Tuesday, October 30, 2007

Trick or Treat

It's interesting to see the Tories rush what would have been a good news spring budget up to October and take a 1% GST cut out of their next election platform by bringing it in now. I suppose with money to burn and Dion calling for tax cuts, it was inevitable that Flaherty would be slashing taxes. As for the GST cut, given that every economist and every news story calls it "bad policy but good politics", I suspect Harper recognized that it's usefulness as an election issue had passed and that he might as well get it off the table. People aren't stupid - after a while "bad policy but good politics" simply becomes "bad policy and bad politics".

More interesting is the arrival of a new auditor general's report. Even from Paris, the timing looks a little coincidental:

Back in the mid-'00s, we used to enjoy a chuckle whenever the Paul Martin crew would come up with some extraordinarily contrived sideshow in an attempt to bury an embarrassing headline.

But even that PMO would never have thought it could get away with announcing tax cuts on 24 hours' notice, simply to bury an auditor general's report.



UPDATE: As pointed out by an astute reader, the federal government must give 60 days notice to the provinces that harmonize their taxes before changing the GST. As a result, if they wanted to make the change for January 1st, it had to be announced yesterday so it was likely not connected to the AG's report. It's still interesting to see them rush the GST cut to January 1st, but it doesn't look like there's anything involved in the day-to-day timing of it.


UPDATE2: I elaborate a bit more on my thoughts on this Macleans post.

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43 Comments:

  • Hi CG,

    never one to correct your excellent writing, but when you wrote:

    "Even from Paris, the timing looks a little coincidental:"

    I think you meant, "Only in Paris,"

    By Blogger Chuckercanuck, at 9:01 PM  

  • It's a little difficult to criticize the conservatives of not making sound judgment when the opposition party cannot summon the fortitude to oppose them on a fundamentally disagreeable principle. Just sayin.

    By Blogger Raphael Alexander, at 10:56 PM  

  • Why didn't the Liberals ever try to distract people from an AG's report with massive tax cuts?

    By Blogger Toby, at 10:56 PM  

  • toby - I'm thinking a 1% GST cut circa February 2004 would have been wise...

    By Blogger calgarygrit, at 1:41 AM  

  • Disappointing!

    Harper is buying time like Paul Martin’s minority government. He’s giving back to us our money.

    Why doesn’t he stand up for what he believes in? We should go to the polls on the issues of Afghanistan, crime, global warming and safe injection sites. Let the citizens decide!

    By Blogger JimTan, at 2:24 AM  

  • I ain't complainin bout tax reduction, in whatever form it comes.

    At least 'arper delivers...........

    eet is not fair!

    By Blogger art, at 10:49 AM  

  • "Why doesn’t he stand up for what he believes in? We should go to the polls on the issues of Afghanistan, crime, global warming and safe injection sites. Let the citizens decide!"

    Yes, if only the party holding the balance of power would allow this government to fall, and let the citizens have their say. Unfortunately, the most we can expect from said party is a very forceful abstention.

    The Liberals need to stand up to the Conservatives if they do not support this government. Put your money where your mouth is, or stfu.

    By Blogger Nordiques, at 11:14 AM  

  • “Yes, if only the party holding the balance of power would allow this government to fall, and let the citizens have their say.”

    Ahhh!

    That’s the fault of harper. He appointed a commission (filled with pro-American members) to ‘study’ the Afghan options. He didn’t stand by his conviction to stay in Southern Afghanistan ‘until he job is done’.

    The Liberals would have gladly given him an election if he had made a firm commitment.

    Or, take the Kyoto statement. Harper didn’t say that global warming was a fraud, and that he would not join any international effort to reduce greenhouse gases. The throne speech merely said that the Kyoto targets could not be achieved in time.

    Obviously, Canada cannot achieve the targets as long as the CPC are in power.

    No, my friend! Harper is doing his best to stay in power. He refuses to fight an election based on his ideology. He is so slippery that he is slimy.

    Next year, the LPC will be in a better position to fight an election based on its beliefs on climate change, human rights and childcare (unless dion messes up again). We will see how harper wiggles his way. I bet that harper will still depend on tax cuts and PR.

