Stairways, ladders, and LIFTs: Ontario unveils its minimum wage worker tax credit

On Thursday Nov. 15 the Ontario government released their economic outlook, which included spending measures meaning it was a mini-budget. As always there is a lot of interesting stuff in the outlook, but a main measure that jumped out at me was the low-income individuals and families tax (LIFT) credit.

You may remember back in the election that Ford promised to eliminate taxes for minimum wage workers which was in exchange for halting the next planned minimum wage increase from the current $14 to $15. That is, Ford promised to leave the minimum wage at $14 but to compensate, it would ensure anyone earning minimum wage would not pay Ontario taxes. In this way they would get some benefits, just not all that they would get from the $15 increase.

I blogged at the time about how this all could unfold here.  I also made a proposal in detail here. Of course there were lots of debate about how Ford could possibly target minimum wage workers. I knew that this was not at all possible and said so. He only has the tools to target income, not wages. While some poo-pooed my thoughts on this, I now smugly point to an income targeted tax credit…for whatever winning such a technical tax implementation argument is worth.

For those of you interested in this tax credit, the full benefit (elimination of Ontario personal income taxes not including the Ontario Health premium) applies to individual income under $30,000 (equivalent to income of full-time full-year minimum wage worker) or family net income under $60,000. The tax credit is phased out at a rate of 10% for income above these thresholds.

There are a few things to note or question with the LIFT tax credit.

First, Ontario already has the Ontario Tax Reduction (OTR) credit which fully eliminates taxes for those with income above the basic exemption and below $~14,840 and is fully phased out at an income level of $~19,500. It is unclear how the LIFT works with the OTR. Is the OTR being replaced or is the LIFT applied just above the OTR thresholds? I’d hate to see the tax system made even more unnecessarily complex.

Second, the OTR is factored into withholding, meaning that a low income workers obtains the benefit on each pay cheque as opposed to waiting until tax time. There is not indication of if the LIFT will be similarly factored into the withholding and if so, how, since it is based on family net income. If the LIFT is not factored into withholding then individuals or families will have to file to obtain the benefit, yet filing rates among low income Canadians is problematic. How does the LIFT work with withholding and what plans does the Ontario government have to increase filing among the group targeted by this tax credit? Will the LIFT be automatic or does the tax filer have to check a box to ask to apply?

Third, both the existing OTR and the proposed LIFT are household based. The OTR is such that only the spouse with the higher net income can claim the OTR, with no requirement that the benefits from the application of the OTR be shared within the  household. The LIFT applies to adjusted family net income, meaning that a low income worker may not derive any benefit at all from the LIFT, depending on their household income. While many advocate for household based system, such determination makes serious assumptions about power and sharing within a household assumptions which are becoming more like dinosaurs in terms of their actual practice. It also means that the LIFT has serious gender concerns and is at odds with achieving economic independence. Of course, some of you tell me that considering gender in designing and delivering policy is pandering, but those of you telling me that know what I have to say to you.

Fourth, the LIFT and similar programs mean that low-income worker keeps more of their income through tax reduction. This means that, because the actual income is not increasing, they continue to qualify for existing benefits like the Trillium Tax Credit or the GST/HST tax credit. However, a wage increase means that worker gets more actual income while reducing their reliance on tax benefits. And therein lies a real  tension with public policy. Do we want workers to be more independent and able to live off their income or do we want workers to be more dependent and only able to live off their income plus their benefits? This is a ill-discussed tension, though a point in a recent interesting paper. Those who lobby against wage increases, highlighting potential economics costs, point to the tax system to make up the difference instead. But those we make up the difference are the tax payers in the province through higher taxes which have efficiency concerns as well. There are costs and benefits to either approach, yet the costs of the minimum wage are discussed to great fan fare without considering the costs of the alternative.

Fifth, the LIFT does nothing for those we already do not pay tax due to the OTR, earn below the basic exemption, or who are unable to work (notice how I did not use the word unwilling). These folk are already reeling from the sudden cancellation of the basic income pilot and are probably concerned about the direction this government will go with their needs. These folk will have to wait the outcome of the social assistance review, the results of which are, I think, being announced next week.

Overall, since the government was hell bent on cancelling the planned minimum wage increase, it is worthy to note that this did not come without benefits. However, the LIFT is no panacea either, more so with the implementation path chosen by the Ford government.

 

 

 

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Who Pays for Municipal Governments?: Pursuing the User Pay Model for Solid Waste

Today the , of which I am a Commissioner, released a report today called Cutting the Waste: How to save money while improving our solid waste systems.

The full report is here, or you can read a shorter blog here, we also wrote an Op-ed in the Calgary Herald here. Robson Fletcher with the CBC also wrote a nice overview piece here which focused on the model for the City of Calgary here. You might even catch one of us talking about it in the news.

One of the main recommendations of the report is that we should pay for waste through user fees as opposed to through property taxes. It is not about paying more, instead it is about aligning municipal revenues to its expenditures. I want to talk about, first the issue more generally, and then move more specifically to the issue as it relates to solid waste. Suffice to say that the views expressed here are my own, and are based on my own research on municipal user fees as well as on the Ecofiscal report.

User Fees as a Municipal Funding Tool

In municipal public finance, we talk a lot of linking expenditures to revenues, which is a method to ensure that the costs of providing a good or service is borne as directly as possible by those benefiting from the goods, services, and privileges. Where *possible* (I’ll come back to this), the direct users, the beneficiaries, of the goods, services, and privileges should pay the price of providing the goods, services, and privileges.

By charging beneficiaries directly, this ensures that the services are consumed by those who value them the most and the government obtains direct feedback as to whether citizens really desire the provision of the goods, services, and  privileges at the cost incurred. This is what economists call an efficient outcome. Efficiency is achieved when goods and services are produced at the lowest possible cost to the producer and the quantities that are provided are of the greatest possible benefit to the consumer.

When goods and services are instead funded through property taxes then the implicit price of using a particular service is zero. When something is *free*, people tend to use more than they would otherwise, imposing higher costs on everything through increased property taxes. Another side effect of paying for residential services through property taxes is that these costs can also be imposed on businesses, since in many municipalities non-residential property taxes are a multiple of residential property tax rates. That is, when things are paid for through property taxes, businesses end up paying for a service that they do not benefit from or consume and may even end up paying twice for a service since many business services are not provided by a municipality. If we care about the business property tax burden then we care about user fees.

