Trudeau’s Would-Be Successor Makes Gains With Tax, Housing Plan

(Bloomberg) -- Erin O’Toole is the one person standing in the way of a third Justin Trudeau term as Canada’s prime minister.

As the Sept. 20 election approaches, the Conservative Party leader is pitching himself as the safest alternative, with a low-key style and no-nonsense plan to rev up economic growth. His platform notably includes left-leaning flourishes like increased spending on social programs and a promise to reduce harmful emissions, though not as aggressively as Trudeau would.

O’Toole, 48, is a former corporate lawyer and retired military officer who’s playing up his middle class roots on the campaign trail. From a dog rescue farm to suburban wedding halls, his rallies have been informal, pandemic-minded affairs with small groups of local supporters.

Dressed perennially in a blue suit with running shoes, O’Toole is known to clutch his 160-page platform on stage while repeating his mantra: “I have a plan.” 

Recent polling data suggest his strategy is working. While O’Toole began the campaign as a statistical long shot, the Conservatives have closed the gap with Trudeau’s Liberal Party; some polls say they’ve pulled slightly ahead. One model suggests O’Toole’s party has a 60% chance of winning the most seats in the legislature. 

Here’s some of what the Conservatives say they will do if that happens.

Banking and Competition

O’Toole’s is trying to appeal to blue-collar voters with rhetoric and policy that’s less friendly to big business than past Conservative leaders. Banks, technology companies and wireless carriers would all be affected if the party wins power and implements its promises. 

O’Toole would promote “open banking,” a framework that makes it easier for financial technology companies to compete more directly with established banks. He’d also direct the competition authority to investigate banking practices. 

A so-called technology task force would scrutinize tech companies for anticompetitive behavior and dominance through the use of algorithms and big data. O’Toole also promises to reject mergers that could harm competition.

• O’Toole’s platform: “Conservatives will give our competition laws real teeth to prevent a few big companies from dominating whole industries and pushing up prices.”
• Trudeau’s platform: “Move forward with a made-in-Canada model of open banking” by early 2023; reintroduce legislation requiring foreign digital platforms to finance Canadian content; and force digital giants to share revenue with Canadian media companies.

Climate and Oil

As the potential leader of the major oil producer whose emissions have  continued to rise since the Paris Agreement was signed in 2015, O’Toole is threading a political needle. 

He would set a target of reducing harmful emissions by 30% from 2005 levels by 2030, compared with Trudeau’s goal of 45%. He would also scrap Trudeau’s carbon tax and replace it with a kind of “loyalty card” that gives consumers credits for carbon reduction that they could then spend on products like bicycles that help them “live a greener life.” 

The Conservatives favor building more oil pipelines -- including the canceled Northern Gateway project to the coast of British Columbia, despite fierce local opposition to it. O’Toole has been vocal about supporting carbon border tariffs on imports from countries with weaker climate laws.

• O’Toole: The Liberals’ targets are unrealistic, which is why the country is falling short. “He hasn’t met his objectives. Mr. Trudeau has missed those targets every single time as prime minister,“ he said Monday at a campaign stop in King City, Ontario.
• Trudeau: Require oil and gas companies to set five-year targets to reduce emissions, with the aim of putting them on a path to net zero emissions by 2050; eliminate government subsidies to the energy sector by 2023; and set a goal of zero emissions for all cars sold in Canada by 2035.

Taxes and Debt

Economic growth is the central theme of the Conservative platform. O’Toole says he can largely eliminate the budget deficit -- which was about C$314 billion ($250 billion) last year -- on the strength of new tax revenue from growth. 

To accelerate that growth, he’d offer a hiring subsidy and tax credits for businesses. There’s also a short-term tax gimmick -- a December-long “holiday” from federal sales tax. 

The Conservatives’ tax policies are mixed: They would pull Canada out of a Group of Seven minimum tax deal intended to stamp out the use of tax havens, but would also implement a 3% digital services tax on the profits of foreign tech firms.

• O’Toole: “While Canadian small businesses have suffered over the last year, major American tech companies like Amazon and Google have made record profits -- while paying next to no tax on the money they make in Canada.”
• Trudeau: Impose a 3% surtax on bank and insurer profits over C$1 billion; a minimum 15% tax rate for the highest-earning Canadians; and no timeline to balance the federal budget.

Housing Market

Low interest rates and exploding demand for more living space during the pandemic increased the national average home price to C$669,200 in July, up 16% from a year ago. Inflation is running hot and voters say cost of living is a top issue.  

Both leading parties have pointed the finger at foreign speculators and have proposed a temporary ban on foreign home buyers. The Conservatives are promising to unleash incentives for building, with a goal of 1 million homes over the next three years. The plan includes releasing government-owned property onto the market to increase supply, a capital gains tax break for rental property and longer rate lock-in periods for borrowers.

Read more: Housing Market ‘Gone Berserk’ Stirs Unease Over Investors’ Clout

• O’Toole: “The supply of homes to own, as well as to rent, is not keeping up with our growing population. Foreign investors are also making the situation worse. They are bidding up prices and in some cases, they are sitting on their investments and actually leaving homes empty.”
• Trudeau: Suspend foreign purchases for two years; ban “blind bidding,” in which prospective buyers submit an offer without any knowledge of counter-offers; and build or refurbish 1.4 million homes.

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