    By Blogger JimTan, at 1:52 PM  

  • "No, my friend! Harper is doing his best to stay in power. He refuses to fight an election based on his ideology. He is so slippery that he is slimy."

    The Liberals have the power to vote down this govt. You can make all the excuses you want about why they won't, and why this isn't the best time for an election, etc. etc. The fact remains that if the Liberals don't like PM Harper, they can put this to the people by voting down the financial update, along with the NDP and Bloc.

    Abstention is not dissent.

    By Blogger Nordiques, at 2:10 PM  

  • “The fact remains that if the Liberals don't like PM Harper... ”

    Of course, many people don’t like harper. Conservatives also dislike harper in increasing numbers. That said, elections should not be fought because of dislike.

    Harper is trying to provoke an election at a time when he has an advantage. The sad fact is that harper is ideologically bankrupt. Unlike Arnold Schwarzenegger, harper is unable to reinvent himself.

    He survived the last budget because he ‘paid’ the PQ. He will continue to use the budget surpluses that he didn’t create to buy time.

    The point of politics is to fight for a vision. Harper doesn’t have one that he can take to the electorate. The LPC has a viable platform (not quite a vision), and it will fight an election when its platform/vision can be clearly presented.

    At the moment, their leaders handicap both of the major parties. It is a race between harper (The Mule) and dion (The Donkey). We will see who makes the final mistake.

    By Blogger JimTan, at 3:00 PM  

  • Were I a politician, I'd be happier to run on a GST cut than repealing the cut and bringing the GST back up to 7%.

    Funny bird, that Dion.

    By Blogger Sean Cummings, at 3:11 PM  

  • Sean, The adults that run the Liberal campaigns would never let him out of his room if he tried to campaign on a gst increase.

    CG: The whole point in doing it on the last possible day before Jan. 1 was to make it reach my neighbourhood unless Dion brings the gov't down in the next 2 months. Notice of ways and means is all you need for a tax CUT to take effect. It doesn't even need to go through the Senate. If Harper's in office Jan. 1 I get the cut at the till, and the only way not to finalize is for Dion to stick with a campaign idea that would get him locked up far from sharp objects.

    By Blogger anonymous, at 4:01 PM  

  • Jimtan, I think that, as somebody that hates the conservatives, your main concern is that Harper has taken actions that will likely lead to his re-election, instead of actions (which you haphazardly label "principled") that will not do so.

    If anybody is getting things close to a real decision it is Harper, who is playing chicken and risking an election, an election that NOBODY wants (contrary to Jimtan's assertion that "we need to let the people decide" - if the people don't want an election, they don't want to decide for now.

    I consider the pragmatists, like William Lyon Mackenzie King to be the real principled heroes of Canadian history. They had ideas, and they muddled around and got them implemented, eventually, by staying in power from 1921-1948 (apart from 1930-1935, which shall not be spoken of again).

    By Blogger hosertohoosier, at 4:04 PM  

  • “Funny bird, that Dion”

    I’m not so concerned about the policy particulars. You can make a rational policy out of raising the GST and cutting income taxes.

    The problem with dion is that he is unable to connect with the electorate on a personal or ideological basis.
    This is crucial for the emotive social and political issues that differentiate the CPC from the LPC.

    I fear that the LPC’s support comprise mainly of anti-harper voters. The LPC would be in deep trouble if harper neutralizes the issue.

    There is a need for leadership that goes beyond the populist ‘we’. Leadership is needed when sacrifices (e.g. climate change measures) are needed.

    Did you see the LOTR: Return of the King? Did you remember the fiery battle speeches given by the human leaders on the eve of battle? These were good men sending their followers into desperate battle against overwhelming odds.

    Leadership is what Canada needs and dion doesn’t understand what that is.

    By Blogger JimTan, at 4:39 PM  

  • >>I’m not so concerned about the policy particulars. You can make a rational policy out of raising the GST and cutting income taxes.<<

    Then there's the optics of abstaining on the vote for this mini-budget only to come out and say you'd repeal the GST cut if you ever win an election.