User fees also have accountability embedded in them. By law, user fees are a cost recovery tool, the revenues for which must be solely used to fund the provision of the service, and the fee charged is dictated by the cost of providing the good or service. Accountability related to property taxes, on the other hand, is weak. Taxes are a form of payment for the sole purpose of raising revenue with no connection to the activity being taxed. Property tax revenues can be used to fund any activity and the size of the tax is unrelated to costs.

User fees are important municipal tools, especially when compared to provincial and federal governments, as municipalities are increasingly likely to be involved in matters where the direct beneficiary, the user, is well defined and it is a simple process to extract payment from the user.

The criteria, easily identifiable individual beneficiary from whom payment can be extracted (or, more importantly, can be excluded from benefiting if they do not pay for the service) are essential characteristics for determining if a user levy is appropriate. This is why user fees are good for say garbage, but not, say, sidewalks, fire, police. So user fees cannot and should not be used to fully fund municipalities, but instead be deployed strategically.

The main concern with user fees is regressivity. This means that the cost of user levies is a heavier burden on lower income individuals. Here are a few considerations on that. User fees are equitable on a benefits received basis, one measure of equity. They may not, however, be equitable based on ability to pay. With user levies, all consumers pay for the cost of the good or service regardless of their income, a key measure for ability to pay. It is this concept, ability to pay principle, where the most frequent, and likely the strongest argument against user levies lie.

The literature, however, is not conclusive regarding the regressive nature of user levies. In fact, the evidence suggests three main arguments against user fee’s regressivity. First, upper-income households benefit disproportionately from free public services. For example, upper-income households are more likely to live in large households and consume more than their share of sewage, water, and refuse collection than lower income households when these services are funded through property taxes and not user levies. Second, user levies allow low-income consumers to adjust their consumption to lower levels, thereby paying less than they would under a property tax system. Third, any regressive or disproportionate effects can be minimized or even reversed with careful design, revenue uses, and compensation mechanisms, particularly discounts and exemptions for readily identifiable groups. For example, the City of Calgary has a fairly unique Fair Entry program that responds directly to this concerns.

But it is also important to understand that property taxes also suffer from similar arguments of regressivity. Property taxes are tied to the assessed value of a property which is only loosely tied to the income of the property owner. This incongruence has led to property tax circuit breaker programs that provide property tax relief to low income residents and cancellation of property tax increases. Suffice to say, while user fees dominate on efficiency concerns, both instruments carry concerns regarding equity on the ability to pay side of things, but user levies at least gain some credibility on the benefits received measure of equity.

 User Fees for Solid Waste

Managing solid waste is a significant expense for municipal governments. In addition, the cost of managing waste is rising. Landfills are expensive to build and maintain and many of our landfills are nearing their capacity. For example, the City of Calgary landfill has about 30 years left at current disposal rates and it will cost $1.5B for a new landfill. If, however, we can deploy a model whereby we can both pay for solid waste management AND reduce the amount we are sending to the landfill, we can achieve multiple objectives of cost recovery and cost reduction/avoidance.

Embedding the costs of managing solid waste in property taxes means that there is no alignment of expenses with revenues and there is no incentive to consider the costs you are putting onto the system.  The amount an individual pays for waste management under this system has no connection to the quantity or composition of the solid waste they generate or the external costs they impose on others due to their waste generation. A properly designed waste management fee that recovers the cost of waste management and aligns the costs to the waste generation of the individual is an important step towards reducing the amount of waste we send to the land fill.

While some municipalities, like the City of Calgary, have or are moving to a fully cost recovery user fee system, in many cases the user fee is a flat monthly fee that is unrelated to the amount of waste. While a fixed portion to a waste management fee will be a necessary part of any waste management user fee system, since a portion of waste services is unrelated to use, in order to incentivize waste reduction, the fee must also contain a variable portion. Such a system is commonly referred to as a Pay-as-you-throw (PAYT) system.

PAYT systems can be as simple as a model where the City makes different bin sizes available and your monthly fee is based on the size of bin you select, with smaller sized bins incurring a lower fee than larger sized bins.Variable bin sizes allow households to chose the bin size the best works for them, as opposed to forcing all households into using the same bin. Variable bin sizes increases the options and even allows a household to opt for a bigger bin than a one-sized-fits all model that the one bin size model imposes.

However, it can also contain other features. For example, there can be an additional fee that is levied whenever the bin is emptied into a waste truck. Many waste bins, including those in the City of Calgary, include RFID technology that can be used to apply a fee to households only when they actually set their bin out for collection. It may come as a surprise that annual operating costs can be significantly reduced simply by redrucing the number of times your household has their bin collected. Another example is to have weighing technology that allows for a fee that is based on the weight of the waste a household produces. However, weight-based models can suffer calibration challenges that may make the costs greater than the benefits and should be pursued with caution.

A key concern that comes with PAYT models is illegal dumping. It is essential that appropriate policies with respect to illegal dumping are considered along with PAYT. Such policies include a basic allotment, tag a bag policies, financial relief for low income households, scheduled large waste item pick up, encouraging the use of the second-hand economy, and the like. However, we note in the Ecofiscal report (p. 27) that the evidence surrounding concerns with illegal dumping associated with PAYT may be overstated.

Summary

Moving to a PAYT model is not about paying more for something, it is about paying differently. PAYT models put the control for costs into the hands of the household, where they should be. And PAYT models offer more choice and extends the life of our landfills and helps us avoid future costs.

And if you want to learn more about user fees and funding municipal governments, check out our upcoming School of Public Policy Current Affairs lunch on that topic on October 31 in Calgary.

The Great Ontario minimum wage tax debate of 2018

If you follow any media from Ontario, you will know that there is yet again another minimum wage debate. Doug Ford, leader of the Ontario PCs, has come out with a plan to refund Ontario taxes for minimum wage earners in lieu of increasing minimum wage to $15/hour in 2019. Kathleen Wynne, leader of the Ontario Liberals, will increase minimum wage from the current $14/hour to $15 hour.

This launched a number of twitter critiques and the CBC released their calculations of whether someone would be better off under Ford or Wynne. Unfortunately, the calculations are not complete, by anyone so far as I can tell. This is because everyone overlooked some upcoming changes as well as the net effect on tax benefits. What we really care about is taking into the whole tax and transfer system, federal and provincial, what will be the net implications for workers. I’ve done those calculations and you are welcome to peruse them here.

