Harper has framed the tax debate just as he wants it

Posted on July 24, 2009 in Governance Debates, Inclusion Debates

TheGlobeandMail.com – Opinions – Harper has framed the tax debate just as he wants it: In Ottawa, conventional wisdom says no politician can even hint at raising taxes

Jul. 24, 2009.   Jeffrey Simpson

Canadians have this funny, ambivalent attitude toward taxes. Reduce them, and we shrug; threaten to raise them, and we howl.

If lower taxes were a certain path to political success, the Conservatives should have won a majority government. After all, the Conservatives stripped Ottawa’s fiscal cupboard bare, before the recession, largely by cutting taxes.

They cut personal income taxes. They reduced business rates. They offered tax credits to targeted groups for child care, truck drivers’ lunches, apprentices’ tools, kids’ recreation programs and transit passes, to name a few. And, of course, they took $12-billion from the cupboard and cut two points from the GST.

Prime Minister Stephen Harper calculated that the GST cut would be visible, appreciated and, therefore, politically rewarding for the Conservatives. But whatever the cut’s economic merits, the GST meant next to nothing politically. Canadians pocketed the cut, if they recognized it at all, and moved on.

The cut was neither a vote loser nor a vote winner. Conservatives are in the polls today almost precisely where they were when first elected.

Mr. Harper chose to cut the GST because he had seen what happened to the Chrétien government. Once the deficit was eliminated, Liberal finance minister Paul Martin announced a $100-billion cut in personal and business taxes. These ballyhooed cuts flopped. Liberal focus groups revealed that citizens did not know their taxes had been cut. So the Conservatives opted for the GST cut, figuring the voters would notice.

Alberta’s Ralph Klein distributed $200 cheques to citizens as a share of his province’s surplus; his popularity kept receding, until he was forced to resign by his own party.

Quebec’s Jean Charest announced a tax cut in the dying days of the 2007 campaign, financed by higher equalization payments he had pried from Ottawa as part of the “fiscal imbalance” campaign. No postelection analysis reckoned that the promise had done him any good. Editorials called it blatantly political and not the reason the National Assembly had insisted that more equalization payments were needed.

Some premiers have even raised taxes, or a tax, and eventually escaped politically.

Ontario’s Dalton McGuinty broke his promise not to increase taxes by imposing health-care premiums. He took a tremendous drubbing but got himself re-elected.

British Columbia’s Gordon Campbell imposed a carbon tax, with the money sent back to taxpayers in lower personal and business taxes. He was pilloried by the NDP, which launched an “axe the tax” campaign. Mr. Campbell survived with a third consecutive win. Mind you, he had promised provincial income tax cuts in his first winning campaign, and he delivered. So he seems to win whether he cuts or raises.

Surveys consistently show that taxes rank well down the list of Canadian concerns, well below the hardy perennials of health care and education. The wealthy are the most interested in lower taxes, and men are more interested in them than women. But lower taxes per se usually show up only after a bunch of other priorities.

In Ottawa these days, conventional wisdom insists that no politician can dare even hint at raising taxes. That cutting taxes doesn’t axiomatically bring political benefits can be shown; that raising taxes will lead to political suicide is taken as a given.

Even the New Democrats accept the conventional wisdom. Rather than tax increases, they call for not proceeding with certain business tax cuts. The Liberals appear to have accepted the conventional wisdom whole, not daring to speak about tax increases. They remember what happened when their party campaigned on a carbon tax. From that bitter experience, they seem to have learned two lessons: An opposition party should not make bold electoral promises, and promised tax increases are suicidal.

To this extent, Mr. Harper has won the political argument. He’s got his opponents scared to even mention higher taxes, no matter what the level or purpose. So he’s framed the political debate just as he wants it.

His victory over Stéphane Dion and the Conservatives’ negative advertising machine have spooked the opposition parties, even though the flip side of the conventional wisdom – that lower taxes are axiomatically winning politics – is a case not proved.

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