    Funny bird, that Dion.

    By Blogger Sean Cummings, at 4:49 PM  

  • Just maybe Harper doesn't want an election and Dion doesn't know how to stop talking about one...
    Steven and the Brain:

    While assuming that Mr. Dion thinks of nothing other than engineering a timely election, informed thinking has similarly taken for granted that Mr. Harper manoeuvres relentlessly to box Mr. Dion into making his move at the wrong time...

    ...Except that Mr. Harper’s actions don’t seem to accord with that scenario. Tuesday’s mini-budget was written to be bullet-proof: even two crazed mice trapped in a cage at Acme Labs wouldn’t be dumb enough to defeat it, though apparently Jack Layton would...

    ...Mr. Harper has shown his tactical skills are nothing to be sniffed at...maybe he actually means what he says, and intends to govern through to October 2009. If you had the prospect of two years in power with Stéphane Dion as your opponent, would you be eager to bring it to an end, risking a new minority and a new, more adept, Liberal leader?


    Stopping the cut is one thing. Campaigning to increase the GST by 1 or 2% afterwards is nutty.

    On the other hand if he's so principled that he wants to eliminate all income tax in favour of a big GST jump and guaranteed income I'm not sure if he's the guy anyone would follow into Stockwell Day flat tax territory.

    By Blogger anonymous, at 5:03 PM  

  • You can also make a case that not all of the tax increases before 2000 hit those with high savings capacity and that not all tax cuts since then should be geared to coaxing them to invest.

    From the 2000 to 2012 the mix of changes in personal income rates, tax free amounts, consumption and corp tax is quite broad.

    Ditch profs, listen to real people

    By Blogger anonymous, at 5:15 PM  

  • An increase in the GST could easily by justified by pointing to specific areas in need of greater spending, say, infrastructure or research or both. It is, after all, the most efficient and least economically-damaging way of raising revenue (whatever an august journal like the Edmonton Sun would have you believe).

    By Blogger Josh Gould, at 5:29 PM  

  • josh, that's right fixate on who prints Sheila Copps.

    By Blogger anonymous, at 5:34 PM  

  • “Then there's the optics of abstaining on the vote for this mini-budget only to come out and say you'd repeal the GST cut if you ever win an election.”

    As I understand it from the article you linked, dion said that the LPC might raise the GST as part of an economic package for the next election. Subject to debate.

    Note that both the LPC and CPC have tax cuts in their platform, though details differ. The GST is not a central part of dion’s platform. Therefore, I have no problem with dion’s abstention.

    The core of Dion’s Euro-platform lies in climate change, domestic human rights and a humanitarian foreign policy. By contrast, harper’s preference is for the evasion of the climate change issue, abolishing HR safeguards for criminals and terrorist suspects, and a militaristic foreign policy.

    (How annoying! I’ve got to explain dion’s platform on this forum)

    Note that harper was very careful not to attack dion’s core platform. The only exception being the rights of repeat offenders. In fact, he didn’t say anything that could be used against him in an election.

    This also meant that he didn’t speak as a conservative or right wing leader. I hold that against harper because he was hoping to win big in a winter election. Compare harper with Margaret Thatcher. You had no doubts about her policy intentions. She fought and won her elections fair and square.

    By Blogger JimTan, at 5:43 PM  

  • "On the other hand if he's so principled that he wants to eliminate all income tax in favour of a big GST jump and guaranteed income I'm not sure if he's the guy anyone would follow into Stockwell Day flat tax territory."

    Excuse me! Did dion ever say anything like this?

    Why are you posting rubbish like this?

    By Blogger JimTan, at 5:49 PM  

  • ...if...

    Campaigning for Mulroney's GST right after allowing the cut is nutty.

    IF he truly believes the a GST increase is _always_ better than an income tax increase THEN why not abolish income tax and rack up the GST?

    Day proposed the single tax with a high tax free amount for progressivity.

    If you abolish income tax in favour of a flat consumption tax you need a guaranteed income program for progressivity.