A key limitation is that we actually don’t have any of the details of the implementation plan for Doug Ford’s plan. There are some pretty concerning complexities with the dribs and drabs we have been provided with, but hard to make clear commentary without the actually plan. So I take his plan at face value, that a minimum wage worker would pay no Ontario tax, but nothing else changes.

The spreadsheet looks at 2017 (Column B) and 2018 (Column C) first which shows the effect of the minimum wage increase from $11.4/$11.6 in 2017 to $14 in 2018. These rest of the columns are various scenarios for the 2019 tax year (Columns D-K), the year in which both proposals come into play. The basic amounts are indexed to inflation and I used 2% for that (hat tip to Election Watcher here as I initially used 1.5%). EI and CPP contributions are calculated using what is confirmed as the formulas for 2019 (again, hat tip to Election Watch here as I was originally unable to confirm the 2019 CPP rate). Federal and provincial tax owing is calculated using current the lowest statutory tax brackets (there has been no announcement yet from either government or party leader that these would change). The GST, WITB, and Trillium tax credits are calculated using best available information and may be off by a bit (which does not change comparisons across categories as they’d be off all by the same fudge factor).

Column D presents for a worker earner $14/hour and working 40 hours a week for 50 weeks (I granted the poor worker two weeks vacation). Column E is the same but for a $15/hour minimum wage. Cell E34 then calculates the net tax position of a $14/hour worker vs $15/hour worker. The $15/hour worker comes out ahead by $712.13.

Column F and G then consider what would happen if the $15/hour worker faced reduced hours so we could see where the break point is. If the worker has their hours reduced by approximately 80 hours a year then they would be better off (net tax position wise) earning $14/hour and having their Ontario tax offset by a credit. If a worker looses their job, well that is a pretty easy scenario.

Column H and I looks at a part time worker, working 20 hours a week for 50 weeks a year. Again, this worker is better off with $15/hour, netting $717.21 a year. But here we see the impact of taxes and benefits that are not re calibrated to minimum wage increases as the worker faces some pretty stiff penalties in having tax benefits reduced.

Finally, Column J and K use the calculations used by Doug Ford and the CBC. In these two columns the poor worker works every week of the year. In this case, the worker nets $740.40 under the $15/hour scheme, assuming no reduction in hours.

If you are interested in knowing the poverty level in Ontario, Row 37 notes the Low Income Measure for Ontario. Row 39 also calculates the inflation that has been reported from the minimum wage increase. Rows 35 and 36 report the average tax rate faced by the worker.

Anyone can use the information in this sheet to play around with any scenario they like.

I present this information, not to say one policy is better than another. They each have their costs and benefits. What I wanted to provide were the facts of the policies and the effects of it on various scenarios. I welcome comments, particularly if you see any errors.

 

GAAR me maties Part III

On the evening of March 6, 2018, I was fortunate enough to be in Victoria and invited by Murray Rankin, the MP for Victoria, to participate in a community town hall he was hosting on his private member’s bill to add an economic substance test to section 245 of the Income Tax Act (ITA).

Section 245 of the section of the ITA is the General Anti-Avoidance Rule. In the early days of this blog, I had two posts about Canada’s General Anti-avoidance Rule (GAAR). One was on the basics of GAAR and the other was on some of the ways GAAR has been used. What I am going to do here is walk us through why we should be supporting Murray’s bill.

Before GAAR

“Modern” Canadian tax avoidance law was established in the UK in 1936 which legitimized legal tax avoidance. This was the Duke of Westminster case that established that taxpayers are entitled to structure their affairs to minimize their tax liability and they cannot be compelled to pay an increased tax. This ruling features prominently in the Canadian tax system and is the key principle governing tax law.

Of course allowing people to engage in tax avoidance without limits leads to abuse. Aggressive and abusive tax planning is one of the five main tax compliance risks in Canada. Other countries, through the judiciary, have created court-led anti-avoidance principles based on business purpose and economic substance tests.

The economic substance doctrine is a common law judicial doctrine that disallows tax benefits of a transaction if the transaction lacks economic substance or a business purpose. The goal of this doctrine is to prevent taxpayers from subverting the legislative purposes of the tax code. It is above the legal standards, which looks to see if the letter of law is followed, to see if the spirit of the tax law was followed. The taxpayer must prove that the underlying economic transaction was not concocted simply to avoid or reduce tax liability, but that there is an economic reality to the transaction. That is, the transaction or series of transactions also creates economic value or profits, other than the tax savings. In particular, economic substance test respects the fact that transactions with similar economic consequences are taxed similarly.

In Canada, however, no such test developed through the judiciary. It pretty much came to a head in the Subart ruling in 1984 when the courts affirmed the Duke principle and that a business purpose test was inconsistent with achieving economic policy through the ITA. This then created the prime opportunity for taxpayers to become much more aggressive in their tax avoidance activities and led to a large growth of tax shelters.

GAAR

Parliament, not pleased with this situation, then embarked on the creation of a General Anti-avoidance Rule (GAAR) which was codified into the ITA in 1988. The idea of GAAR was to stop the cycle of complex, specific tax measures aimed at sophisticated business practices, and inevitably, professionally guidance and equally specialized reaction. While there are many sections of the act that refer to anti-avoidance (specific anti-avoidance), GAAR was supposed to serve as an overarching rule informing the entire Act unlike the other anti-avoidance rules that suffer from a lack of breadth. GAAR was intended to distinguish between legitimate tax planning and abusive tax avoidance, requiring the Duke principle to be united with GAAR.

Economic substance was envisioned by Parliament to be part of the GAAR, because in the explanatory notes accompanying the draft legislation it said the provisions of the income tax act are intended to apply to transactions with real economic substance, not to transactions intended to exploit, misuse, or frustrate the Act. Therefore transactions lacking economic substance should be presumed to frustrate the legislative purpose of the income tax act. However, an economic substance test was not directly incorporated into section 245 of the ITA.

Post-GAAR

The case law shows a very cautious application of GAAR and an uncomfortableness with economic substance, often playing in the background rather than featuring in the decision. And because future cases look back at past cases for their decisions, this feature of not applying or developing a clear test has become somewhat entrenched in the application of GAAR at the judicial level. In fact, in looking at the court cases it is clear that an application of economic substance is needed but more guidance to the courts is needed.

