Liberal delegates to the party’s policy convention have overwhelmingly endorsed a resolution calling for the establishment of a universal basic income (UBI) in Canada, while also rejecting a call to hike the capital gains tax.
By a vote of 77 per cent, Liberal members on hand for the policy plenary today backed a call to permanently implement an income program similar to the Canada emergency response benefit (CERB), which kept millions of people afloat with monthly cheques during the first wave of the pandemic.
With 8.7 per cent of Canadians living below the poverty line and thousands more struggling to make ends meet, backers of this policy say a UBI would “ensure that communities at risk (including Indigenous peoples) are able to feel financially secure.”
“Given the success of the CERB program, a UBI will assist seniors and low-income Canadians maintain an adequate standard of living, regardless of working status,” the resolution reads.
Speaking to delegates assembled online, Alex Spears of the Young Liberals of Canada said a UBI would ensure the country’s “strong and robust social safety net is adapted to the 21st century,” adding that a program to send cheques to all families is “completely consistent with our values as a party.”
He said the program would “put more cash in the hands of working Canadians and families” and could lift millions out of poverty.
“UBI is not a silver bullet and it ought to be done in conjunction with many other progressive policies, but it is a critical step,” he said.
Would a UBI work?
The resolution does not say how such a costly program would be designed and implemented.
Few jurisdictions around the world have successfully enacted programs that make regular payments to all citizens without means tests or work requirements.
The parliamentary budget officer last week concluded that a universal basic income could almost halve Canada’s poverty rate in just one year, but at a steep cost: $85 billion in 2021-22, rising to $93 billion in 2025-26.
While the resolutions are non-binding — the government ignored a 2018 convention vote to decriminalize all illicit drug use, for example — the policy endorsements could help inform future government spending and the Liberal Party’s election platform.
The government has said it’s preparing to spend up to $100 billion this year to kick start the post-pandemic economy even after it reported a record-high deficit of $381 billion in the last fiscal year.
While the idea of a UBI has gained traction in progressive circles — supporters maintain the massive price tag of such a program could be offset by dismantling existing provincial social welfare schemes — academics who study poverty reduction are split on its value.
A 529-page report authored by researchers at the University of British Columbia, Simon Fraser University and the University of Calgary concluded after a three-year investigation that a basic income for all is not the best way to address poverty and other social problems.
Instead, the report said, governments should boost existing social support programs for vulnerable groups through improved disability assistance, dental care programs and more money to help the working poor pay rent. A more targeted approach to help the disadvantaged, as opposed to a universal program like UBI, would do more to lift people out of poverty, the report concluded.
Conservative MP Ed Fast, the party’s finance critic, said pursuing a UBI would be a “risky and unknown experiment that will leave millions more Canadians behind.”
He said the Liberal Party is trying to “reimagine” the Canadian economy while the country is still struggling with the pandemic.
“The fact that UBI was supported at the convention this weekend is par for the course with Justin Trudeau and the Liberals. Instead of focusing on creating jobs, they are fixated on implementing risky, expensive and untested economic policies,” Fast said.
Delegates endorse pharmacare, ‘green new deal’
Liberal delegates also supported other progressive policies, such as the creation of a national pharmacare program and a “green new deal” to dramatically lower greenhouse gas emissions.
B.C. members backing the new green-friendly policies say Canada needs a “10-year national mobilization” plan to achieve net-zero emissions by 2050 because “a changing climate threatens human life, healthy communities and critical infrastructure.”
While this proposal is also light on specifics, its supporters are calling for an “urgent, transparent and inclusive consultation process” with workers, labour unions and businesses affected by the shift to cleaner fuel sources. Delegates agreed there should be a “just transition” for energy workers who will lose their jobs as a result of move to renewable energy.
Inheritance tax, capital gains hike rejected
At a time when all levels of government are searching for new revenue streams to offset the costs of the COVID-19 pandemic, Liberal delegates rejected a resolution from the party’s Ontario chapter to hike the capital gains tax.
Currently, when an investment is sold — a stock, a mutual fund or any one of a number of other assets — 50 per cent of any increase in value is taxed as income.
For example, if a person buys a share in a publicly traded company for $20 and sells it for $40 at a later date, then $10 will be added to a person’s income for tax purposes; the other $10 earned goes untaxed.
This preferential tax treatment is designed to encourage people to make investments to drive economic growth and provide companies with easy access to capital. Critics maintain this unfairly benefits the rich.
The Ontario chapter proposed reducing the capital gains tax exemption to zero — meaning all investment gains would be taxed as income.
As part of the same proposal, the Ontario chapter pitched an “inheritance tax” on all assets over $2 million. That proposal did not specify the rate at which these assets should be taxed, or how and when such a system would take effect. Delegates rejected the idea along with the suggestion to increase the capital gains tax by a 62-38 margin.
‘Please make me pay more taxes’
One delegate, Jake Landau, the president of the Don Valley West Young Liberals, said he considers himself “upper middle class” and he believes the current system is tilted toward the wealthy.
“I am asking everyone, please make me pay more taxes. I want to pay my fair share,” he said.
Another delegate named Linda — who also did not give her last name — said she worries that a change to the capital gains tax might open the door to the federal government taxing the sale of primary residences.
In the last election, the Conservative Party warned that a Liberal government would look to cash in on rising home values by levying a capital gains tax on home sales to raise funds — a charge the Liberals have denied.
Right now, sales of primary homes are exempt from capital gains taxes — meaning the owners don’t have to pay taxes on any increase in a home’s value when it’s sold. The same rules do not apply to secondary, seasonal or investment properties, which are taxed like other investments.
“My concern with this is it is a blanket resolution,” said Linda. “There are many people relying on capital gains in their home in order to retire and not live in poverty.”
‘Long-term care can be a nightmare’
Party members also overwhelmingly backed a policy proposal — with 97 per cent in favour — to reform the country’s long-term care home system, which has been hit hard with death and disease throughout this pandemic.
“The pandemic has shown us that long-term care can be a nightmare,” said one unnamed Liberal delegate. “Seniors will do anything they can to stay out.”
The policy calls on the federal government to introduce new legislation to set “enforceable” national standards to prevent a repeat of the COVID-19 outbreaks in long-term care facilities that have claimed the lives of thousands.
Kathleen Devlin of the Senior Liberals’ Commission said Canadians have been “horrified” by the conditions reported in long-term care homes throughout this health crisis.
She said the Canadian Armed Forces report last summer from the pandemic front lines “embarrassed us all.” Soldiers reported that residents in some long-term care homes were bullied, drugged, improperly fed and in some cases left for hours and days in soiled bedding.
“While it’s a provincial responsibility to deliver it, there needs to be federal leadership to give all Canadians equity when they’re at their most vulnerable,” Devlin said. “Sometimes we need a crisis to face what we already know.”
According to the resolution, these new standards would address accommodation conditions, staffing levels, qualifications and compensation. The proposed legislation also would demand greater transparency in how homes are operated “and public accountability through random inspections and annual public reporting.”