the host, Tony Clement, MP.
00:00:16.140You're listening to The Blueprint, Canada's Conservative Podcast.
00:00:21.540Is the Prime Minister actually saying that taxpayers should be on the hook when he breaks the law?
00:00:30.000What is it going to take for the Prime Minister to have any respect for any laws in this country that may curb his out-of-control behaviour?
00:00:43.100All these deficits leading to nothing but burying Canadians in taxes.
00:00:53.260And now, here's your host, Tony Clement.
00:00:55.460You're listening to The Blueprint, Canada's Conservative Podcast.
00:01:00.580I'm your host, Tony Clement, Member of Parliament.
00:01:02.780And with me today is Pierre Polyev, the Member of Parliament for Carleton and the Shadow Critic for Finance.
00:02:56.000We just pay taxes and then hand that extra $9 billion over to a bondholder who has lent us the money.
00:03:05.980And you know what's ironic about that, Tony?
00:03:08.140The liberals are always talking about how the 1%ers are making off like bandits and the working poor left behind.
00:03:16.800Well, debt interest is a wealth transfer from working class people who pay taxes to the wealthy people who lend money to governments.
00:03:26.240The bondholders, of course, are typically wealthy.
00:03:28.760They're the ones who have money to lend.
00:03:30.740And therefore, they are the ones who get the cash when we pay more in interest.
00:03:35.300So if you're an international banker, you're probably pretty happy with this government.
00:03:39.900But if you're a working class guy who's tired of paying taxes and getting nothing in return, more bad news from this budget.
00:03:46.360Let's talk a little bit more about the tax situation because there were some tax increases and how that impacts the middle class and local business owners in particular.
00:03:56.420Well, as you know, Tony, even before this budget, the Fraser Institute calculated that 80% of middle class taxpayers are paying more now than when Trudeau took office, contrary to the central plank of his last platform.
00:04:11.820On average, a middle class person pays an extra $800 in federal income tax now more than they did before, Trudeau.
00:04:22.200That's because they've canceled the children's fitness tax credit, the children's arts tax credit.
00:04:28.240They removed the deductibility of student textbooks and tuition.
00:04:33.560They have removed the ability of families to split income between spouses to lower their taxes.
00:04:39.940They have imposed higher payroll taxes, which means your take-home pay on your check biweekly is reduced.
00:04:47.960So I don't mean to get too deep into the litany, but bottom line is people are paying more.
00:04:53.100And I would argue that they're getting less.
00:04:55.780You know, the government is more expensive, but does that mean it's a better government?
00:05:01.220And indeed, one of the things that I noticed after the big brouhaha about budget day was that spending on infrastructure has actually been reduced by $2 billion.
00:05:14.600We were told, we were sold this bill of goods during the election that, oh, we're going to have a modest deficit, but don't worry, it's going to go to infrastructure.
00:05:21.160But the deficit is three times what it was projected to be, and we're getting less infrastructure.
00:05:28.420And the idea of their spending was they said, you know, we're going to borrow now when rates are low, but we're going to build stuff that Canadians will have for the long haul.
00:05:35.940Kind of like borrowing to buy a house.
00:05:37.680But we're not buying assets that remain with us deep into the future.
00:05:42.400We're just buying bigger government, more expensive government, a government that takes more and gives, actually delivers less.
00:05:52.500So, again, small business owners, there was a big kerfuffle, a protest, really a nationwide protest.
00:06:00.660A real, real-life tax revolt in the fall when the Liberals unveiled their initial plans.
00:06:07.240Mr. Morneau unveiled his initial plans.
00:06:09.580Tell us what's happened in the budget with that.
00:06:14.440So, originally, Bill Morneau was planning to double-tax the passive investment income of small businesses to rates as high as 73%.
00:06:24.240Passive income is when a company makes a few bucks and sets it aside in stocks, bonds, real estate rentals, or other investments that produce income.
00:06:35.720Because of this incredible tax revolt, led really by the conservatives, but supercharged by people, grassroots people, from farms to pizza shops to every other setting.