It has been suggested that this has arisen because the courts have preferred to look at legal substance or the legal form whereas economic substance requires textual, contextual, and purposive analysis. The textual contextual and purposive analysis is to determine what the words of the ITA mean so as to determine the object, spirit, or purpose of the provision. It is a search for rationale. Economic substance is a search for rationale and so is consistent with this approach.

The SCC has specifically said that absent a specific provision to the contrary, it is not the courts role to prevent taxpayers from relying on the sophisticated structure their transactions arranged in such a way that the particular provisions of the Act are met. The courts role is to interpret and apply that Act as it was adopted by Parliament, not necessarily the explanatory notes. What the courts have said is that the act of searching for policy and then to use such policy to override the wording of the provisions in the ITA would place the formulation of tax policy in the hands of the court.

The courts have, therefore, concluded that the concept of economic substance has no relevance without a specific statutory provision that makes it relevant.

Economic Substance

Adding an economic substance test is consistent with most legal analysis of the situation in Canada regarding abusive and aggressive tax planning. Without the economic substance test or similar test many abusive transactions will not be found to be such. E.g Offshore beneficial trusts, which have flourished as a tax shelter.

Canada is an outlier not having an economic substance test. For example, the US economic substance test developed in the courts in response to a waive of tax shelters set up in the 70s and 80s, the same tax shelters Canada was responding to when it enacted the GAAR. The US economic substance test was codified in 2010 into the ITA following the global financial crises (a need for revenues and discouraging the use of tax haves). The enactment was given significant teeth by enacting high civil penalties.

The US is a good example as real economic substance to transactions is what was in the mind of parliament when GAAR was enacted. The US defines a transaction as having economic substance (sham transaction) if (1) the transaction changes in a meaningful way (apart from its federal income tax effects) the taxpayer’s economic position ( subjective intent, whether the taxpayer had a non-tax business goal for the transaction); and (2) the taxpayer has a substantial purpose (apart from those tax effects) for entering into the transaction (objective intent, whether the non-tax business goal had a reasonable or expectation possibility of profit). The US provision is accompanied by a general directive that gives guidance on how to determine if the doctrine applies.

Other Actions

We should not overlook the role of tax accountants and tax lawyers in creating abusive tax shelters that lack economic substance. Tax professionals contribute majorly to abusive tax avoidance, benefit greatly from its persistence, and have significant capacities to reduce its extent. Tax professionals ought to do much more to address tax avoidance than merely comply with existing legislation. These responsibilities are consistent with widely accepted standards of professional integrity. A way to nudge better professional standards is to adopt penalties for those who promote abusive tax shelters, as the UK, US, and Quebec has done.

Further, Canada does not currently impose penalties when the GAAR does apply. If a transaction or series of transactions is found to run afoul of GAAR, only the tax owing is assessed. This is contrary to other jurisdictions, like the US and Quebec, which levy penalties as well and may also help reduce aggressive and abusiveness tax avoidance.

Of course, we all know a key problem is learning about these abusive tax shelters in the first place. Some jurisdictions, including Quebec, impose mandatory disclosure of potentially abusive tax shelters. The advantage of disclosing tax shelters in advance is that it provides information to the tax authority for it to investigate. Why would a tax planner disclose a tax shelter? If disclosed if found to be against the general anti-avoidance provisions, the aforementioned penalties would not be applied due to the disclosure.

There is a lot of talk in Canada about how immoral these tax shelters are and more should be done to stop them. That is easier said then done, but Murray Rankin is right to push the Government to enact an economic substance test. I just hope it is one with teeth.

Canada’s Equalization Program

As many of you know, I am spending my research semester as a Visiting Professor in the School of Public Policy, University of Calgary. This allows me better opportunity to attend various SPP events, including the one held today on Current Affairs in Equalization. I can say it was a very well attended event, held in the Alberta Room of the Fairmont Palliser. The event featured Bev Dahbly as framer and moderator and Ted Morton, Tracy Snodden, and Trevor Tombe on the panel.

To get more details on the issue, you can read Trevor Tombe most recent blog post here along with other popular reading here, and here. In January 2014, SPP also held a two day conference on equalization and that is summarized here.  And there are oodles of papers on equalization on the SPP research website (just search equalization). I’ll attempt to summarize the discussion at this panel below.

The panel began with Bev Dahlby framing the problem. Equalization is a very hot topic in Alberta, but as noted at this panel session, the program, its formula, and the payments are not well understood. As noted in the framing for the panel, Canada has oodles of programs that transfer money from the federal government to the provinces, and equalization is but one of these programs.

The basis for the equalization program is 36 of the Constitution Act which reads

  •  (1) Without altering the legislative authority of Parliament or of the provincial legislatures, or the rights of any of them with respect to the exercise of their legislative authority, Parliament and the legislatures, together with the government of Canada and the provincial governments, are committed to

    • (a) promoting equal opportunities for the well-being of Canadians;

    • (b) furthering economic development to reduce disparity in opportunities; and

    • (c) providing essential public services of reasonable quality to all Canadians.

    • (2) Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation

Canada in not unique in having such an arrangement, but may be unique in terms of the vagueness of the commitment, being aspirational rather than definitive in its commitment. The equalization program was introduced in 1957 and has been tweaked many times since its introduction. It currently transfers about $19B in federal tax revenue to the provinces.

The equalization program works by transferring federal money according to a formula that is intended to equalize fiscal capacity. That is, it tries to address the difference between a particular provinces capacity to raise revenue from taxes compared to the average capacity to raise revenue. Notice this is not about what is actually collected, but rather the capacity. The current formula considers this from the angle of

  • Personal income taxes
  • Corporate income taxes
  • Consumption taxes
  • Property and miscellaneous taxes
  • And includes 50% of resource revenues.

The example that was given to understand the formula was as follows:

  • Say you were interested in calculating the fiscal capacity of consumption taxes in a province
  • Say the average provincial consumption taxes rate is 5%
  • Say the average per capita consumption expenditures subject to tax was $32,000
  • Assume the average per capita consumption expenditures subject to tax in a given province was $30,000
  • Then the per capita transfer for that province would be 5%(32000-30000)=$100

There are concerns with the equalization program. The biggest is the incentive effects. That is, equalization may affect the fiscal decisions in a recipient province. The formula incentivizes these provinces to have a higher corporate tax, and reduced incentive for productivity enhancements and resource development (since a $100 in resources reduces equalization payments by $50) which reduce equalization payments. The next biggest concern seems to be related to how much resources should count in the equalization formula (with views ranging from 0-100%) and whether resource monies put aside into a provincial sovereign wealth fund should count. There are significant concerns about the cap on total payments that was introduced in 2009 to ensure Ontario did not get net equalization payments and its unintended consequences of introducing a price floor. There are concerns that some provinces are keeping their resource revenues low by not charging a market price for their resources (e.g. hydro on Quebec). Finally there are concerns about the model being based solely on fiscal capacity and not taking into account the difference costs provinces face in publicly providing goods and services.

