Rick Peterson entered the Conservative Party leadership race Oct. 18, 2016. Over the last six months, the private sector underdog is all about innovation and invigorating the economy—he’s one of the only candidates consistently debating serious policy.
Peterson has proposed significant tax cuts across the board. A 15 per cent, flat personal income tax, coupled with a 0 per cent corporate income tax (CIT), he believes, will provide one of the largest economic stimulus plans in Canadian history. And we’re going to need it.
During now-President Donald Trump’s campaign, he promised to reduce the American business tax to 15 per cent—“taking [their] rate from one of the worst to one of the best,” a campaign press release purported. On Feb. 27, 2017, Trump reiterated his intent to cut business taxes.
Charles Lamman, director of fiscal studies at the Fraser Institute, noted in a Nov. 28 Vancouver Sun article that such a move would be disastrous to Canadians, as it would “dramatically reduce the competitiveness of our business tax regime.”
According to the same article, Canada’s combined average federal-provincial corporate income tax rate is currently 26.7 per cent—significantly lower than the U.S.’s 38.9 per cent. Should Trump implement his tax plan, however, their rate is projected to fall below 20 per cent.
In order to keep our competitive edge, Canada has to do more than slightly lower its CIT. Maxime Bernier, another leadership hopeful, has suggested lowering the CIT from 15 per cent to 10 per cent—but this might not be enough.
“The U.S. doesn’t have a value added tax, so this 15 per cent rate is as low as they can go. In Canada, to maximize the competitive advantage, we would need to go to zero per cent,” Peterson told the Prince Arthur Herald. “Going to zero CIT signals a bold and strong move that would make Canada the most attractive investment opportunity in the world.”
Peterson’s 15 per cent flat income tax will also contribute to this economic boom. Current personal income tax rates at the federal level range from 15 per cent to 33 per cent, with some combined federal-provincial incomes reaching nearly 54 per cent. This is one of the highest of any OECD country.
High personal income taxes contribute to a lack in spending, saving, and entrepreneurship. Lamman and Ben Eisen, a senior policy analyst at the Fraser Institute, wrote a joint article for the National Post in late 2015 about the damages of high income taxes. Raising taxes, they found, did not bring in additional revenue, as individuals changed their behaviours to minimize the effect of the tax.
The two suggested Canada adopt a 15 per cent tax rate for the majority of Canadians and one high-income rate of 29 per cent—a plan not entirely dissimilar to Peterson’s.
Peterson plans to offset the revenue lost from his tax cuts with an increase in GST to nine per cent, and plans to cut back federal spending 10 per cent further than former Prime Minister Stephen Harper did. To ensure the tax is not regressive, he has also pledged to raise the basic personal amount to $12,000 and provide low-income families with additional tax deductions and GST credits.
“The net effect of this entire plan would be an increased income of $4,200 per year for a family of four, with two working parents. We would expect a $200 billion contribution,” Peterson projects. He also projects his cuts would drop the federal personal income tax burden by roughly one-quarter, and the top marginal rate by over half.
“My private sector experience is key in understanding what catalysts and stimulus are required to help grow and support the private sector,” said Peterson, explaining the origin of his policy. His bold policy team is also being headed by Dr. Mark Mullins, former head of the Fraser Institute and a key architect of Ontario Premier Mike Harris’ economic policy plans.
By calendar 2023, Peterson predicts the economic boom his plans will create will require an annual immigration rate of 500,000 total. Despite stating he believes in Canadian values, his policy, which would not include a values test, stands in stark contrast to policies put forth by candidates like Kellie Leitch.
Beyond economics, Peterson’s social convictions make him electable come the general election. Peterson is pro-same-sex marriage, pro-LGBT rights, pro-choice, against M-103, and in favour of assisted suicide legislation. He is even open to marijuana legalization, provided we “tax the hell out of it and funnel this tax revenue back into health care with a focus on seniors,” as he says
He is the definition of “progressive conservative”—which he believes will help him win in 2019.
“I grew up as a Peter Lougheed Conservative in Alberta, which balanced progressive social policy with Conservative fiscal policy,” explained Peterson. “The majority of Canadians share those two views.”
And he’s not wrong. According to recent Ipsos polling, 77 per cent of Canadians support at least some access to abortion. Polls conducted by Forum Research in 2015 revealed 59 per cent of Canadians support legalized marijuana and 70 per cent support gay marriage.
Nonetheless, Peterson promises social conservatives will be able to speak freely under his government. When speaking to the Prince Arthur Herald, Peterson reiterated “how well all the leadership candidates get along on a personal level, and the respect we all have for each other over and above differences on policies and ideas.”
Peterson is also one of only a few leadership candidates who is perfectly bilingual, and has expressed interest in running for a Quebec riding. Considering that candidates need 16,901 votes to win this leadership race, and 7,800 of them are in Quebec’s hands, this commitment to nearly 25 per cent of Canada’s population is definitely noteworthy.
“Our Party must win back progressive conservatives, especially in urban ridings and Quebec. Our next Leader must be a progressive who also welcomes and respects social conservatives,” he said. “I am that person.”