We need a plan for today, not for 2007

It’s been amusing to read the punditry and the politicos, but particularly the politicos, as they try to find stones to throw at the Liberal Party’s strongly supported by the public position that now is not the right time to keep slashing corporate taxes.

One oft-repeated meme is that four years ago the Liberals supported corporate tax cuts, and so how dare they change their mind. This leads to one of the most oft-repeated, and lamest, charges in political “debate”: the flip flop.

Hearing this charge from the Conservatives on the right is one thing (not that they’ve never been known to change their minds on anything…) but it’s particularly amusing coming from the NDP, given that they also are opposed to further corporate tax cuts. But then again, they have a history of being angry when people agree with them, anger being a default position, although one that makes it difficult to “make parliament work."

When people make the “you supported it in 2007” argument as NDP strategist Brian Topp does today, and as Sun reporter David Akin did last week, they usually forget to add one useful thing: context.

Things are a lot different today than they were in 2007. The Ottawa Senators battled Anaheim in the Stanley Cup Finals. Pirates of the Caribbean: At World's End packed them in at the box office, and The Dixie Chicks cleaned-up at the Grammies.

Oh, and the Liberal Party had another leader and the federal budget projected a surplus for 2006/07 of $9.2 billion, and $3 billion for 2007/08.

In the context of 2007, with a healthy surplus, corporate tax cuts made sense as part of a program of targeted tax relief in other areas and other program investment. Which is what the Liberals campaigned on in 2008.

However, things are a little different today, aren’t they? We have a deficit of over $50 billion, and a host of more pressing priorities. And the Ottawa Senators are now a horrible hockey team. So in the current context, corporate tax cuts no longer make sense, particularly when you're talking about borrowing money and adding to the deficit to do it.

Things change, and we need our politicians to change along with them and adopt policy that suits the needs and challenges of the times, instead of being wedded to the policies of yesterday if they no longer make sense. That’s why government investment in telegraph infrastructure shouldn’t be a priority, why there’s no debate about a phonograph levy, and why we don’t need to tighten our border security to guard against Fenian raids.

Canadians want leaders with a plan for 2011; not critics still living in 2007.

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In a battle of populism vs. the experts, the people always win

I've been planning to write about populism vs. experts on taxes for a few days, but with the release yesterday of stunning numbers from Abacus Data on Canadians’ lack of support for corporate tax cuts, the case is bolstered even further.

An interesting battle has been shaping up between the Liberals and Conservatives on the issue of planned cuts to corporate taxes. In essence, here are the battle lines:

The Conservatives want to continue the cuts, saying they’re necessary to spur job creation and make Canadian businesses competitive.

The Liberals want to cancel the planned cuts (and raise the rates back to the current 2010 level after they’re cut further in the coming fiscal year), saying they’re already plenty competitive, and, with a huge deficit, we could better spend scarce resources on priorities such as home care and education.

What I’ve found interesting about this debate is that while the Liberals have adopted a populist track (we want to help you, not big business) the Conservatives are relying on experts to make their “job creators” argument, trotting out economists to discuss economic theory and productivity gains.

It’s an interesting contrast to the 2005/05 election campaign, when the Conservatives campaigned on reversing Liberal income tax cuts (raising personal income taxes for the lowest-income Canadians) to finance their GST cut. It was a policy nearly every economist and expert would tell you was ass-backward. The Liberals tried to argue the economic theory. The Conservatives ignored them; they knew that whatever the experts said, the people would buy into a sales tax cut no matter how they paid for it. And populism trumped the experts and the theory.

When I read columns earlier in the week where pundits said the Liberals were crazy to be taking this track when all these experts said corporate tax cuts are the bees knees, I just smiled and remembered back to 05/06.

And it would seem I read the mood of the people right, according to the study Abacus Data released yesterday. 57 per cent of Canadians most identified with the opposition parties’ position opposing the corporate tax cuts, 21 per cent with the Conservatives, and 21 per cent identified with neither. The opposition carried the day in all age groups, both genders, and across Canada. Even 26 per cent of Conservative supporters disagreed with the government.

When asked if they supported or opposed the Conservative plan to continue with corporate tax cuts, 52 per cent strongly or somewhat opposed it, while just 26 per cent somewhat or strongly supported it. 22 per cent said neither.

So, suffice to say the Conservatives have their work cut out for them, which explains their cross-country panicky full-court-press this week, sending the cabinet out to stump for cuts that studies say will be of most benefit to the big banks.

The framing of this issue is also interesting in another sense. As a Liberal, I’m not opposed to the theory of corporate tax cuts. So, while I think things like Mintz’s study greatly exaggerate the impact of corporate tax cuts, I do believe competitive corporate tax rates are an important part of a competitive economic climate. So I see no reason to debate the experts on the basic theory; just their spin.

The issue for the Liberals is that our corporate taxes are already extremely low. When we were in surplus, the Liberals pursued a balanced agenda of personal and corporate income tax cuts and program investment. But with a deficit of over $50 billion, we need to set priorities. And we think family home care, education, and pensions are all more pressing priorities than yet another corporate tax cut.

Now, this is more nuance than I’d ever hope to see in the soundbite-driven era of modern politics, but the point should also be made that corporate tax rates are not the be all, end all of creating a competitive business environment and fostering job growth. And many of the Liberal proposals, from education to home care, do help to create a more competitive climate for business investment. I wrote about this in November, in a piece called Seeing the forest for the corporate tax cuts. It would be nice to see some of the expert analysis look at ALL the factors that both reduce cost of business and create a climate for businesses to invest and grow.

But in the mean time, in a battle of populism vs. experts, never bet against the people.

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