Ted Morten then proceeded with some comments that were driven in response to this recent publication on equalization. The key points seemed to be related to a point above, about how equalization does not account for decisions in the provinces or other factors that affect a provinces capacity. One example he gave was the National Energy policy, which Ted indicated led to a $98B in reduced activity in Alberta and garnered the federal government $100B in additional revenues. The other example Ted gave was the long term economic effects of Quebec sovereignty included their language laws, which reduced economic capacity. Ted also noted the problem with the equalization program in that there is executive discretion which allows the formula and the program to be subject to partisan politics and electoral consideration (e.g. no one wants to get into a fight with Quebec).

Tracy Snodden noted that the formula is set so that not all provinces get money. It is set to the average, and some will be above average and some will be below. It is the nature of the formula. Tracy focused on Ontario, who became a have-not in 2009, but is about ready to shake this qualifier off. Ontario had already had economic difficulties before 2008, but was also heavily affected by the 2008 financial crises. In addition, the resource boom in other provinces raised the baseline fiscal capacity. These two things, poor economic growth and the raised baseline fiscal capacity interacted to lead to Ontario being a have-not province. Ontario’s per capita transfer under the program is small but because it has about 14 million people the total payment appears large. She noted that Ontario was also a have-not province for 1977-1981, but did not get payments then. When Ontario becomes a have-not province, because the implication on total transfers is large, the response in Ottawa has been to introduce overrides due to the fiscal concerns with making these payments. Tracy noted that with Ontario moving out of have-not status this leaves some breathing room for discussions to proceed with the 2019 renewal/modification of the equalization program, but the cap that was put in place in 2009 needs to be reconsidered as it also, unintentionally, put a floor onto the program that has lead to adverse affects.

The panel concluded with comments from Trevor. Trevor note that in 1867 20 cents of every federal dollar was transferred to provinces. Fast forward to 2018 and 20 cents of every federal dollar was transferred to the provinces. So transfers are not new nor have they changed much in total. They have though changed in the nature of the transfers. Trevor pleas for people to get the facts straight. He says too many people argue that equalization is a transfer from Alberta to Ottawa (the province of Alberta does not write a cheque to Ottawa. Albertans pay federal taxes), equalization caused the deficits in Alberta, the cap brought in in 2009 (by the Harper (and Kenney) government) has impeded Alberta’s ability to obtain equalization payments during the oil crises, and removing resource revenues from the formula would benefit Alberta (note: doing so would increase payments to Quebec). All of this is fiction.  What we need to do, to have a better discussions, is focus on the facts and to try to come to a common understanding of what objective are we trying to achieve and what problem are we solving. It is true that Alberta, since the program’s inception, has been a net contributor to all federal transfers, but this is because: Albertans have higher incomes, businesses have higher levels of profit, Albertans are younger than other provinces, and Albertans have a high rate of consumption. All this factors into less money from federal transfers.  In fact, Trevor noted that if we went back in our TARDIS and instead of dropping the GST, the federal government dropped income taxes, then Alberta’s fiscal gap under equalization would shrink.

Questions then came from the floor:

  • Q: How is money transferred to the federal government. A: We pay federal taxes, it is as simple as that. However, it was noted as to whether it makes it less serious if out of the pocket books of individuals or the provincial legislature? [I would say, define serious.]
  • Q: If this is all due to Albertans being so much better off than the rest of Canadians, is that really such a terrible problem? A: The problem would indeed go away if Albertan’s were less successful, but there are of course implications that go along with that. This takes us back to two issues: if equalization distorts productivity gains and resource development then, yes, this is a concern; and, what problem are we trying to solve.
  • Q: If Albertans are helping these other provinces by paying federal tax, are there any assurances that the provinces we are helping will become more productive? A: Poignant question , since the program does not appear to address this problem.
  • Q: Are we impeding mobility with equalization? A: Seems that EI is a bigger consideration in mobility than equalization. But we can ask this question: what policies will help facilitate mobility, productivity, resource development, etc?
  • Q: When I looked at the payments I saw for this year a $1.8B adjustment factor that meant $1.8B more in funds that went to other provinces including Ontario. What is that? A: That adjustment factor is the unintended result of the cap put in in 2009 which also effectively operates as a floor. That adjustment factor, the floor, shows how broken the system is.
  • Q: When does the current model expire? A: Strictly speaking, it is a federal program and the  federal government can do what it wants. But it is set to expire March 2019 and Ottawa does typically consult with the provinces.
  • Q: How do Manitoba and Quebec hydro resources revenues get counted? A: Hydro rents are included in the formula, the question is whether the hydro rents received reflect the potential rents. This is poignant since Alberta sells at market rates, yet some provinces subsidize hydro by underpricing it for domestic needs compared to what it sells for on the open market. This was followed by a discussion as to whether revenues from renewable resources should be treated differently from non-renewable resources since the later is finite. Of course, however, everything is finite in the long run so does it matter (that was an economist ;-))? There was also a conversation as to, since resource royalties and related are not taxes should they be considered? [This is true, resource royalities or selling provincial proprietary interests (e.g. hydro) are proprietary charges, not taxes.]

The panel finished with a final consideration in that what is the role for Ottawa and our fellow provinces helping Alberta out when times here are not good? The oil price collapse was a significant economic adjustment and many in Alberta felt abandoned (not just through equalization but also EI and federal transfers like the CCB and GST tax credit that do not adjust quickly enough). What can we, as a federation do, in these times?

That is the sum total of my notes. My notes are simply an attempt to record the statements. I am not evaluating the statements made (except where noted) and I may have erred in my note taking.

Debate #1 in the #BCLibs18 Leadership Race

Today the BC Liberals had their first so called debate in their leadership race. I say so called since there was no actual debate. It was two hours of vague answers to questions, with most speakers, most notably Dianne Watts, being cut off half way through their answers as they were unable to manage their alloted time.

