Friday, May 18, 2007

Hells no McCallum

My jaw dropped when I came across this story (h/t Jason), which says Liberal finance critic John McCallum says the party is considering the idea of raising the GST back to seven per cent. I mean, seriously John? WTF?

The Liberal party is debating whether it should pledge to reverse the $6-billion cut to the GST made by the Conservatives, as a means of funding broad-based income tax cuts.

John McCallum, the party's finance critic, is understood to have pushed the idea of increasing the federal goods and services tax back to 7%.
Allow me to save the party the money it might otherwise spend on focus-testing this stinkbomb: it’s a dumb idea. Stupid with a capital S. Paging anyone with any political antanne? It’s not often I agree with the head of the Canadian Taxpayers Federation, but they’re bang-on here:
…an increase in the GST would be "electoral suicide."

"The Conservatives would have a field day. The Liberal caucus has got to give its head a shake if it is contemplating increasing the most hated tax in Canada," he said.

A field day indeed, I bet Harper and Flanagan are as giddy as little girls at the prospect.

Now, I agree the GST is a more effective tax than income tax, and cutting income tax is a better, fairer course than cutting GST. I agree with Dion’s pledge to cancel the scheduled GST cut from 6 to 5, and putting that money to fighting child poverty instead. That’s a good policy. And I was against the cut from 7 to 6, and posted often on the shortcomings of the Conservative move during the campaign.

But what’s done is done. You can’t roll back the clock. Yes, it was a dumb cut, particularly since the Cons combined it with an income tax increase. But if we couldn’t successfully make that case during the campaign, how in the hell do they think we can make the case for raising the freakin’ thing now? Not a chance. Leave the GST alone. Focus on broad-based tax relief.

This one needs to be nipped in the bud now. McCallum either needs to make clear it was his idea and he’s thought better of it, or Dion needs to distance himself from it, and make clear it’s off the table and was never seriously considered. John is a smart guy, he's done a good job exposing Flaherty's incompetence and developing a good alternate policy on income trusts. But this seems to be a case of the economist needing to come down from the tower.

Things are starting to go better for the LPC these days, or at least go worse for the Cons. Let’s not shoot ourselves in the foot, nay, the head, shall we please?

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Mark Dowling said...

oh dear. I thought you had just left out where McCallum was proposing to give that 1c to cities as our Blondeness and other mayors have been demanding, but no.

I think there's a chance that you could sell a GST raise given to cities to implement a National Transit or Infrastructure Strategy (although on constitutional grounds I'd prefer it be PST but that wouldn't fly in Alberta).

catnip said...

Now, I agree the GST is a more effective tax than income tax, and cutting income tax is a better, fairer course than cutting GST.

Fairer for whom? There are thousands of poor Canadians who don't even pay income tax, so a GST cut actually does something for them - not much, but at least it's something.

And I certainly agree that raising the GST is an absolutely idiotic idea that needs to be stopped in its tracks.

Anonymous said...

McCallum needs to sell it better.

I am suggesting that he uses the term harmonization of sales taxes. Make it something like a 15 per cent value added tax to be implemented nation wide. Not popular in Alberta though, think this province will be a write-off.

If Dion forms government, the coffers will be filled with the so-called carbon tax. He may consider raising the income tax rate for higher earners. This will fund some of the social spending programs that will probably be needed.

Furthermore, Dion should think of replacing McCallum as shadow Finance Minister. I am recommending John Godfrey who would be more credible of developing more progressive economic policies.

Jeff said...

Mark, given the the Conservatives haven't (quite) pissed away the surplus the Libs left them yet I'm don't think you can sell a tax increase as a necessity. If there was some grand national need then maybe you could frame it that way, but I think there's better ways of doing it if that's the case.

Catnip, there's other ways of helping the poorest Canadians. I'd rather have a targeted way of helping those poorest Canadians instead of a GST cut that will cost billions, and provide much more benefit to those buying new BMWs. Such as canceling the cut to six per cent and channeling it to fighting child poverty as Dion has already proposed. And for the lowest income bracket, the working poor, an income tax cut is more fair, as it leaves them with money in their pocket to save. With a GST cut, you need to spend to "save", it's counterintuitive.

Well mushroom, he sure hasn't sold me. Even if we needed the money, and that's the case to be made first, I just don't think you're going to get Canadians to accept a tax increase in any way, shape or form.

Red Tory said...

Catnip — You well know that lower-income Canadians are NOT affected by this. As long as the offsetting rebates are in place it will not impact them in any significant way at all. The majority of their expenditures in any case go towards things are not even subject to GST. I don’t know why you would be boo-hooing about lower income earners when maintaining the cuts only serves to benefit those in higher income brackets. Give your head a shake.