Conservatives, NDP push Liberal government to take more action against inflation
Federal opposition parties are pressing the government to do more to curb inflation before Parliament rises for the summer, although there is considerable disagreement on whether to tackle cost-of-living challenges by cutting taxes or by raising them and redistributing the revenue.
On Tuesday, the Conservatives used their final opposition day before the summer recess to introduce a motion calling on the government to freeze the goods and services tax on gasoline and diesel, suspend the carbon tax and lift tariffs on fertilizer imports, among other requests.
“People don’t need a cheque from the government. They need taxes cut,” Interim Conservative Leader Candice Bergen said in a Tuesday news conference before debate on the motion. “The best way to provide relief for Canadians is to cut their taxes, not promise them a cheque might come in the mail.”
The motion was scheduled for a vote late on Tuesday. The Liberals and the NDP, which when voting together have a majority in the Commons, spoke against the Conservative proposal.
Meanwhile, the NDP reiterated its own proposal to tackle affordability by taxing “excess profits” large companies have earned during the COVID-19 pandemic and redistributing the revenue to low-income families through increases to the GST credit and Canada child benefit.
The sharp rise in consumer prices, particularly for essentials such as food, gasoline and housing, has become a major political issue. Opposition parties have spent much of the past two Parliamentary sessions needling the government about inflation, which hit a three-decade-high annual rate of 6.8 per cent in April.
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So far, opposition proposals to deal with it have made little headway.
The Liberals have shrugged off efforts to pin soaring prices on them, arguing that inflation is a global phenomenon caused by pandemic-related disruptions in supply chains and, more recently, a commodity price shock due to Russia’s invasion of Ukraine.
Liberal ministers have also pointed to initiatives such as subsidized child care and an expansion of the Canada Workers Benefit, which goes to low-income earners, to argue that the government has been pro-active on cost-of-living issues.
At the same time, the government has taken fewer steps to tackle price increases or offset rising costs than those of other advanced economies.
In March, U.S. President Joe Biden ordered the release of strategic oil reserves. That is putting an additional million barrels of oil on the market every day for six months.
Mr. Biden has said getting inflation under control is his economic priority, and over the past few months he has emphasized the importance of reducing the size of the U.S. federal government deficit as a means to do it. The Democratic administration is under considerable pressure to show it is serious about inflation control before the mid-term Congressional elections in the fall.
Germany’s ruling coalition announced a €16-billion ($21.5-billion) inflation-relief package in March that includes measures such as cutting the tax on gasoline for three months by around 30 Euro cents per litre.
European countries face an acute inflation shock, as sanctions against Russia have affected much of their oil and gas supply.
When asked in question period on Tuesday why the Canadian government was not doing more to address rising fuel prices, Natural Resources Minister Jonathan Wilkinson said the government was working with allies to stabilize international energy markets.
“In this regard, we have committed to increasing oil and gas production by 300,000 barrels per day by the end of the year. At home, we’ve instructed the Competition Bureau to ensure there is no collusion around gas pricing,” Mr. Wilkinson said.
The United Kingdom’s Conservative government has introduced a “windfall tax” on energy company profits similar to what the NDP has proposed.
Starting at the end of May, energy companies operating in Britain face an additional 25-per-cent levy on earnings – although there are exemptions to encourage things such as increased investment. The U.K. government plans to direct these funds toward initiatives aimed at alleviating cost-of-living challenges.
Canada’s Liberal government raised taxes on excess banking and insurance company profits in its April budget. This included a 1.5-per-cent bump to the corporate income tax on profits over $100-million, as well as a one-time tax of 15 per cent on bank and insurance company income above $1-billion for 2021.
NDP Leader Jagmeet Singh said on Tuesday that the government should expand on this initiative by taxing other large companies experiencing windfall profits, “particularly the big-box stores and oil and gas companies.”
It is the responsibility of government to say, “If you’re making excess profits off the backs of people in a difficult time when people can’t afford to eat, then you have to start paying your fair share,” Mr. Singh said in a news conference.
The main responsibility for reining in inflation lies with the Bank of Canada, which has begun aggressively raising interest rates to try to slow the economy and bring demand and supply back in line. The central bank has increased its policy interest rate at three consecutive rate decision meetings, to 1.5 per cent, and said that it may need to push the benchmark rate to 3 per cent or higher.