Overall, there were not many details provided by the candidates about their policies, possible because none of the six current candidates have a detailed platform, or so it seems by reviewing their leadership websites. The main themes that did come up were: 1. they are a free enterprise party (I’ll remember this the next time I critique a platform because I could rip past platforms to shreds on this principle); 2. they need to strike a better balance between fiscal stewardship and investments in program spending; and, 3. they are scared as hell about the province moving to proportional representation.

With so much vague detail there is little to critique, though I could mention the irony of our former Minister of Transportation mentioning that the province needs a transportation plan and a better relationship with Metro Mayors. There were, however, three gems that came up that are worthy of this blog.

First, Andrew Wilkinson is committed to providing a tax deduction for tutors. We can talk about how tutors are a luxury afforded by households with the income available to pay for them. We can talk about how tutors are not a cost incurred to earn an income and therefore not an item we would consider worthy of a tax deduction. Instead, I will note that this is once again an example of the BC Liberals showing their lack of understanding with basic tax nomenclature. Under the tax collection agreements with the federal government, the provinces can’t enact tax deductions. They are wed to the federal definition of taxable income. They can enact tax credits. Tax credits are not tax deductions. Stop calling tax credits tax deductions! The BC Liberals did this in the election. Get the nomenclature correct because it is really hard for me, a tax economist, to think you are truly a fiscal steward when you can’t get basic tax and spending nomenclature correct. Oh and by the way, a tax credit for tutors is just as terrible an idea as a tax deduction. Stop with tax credits. All you are doing is taxing people throughout the year, creating all those distortions, and giving it back to a chosen few at tax time who do things they would have done otherwise, all while paying for the administrative costs of the tax credit.

Second, Sam Sullivan answers my call to arms that we, as a province, put our big girl pants on and have an adult conversation about doing away with the PST in favour of a VAT. Sam wants a modified value added tax in BC, a VAT that sounds a lot like the VAT proposed by Bev Dahlby’s tax competitiveness commission last year. This is great as doing so would help address a terrible tax burden in BC, but without having any details I don’t know his plan to deal with the regressivness which is easily done through a low income transfer that we can piggy back onto the GST refundable tax credit or low income carbon fund payment.

Third, Mike De Jong outlined a plan to ensure that students are not saddled with post secondary debt by, wait for it, a BC version of the RESP grant. He firmly believes that people should pay for their education so low income families be damned. Instead, he wants to give the equivalent of a $500 RESP grant. Now no details, of course, are provided, like what contribution rate is needed to get that grant. If we assume that the program would piggy back off the federal one then $2500 would be needed to get the $500 provincial grant. There is recent data available to help us understand RESP participation and contribution rate. It seems that the overall RESP participation is just under 50% and the average holdings are just under $7k. The data shows that we have a lot to do to improve participation in RESPs, notably among low income households. Without a plan from Mike De Jong to improve participation rates and contribution amounts than all this plan does is subsidize even more of those individuals who are already saving for kids who will already go to post secondary education. I also note that he has not costed the proposal or indicated how it will be paid for (the opportunity cost). I sent him this tweet:

These are fairly basic questions that someone proposing this policy should be able to answer right now, especially one promoting themselves as a fiscal steward.

So that is round one, five more to go. I hope more detailed platforms come out, the debates, become debates, and the candidates learn to deal with the time the limits before the next one.

CBC fails TAX 101

As many of my loyal readers know, I regularly get a bit apoplectic with the general lack of basic tax knowledge in this country, particularly by journalists. I mean, if you are going to report on tax news, you should take a soupcon of time to ensure that you are edumacated about the topic upon which you are supposedly proffering opinion and fact about. But when it comes to topics that touch on economics and tax, apparently this is a tall order, especially for the CBC.

A few weeks ago this gem came across my twitter feed. The headline reads “P.E.I. man wants to know why he pays HST on electricity he generates himself.” Well, I know without even reading it that he does not. I know if I looked at his bill that he pays HST on the electricity he consumes. That is all, nothing to see here. But gosh forbid we take a moment to think logically about this situation and the tax system.

Alright, since the journalist, one Kerry Campbell won’t do it, I’ll do it for you.

In this situation, the consumer has a “net zero” home. The important point is net. Some times the home draws power, some times the home provides power back to the system. I imagine, the home mostly draws electricity from the grid at night and does at an agreed rate. The home owner then has to pay for that electricity and that amount is subject to HST.

Now comes the second part. During the day, the home is generating surplus electricity so the home sells the surplus back to the grid. So the home gets a credit for that. But wait, the home owner is likely a small supplier, without a HST number, so, GASP [clutches pearls] does not charge the electrical provider HST.

When the bill is reconciled, the home owner is paying the HST on the power the home draws. The home owner does not get its own magical tax charge on the electricity the home sells back to the grid to offset the HST already paid. The homeowner is not, as the CBC put in the headline, paying HST on the electricity the home generates itself.

This situation is no different than for any other business activity or any other consumer. We pay tax on things we consume. When we sell things, if we are a small supplier, we don’t have to charge the tax, but there are some advantages to being a registrant, one being that you can claim input tax credits. Overall, there is nothing to see here, or at least, as a tax person, there is nothing to see here…now where are my pearls.

Update: a very smart tax accountant informed me that they have done the HST analysis for their clients and determined it was more beneficial to not register for the HST as most of the expenses are exempt supplies which don’t provide an input tax credit (thereby reducing the GST/HST paid–in this case the HST paid on the electricity consumed which is what is the concern of the homeowner). He did though inform me that  my pearls could be considered part of the uniform of a tax consultant and there for a reasonable allowance for them could be claimed; 72/168 of the cost based on average working hours for the week.

 

 

The BC Election & the BC Green Party Platform

Here we are at the half way point in the BC election and the BC Greens have released their whole platform. I’d been waiting for this release of the full platform to write up my comment. The pieces that had been released had caught my eye and the eye of many others as being actually very interesting, well thought out, and based on evidence. I think people did not want to jinx it by being overly optimistic to early on. But certainly when the Green’s released their plan to use mobility pricing to address congestion, well that was too much for this economist, earning the BC Green’s membership in the Economist Party of Canada.

