Something that was central to the 2015 campaign – a clear choice of coherent economic strategies – is missing. In place of a long-overdue tax-policy overhaul designed to bring Canada’s tax structure out of the 1960s and position the country to compete in the 21st century, we have a couple of carnival barkers trying to outshout each other to lure you into their tent.
Both parties have as their centrepiece a glittering $6-billion-or-so cut to personal taxes – their biggest cannons in the battle to win the hearts, and pocketbooks, of the “hard-working middle class,” as they keep calling everyone’s most coveted voter demographic. While the method of delivery of this cut differs – the Conservatives have promised to cut the tax rate on the first $47,630 of income (the bottom tax bracket), while the Liberals would give you an increase to the basic personal exemption – the impact is much the same. It’s a modest tax cut for (almost) everyone.
There are all sorts of other perks that the parties are tossing out, too: For home buyers, for small-business owners, for soccer moms and dads. The details differ, the approaches vary, the impact shifts a little up or down the income spectrum – but there’s a certain sameness to all of it. And a distinct lack of a visible master plan, beyond using tax breaks to entice voters.
Indeed, it’s not even clear how the parties would pay for their proposed largesse. It’s a long way from 2015, when it was considered a bold move to even talk about small, short-term deficits.
In the past election, Justin Trudeau’s Liberals campaigned on a well-defined and articulated strategy: to both reignite the economy’s longer-term productivity growth and redistribute wealth more equitably. Their platform featured specific means to those ends: running deficits to fund a major increase in infrastructure spending; increasing immigration levels; cutting the tax rate on lower-to-middle incomes while raising it for the highest earners; introducing the Canada Child Benefit.
The Conservatives, then led by incumbent Stephen Harper, were equally clear: They were all about balanced budgets and low taxes. They believed strongly that keeping the government small and within its fiscal means was the basis for maintaining low and competitive taxes that would foster growth and job creation.
It was a distinction you could sink your teeth into. Ultimately, Canadians were more swayed by the vision the Liberals presented.
We have spent the past four years watching the Liberals attempt to reshape economic policy toward that vision, against a backdrop of fast-shifting international trade sands, continuing questions about Canada’s global competitiveness, rapid technological innovation, an aging population and the threat of climate change. Their relatively modest tax changes to begin to address some of these issues have in some cases pushed too far, and in other cases not nearly far enough.
The hard truth is that Canada is operating with an antiquated tax system that was devised in the 1960s and implemented (decidedly imperfectly) in the early 1970s. It was built for a Canadian economy that isn’t even recognizable any more, in a global economic landscape that is utterly transformed. It suits Canada’s past, not its future. It needs a massive rebuild, needs to be rethought from the bottom up, if it is to be a catalyst for Canadian competitiveness this century rather than an impediment.
After four years of well-meaning but often awkward half-measures, it’s time for a serious discussion about reforming Canada’s tax system – a discussion that could so nicely have fit this election campaign. This should be the campaign in which our leaders are discussing the merits of a long-overdue royal commission on taxation – the first since the Carter Commission filed its report in 1966. Mr. Trudeau and Andrew Scheer should be debating what a new, fairer and more efficient tax system might look like, and laying out their own policy visions to get us there.
Instead, we are being presented with a hodge-podge of tax changes that looks nothing like a coherent tax policy, or even the vaguest basis for a broader overhaul. It’s not even close. It’s an expensive mess.
We deserve better than a bidding war for our votes. We deserve sound policy. We deserve choice.
https://www.theglobeandmail.com/business/commentary/article-the-major-federal-parties-are-promising-a-stampede-of-tax-giveaways/
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