00:06:53.460The government was forced to backtrack and flip-flop multiple times.
00:06:57.720The latest version of their tax increase is basically to take away the small business tax deduction away from any private company that has more than $50,000 annually in passive income.
00:07:14.740And that means that those businesses will pay higher taxes on their active income, ironically.
00:07:22.780And so, we are still watching carefully and consulting with our small business entrepreneurial sector to find out what impact this will have.
00:07:32.760Yeah, it sounds like small businesses or local businesses did not get really free and clear.
00:07:37.720There were some changes made, but there's still an attempt to grab tax revenue from local businesses.
00:07:43.340Definitely a tax increase, but it is a different kind of tax increase than they were proposing even a few months ago.
00:07:51.220So, it remains to be seen what impact it will have on the ground.
00:07:57.740We will not take the government's word for any of it.
00:08:00.160And when the legislation implementing the tax increase comes forward during the Budget Implementation Act, we'll check inside every line.
00:08:10.980As you know, Tony, the devil is in the details.
00:08:14.240And we're going to look carefully in that bill to find out if he's hiding there.
00:08:17.720What other highlights were there for you on the budget that you want to talk about to set things that maybe the casual observer may not have noticed?
00:08:26.520Well, the payroll tax will go up modestly, but this is compounded on top of earlier payroll taxes, tax increases that the government had already approved.
00:08:36.960Payroll taxes are particularly damaging for low-income workers and small businesses.
00:08:40.760And the reason is that it's a flat rate of tax on roughly your first $50,000 of income.
00:08:46.880So, the more you make, the smaller the percentage of the tax.
00:08:50.500The less you make, the bigger the percentage of income you lose.
00:08:55.120And small businesses, of course, have to also match the employee's contribution to payroll tax deductions for EI and CPP.
00:09:02.780That means it's more expensive to hire when payroll taxes go up.
00:09:08.800So, they're going to inch up yet again.
00:09:10.500And so, I think that will create some pressures.
00:09:29.640They're going to feed this through NGOs, who they call arm's length.
00:09:33.860And I'm very curious where this money is going to end up and who's going to be eligible to receive it.
00:09:39.120We know the government under Trudeau has put in place an attestation that small businesses and charities must sign in order to get Canada summer job students.
00:09:50.640And so, are they going to have an ideological attestation before a local newspaper can get any of this support money for local journalism?
00:10:03.720And if so, is this an indirect way for the government to control what Canadians read, see, and hear?
00:10:10.200I know that there are some journalists who are very uncomfortable with this, even though journalists have been covering the plight of journalism in Canada right now.
00:10:22.380It's not very good for traditional newspapers, although I would argue a lot of the online editions of newspapers are taking over and are finding their space.
00:10:32.860But regardless of that debate, the journalists who have been covering this have said there's a problem.
00:10:38.960But this surely cannot be a solution that every journalist is comfortable with because you've got the government kind of deciding through a third party who's good enough for getting cash and who isn't.
00:11:02.200And then, you know, basically you have state control, state funding, and indirect state ownership of the media that people consume.
00:11:12.300And it was interesting, if you read the budget document itself, the justification for this $50 million fund was that too many Canadians are getting local news from social media and not enough from traditional media.
00:11:25.620So you're finding out about who won the local hockey tournament at the Osgoode Arena in South Ottawa from your brother's post on Facebook instead of from the sports station.
00:11:41.700And I try to understand what is the problem with that.
00:11:46.600If you're getting the information from social media, is it necessarily a problem that you're not getting it from a traditional media source?
00:11:55.560But then I saw something very interesting.
00:11:57.920Soon after Justin Trudeau was roundly ridiculed by Canadians for his ridiculous people-kind comment.
00:12:30.100Well, it was Facebook and other social media that Canadians had used to make part of Justin Trudeau.
00:12:34.980So you have to wonder, given his propensity to try and control what people think, what he means about regulating Facebook and funding media.