All joking aside it is now time to get into the platform. I took it along as my reading material for my varied medical appointments and it provided an excellent read (along with conversation fodder with those in the waiting areas and the medical staff). People actually have a lot of really interesting questions to ask folk like me, people who are non-partisan and fairly informed on public policy matters. We had some really good chin wags and people were really interested in getting some facts on things like what was the BC debt situation, how much would day care costs and how would we pay for it, and do deficits really matter. I wish people knew that they could just ask people like me their questions. Did you know you can? Go ahead and tweet, email, or call. I’ll do my best (and I am more likely to answer the real questions and not the ones that are some variant about me being some paid hack for one of the political parties—full disclosure, not a single one has paid me or even asked me my opinion).

As always, I am going to focus on those items that are in my bailiwick. What is actually really helpful and quite refreshing is that the BC Green Party Platform starts with what I would call their guiding principles. These principles help get a sense for what the policies are intended to achieve. There is so much in this platform that it is hard to focus on just a few things, but here are a few considerations (if you are interested in post-secondary education analysis of the platforms, see Alex Usher here, you will see he is not so bully on some of the Green elements including the “ungodly bad idea to create in BC the same graduate tax credit rebate that New Brunswick, Nova Scotia, and now Manitoba all have had a shot at”).

Consumption Taxes?

On page 16 of the platform it says “Work with the federal government to streamline business and consumption taxes to avoid distorting effects on business investment decisions and to promote risk taking and innovation.” Well, holy hell! Could that be a commitment to finally do away with the completely inefficient PST system and getting us into the 21st century with an HST? I guess that is a question to put back to the BC Greens because that is sure how I, lowly tax economist, reads it and that gets me excited.

Look, I know this is a sore point in this province. I am with you that the BC Liberals completely messed up the implementation of the HST in this province. They failed abysmally and in every way in the way they announced, communicated, and implemented this hot potato and the end result was not surprising. But the problem was that it was good economics. The PST is a real drag on the BC economy; it reduces investment, slows economic growth, and leads to lower quality employment. Not particularly, the Expert Panel on BC’s Business Tax Competitiveness said

In particular, unless the PST burden on the investments BC businesses must make to remain competitive is reduced, some of BC’s recent gains in investment levels will be put at risk and this, in turn, will result in fewer job opportunities for BC workers. This core issue informed the Panel’s work and its recommendations

And, upon being direct specifically by the Minister of Finance not to recommend a return to an HST:

The Panel urges the BC Government to undertake a comprehensive assessment of a made-in-BC value added tax. The Panel believes that an alternative such as the Business Transfer Tax (BTT) discussed in the Report is a feasible option to replace the PST.

We need put emotions aside and have a logical discussion about this. There are in fact some real options moving forward including moving forward on the BTT as outlined by Kevin Milligan, the Expert Panel on BC’s Business Tax Competitiveness, or going with an HST as outlined by others. Kudos to the BC Green’s for being willing to revisit this discussion, unlike the BC Liberals who lack any degree of leadership on this topic despite promoting themselves as economic leaders.

Basic Income Pilot

The BC Greens have committed to “draw on experience in other jurisdictions to design a basic income pilot to test whether giving people a basic income is an effective way to reduce poverty, improve health, housing and employment.” I certainly hope one experience they will wait to draw on is Ontario which just announced yesterday that it is rolling out their pilots in Hamilton, Thunder Bay, and Lindsay (no relation ;-)). They will also announce an Indigenous community in the Fall, I believe. I also believe that we will be seeing results of this pilot around 2020 and I certainly hope the data will be made accessible to academic researchers! There is certainly a lot to be learned from these pilots, but do not mistake how much this is going to cost. And given the amount of time and effort BC will put into a pilot there is no reason for us not to wait for Ontario to do theirs, learn from these pilots, and then design ours based on their lessons. And let’s remember, if we move ahead with a basic income, this is not cheap, not by a long shot and the BC Greens are already taxing and spending for a very aggressive platform.

Various Property Taxes

The Greens have proposed various measures to cool the real estate and Tom Davidoff provides his always excellent assessment of these measures. There is one, though, that really gets mine and Kevin Milligan’s goat and that is the proposed measure to tax lifetime capital gains in excess of $750,000 on principal residences. There is this issue in that the provinces (excluding Quebec) have all signed the tax collection agreements. In signing those agreement the signing provinces have agreed to a common definition of taxable income that is set by the federal government. The federal government has established that the capital gains from a principal residence is exempt from capital gains taxation. This means a provinces cannot tax that income. And no, this is not a matter of a shrewd one off negotiation because this is the heart of the tax collection agreements. Now we know that Ottawa is eyeing the principal residence exemption. Effective for the 2016, all tax filers who sole their principal residence are now required to report the sale of that residence to qualify for the exemption or face stiff fines and penalties. It has been rumoured that this is the first step towards a life time cap, but it will be years before that comes into play. In the meantime, the Green’s will not be able to deliver on this platform promise.

UPDATE: Now come people are suggestion that the Greens could be proposed to do this through the property transfer system. First, their language suggests otherwise. Second, yes, such a tax has been proposed by Rhys Kesselsman but as noted by Kevin Milligan

Measuring the Economy

The BC Greens note that GDP is but one measure of how the economy is growing. This is very true. GDP is simply a measure of the “total unduplicated value of the goods and services produced in the economic territory of a country or region during a given period.” It is designed to measure certain (but not all) economic activity and is certainly not a measure of social or even economic welfare. Economists have developed many alternative measures with the intent of better assessing social welfare but nothing really provides a single result or indicator. Despite our protestations, GDP continues to be used by others as though it is THE measure of life, the universe, everything (42!). The BC Greens are, instead, proposing to develop a genuine progress indicator based on a range of indicators based on the social determinates of health. While for those more used to mainstream economic indicators this might sound out there, but economists have been long working in this area. I don’t think any one has been signed off on as being ready for prime time, but I think there is enough established knowledge in this area to make some real headway here. And my colleague Lynda Gagne as done a lot of work in this area as well and I am sure would be very interested in working with Andrew and his team.

Tolls & Congestion Pricing

Unlike the BC Liberals and BC NDP, the BC Greens are not going to eliminate tolls, instead they are going to work with the Metro Vancouver Mayors to develop and implement a rational tolling system to management congestions and finance the region’s share of the transportation plan. As I said when parsing the BC NDP platform, infrastructure is expensive and someone needs to pay for it. Not only is infrastructure expensive but in a major cities many of our roads and bridges are hugely congested as everyone gets into their cars and drives everywhere. Congestion is a fairly simply concept, things become congested when demand exceed capacity. I am sure it will come as no surprise that the origin of the concept of using prices to manage congestion is an economist, William Vickrey to be exact. He proposed increasing fares on public transit during rush hour to manage demand. He later extended the concept to road pricing. Now most people view congestion pricing as a tax grab, similar to the reaction to a carbon tax, but that can be battled by ensuring that the congestion pricing is properly communicated as revenue neutral by reducing property taxes. This is in fact an ideal situation since funding transportation infrastructure through revenues from a congestion charge rather than through property taxes is ideal as the former’s level is linked to the consumption of the funded service.

The Fiscal Plan

One thing that is impossible to summarize in this blog is the social investments that the BC Greens are outlining in their 97 page document. The BC Greens are committing to massive spending in BC, from health care to education to public safety to municipal infrastructure. By the end of the four year period, spending will have increased to nearly $4.4B in just 2020/2021 a year. To fund this increase, the BC Greens will obviously have to raise taxes. Unlike the BC NDP who opt to waive their magic wand and ignore this issue until after the costing period, the BC Greens tackle it face on. And folks it is not pretty and it gives you a good idea of what is behind the BC NDP curtain. I applaud the BC Greens for the transparency they do provide in this area, though they are still lacking some details.

Here is where the money will come from:

  1. The BC Greens commit to raising the BC Carbon Tax to $50 per tonne by 2021, one year before the timeline set by Justin Trudeau for the provinces to meet the set floor and one year before Alberta’s Carbon Tax is set to hit $50 per tonne as well. But what I did not see in this plan is any increase in the low income transfer. Maybe I missed it. In the appendix I see this “A BC government will also act to protect those on low incomes from any adverse effects of the carbon tax increases” but I don’t see a spending line item. I also note in the appendix that the BC Greens end the commitment to revenue neutrality (and so the Economists Party takes back their membership card). By 2020/21 the revenues from this increase will total $865M a year.
  1. The BC Greens buck the trend and will not, or so I read, commit to the 50% reduction in MSP premiums. Which given the substantial investment in health that they are outlining in their platform, that is reasonable. Look, health care is already expensive and eats up 50% of the BC budget as it is and that is without addressing the pressures that we have related to the opioid and mental health crises. To think we can eliminate the MSP and fund health care pressures is dreaming in gum drops, unicorns, and candy can kittens. The BC Greens are being honest and realistic with tax payers by committing to eliminating the MSP premium in full and instead immediately rolling funding to health care into the pay roll and income tax system in what sounds a lot like Option 2 proposed by Iglika Ivanova here. All in, the revenues from this will amount to $810M by 2020/21.
  1. The BC Greens will, much like the BC NDP, raise person income taxes but unlike the BC NDP are not clear on what this means for you and I. This is a vague promise that says “Begin the transition to tax fairness by increasing the share of taxation contributed by those earning over $108,460 per year over four years by 1% in 2017/18, rising to 3% in 2020/21. The BC Greens indicate that they will raise $275M a year by 2020/21 from this initiative but I have no idea how. That is what rates and for whom. The current rate for those over $108,460 is 14.7%. The BC NDP have promised to raise the rate for those over $150K to 16.8% and indicate they will raise $250K a year from that. Here is where I think the BC Greens should be much more transparent: how much and for whom because there are many permutations and combinations that potentially get the same revenue but voters should know the rates a priori.
  1. Like the BC NDP, the BC Greens will increase the general corporate tax rate to 12% which actually I was reminded the Expert Panel on BC’s Business Tax Competitiveness recommended it be increased to 11.5%. If the Green’s proceed with movement on the PST and a few other small items on business competitiveness then this can be argued as being in the realm of a revenue neutral move.
  1. The BC Greens believe they will raise $500M a year from their housing measures discussed above but the revenue from their ill-conceived principal residence capital gains tax measure will have to be netted out.
  1. The BC Greens will spend all the expected surplus, contingency, revenue growth, and the like netting them a whopping $800M a year by 2020/21. This means there is no room for fudge, emergencies, debt payment, credit rating downgrades, nothing, nada. It’s a bit risky.
  1. The Greens will expect to net about $450M a year by 2020/21 from three really interesting initiatives. First, the BC Greens get their membership card in the Economist Party back again as they will eliminate all boutique tax credits which is awesome because these things are nothing but a waste of money. Remember, say it with me: taxing you all year to give it back to a chosen few at tax time does not constitute a tax cut! Second, they will establish “a working group to develop proposal for an overhaul of the tax system that will reverse the trend to regressive taxation, streamline and simplify the tax system, and remove perverse incentives and distortionary effects.” Rock on. I think this is great (hmmm, what will the working group do if all the boutique tax credits are gone?). There is only so much that can be achieved at the provincial level, but since there is equal appetite at the federal level, there is much that could be done. And piggy back this with a mandate to crack down on the underground economy (that is not in the platform but a nudge is as good as a wink) and Bob’s your uncle as us Brit’s say. And may I say, I might know a gal for you *winks*. Third, they will, perhaps with the help of the working group “develop options to shift taxes in order to incentives choices that benefit society and disincentive choices that are harmful and costly.” That could be a sugar tax, which might not change choices but is amazing tool to raise revenue!
  1. The BC Greens will raise about $150M a year by 2020/21 from resource rents, fees, and licenses. Hmmm, not sure what this is linked to the platform and a word search got me no love.
  1. Finally, and again a word search got me no love, there is $460M a year from internal repurposing. This might be similar to the BC NDP proposal for an internal review for waste and eliminate waste and inefficiencies. The federal Liberals ran with a similar item in their platform and the Chretien/Martin Liberals had a similar exercise. In fact, most incoming governments come in with similar exercises. It is a lot of money to find, but it is not unrealistic and at least the BC Green’s have guiding principles to inform this process.

Finally, in the fiscal plan section, the BC Green’s are proposing balanced budget legislation which is not something that is necessary. Balancing a budget over a business cycle is the point of fiscal policy. So it is really unnecessary but I imagine that this is just a line item to play into some BC Liberal swing voters.

So there you go, the BC Green Plan. It is certainly more transparent on the funding side that the BC NDP. There is still room for more transparency and clarity, but if you want your government to make these kinds of investments in social programs in this province, these are the tradeoffs.

So there you have it. You now have all three platforms. It is a lot to digest. Now go read them yourselves and be sure to vote on May 9! I know I will.