    Neither is likely anytime soon.

    By Blogger anonymous, at 6:02 PM  

  • "IF he truly believes the a GST increase is _always_ better than an income tax increase THEN why not abolish income tax and rack up the GST?"

    I have never heard Dion say ‘always’ about the GST/income tax issue. So, what is the point of your exaggeration?

    By Blogger JimTan, at 6:19 PM  

  • In fairness he did not state how high consumption taxes should go:

    "In fact, compared with other OECD countries, our consumption taxes are among the lowest".

    Anyone think the economists he loves to quote think 7% is high enough?

    My original point was simply that incrementalism (i.e. going back to 7%) is not going to get past the campaign team. And that IF he wants to go higher e.g. to the OECD who will follow him?

    By Blogger anonymous, at 7:44 PM  

  • As I understand it from the article you linked, dion said that the LPC might raise the GST as part of an economic package for the next election. Subject to debate.

    And that would be his "John Tory" moment right there. JT was sure that Ontarians would warm up to faith-based funding, if only he explained it correctly.

    By Blogger Möbius, at 7:45 PM  

  • Dion has now indicated that he wants to "revisit" the 2% GST cut.
    This leader has all the political astuteness of Joe Clark. I am old enough to remember Joe campaining on a gas tax that blew up in his face against Trudeau.
    I am still waiting for the Liberal promise to abolish the GST.

    By Blogger tjeerd, at 8:05 PM  

  • CP OTTAWA - Stephane Dion's suggestion that he might one day increase the goods and services tax had some of his Liberal troops shaking their heads Wednesday.

    One Liberal MP actually buried his head in his hands when told of his leader's public musing.

    Another simply cursed.

    By Blogger anonymous, at 8:07 PM  

  • “My original point was simply that incrementalism (i.e. going back to 7%) is not going to get past the campaign team.”

    I have no idea what the campaign team thinks. Do you know any of the guys?

    By Blogger JimTan, at 9:01 PM  

  • “And that would be his "John Tory" moment right there.”

    I doubt it!

    John Tory’s mistake was fundamental. He mused on a subject close to his heart and forgot about the sensitivity of the citizens.

    On the other hand, the citizens like tax cuts in any form. I wonder how many would care whether it came as a GST or income tax cut. For that matter, dion could campaign on a promise of more services for a rise in GST. Lot’s of possibilities.

    I think that harper’s harpies don’t have anything substantial to attack dion with. Hence, this diversion into a technical economic point.

    By Blogger JimTan, at 9:15 PM  

  • “I am still waiting for the Liberal promise to abolish the GST.”

    Don’t hold your breath.

    Read the wikipedia article on GST. There is a background section that explains why GST was introduced to replace the Manufacturer’s Sales Tax (MST).

    Chretien and Martin retained the GST when they were elected because they listened to the economists. They steered the country through hard times. But, we can see the payoff today.

    Is taxation through income tax better than through GST? Well, harper should abolish GST if he thinks so! No point in incremental cuts. Harper should show the backbone of a decisive leader. No?

    By Blogger JimTan, at 9:45 PM  

  • "For that matter, dion could campaign on a promise of more services for a rise in GST. Lot’s of possibilities."

    Assuming Canadians would prefer increased services in exchange for higher taxes. Try selling that one to the electors. As per the ol' Temptations song:

    "And the politicians say: more taxes would solve everything..."

    Trust me, no Liberal in their right mind wants to campaign on raising taxes.

    By Blogger Nordiques, at 10:03 PM  

  • Oh Cmon Nordiques,

    jimtan is so blindly devoted and filled with hate for harper he would campaign on almost anything.

    Im betting the old "hidden agenda" busts out one of these days.

    Of course as long as these "principled" abstentions continue there might not be enough agenda left to be hidden. LOL

    Bark at the moon jimtan...youre just another loser now.

    By Blogger conservativehabsfan, at 10:26 PM  

  • Hey Grit guy --

    As I told your correspondent in Paris earlier today --

    The Tories timed this thing solely to coincide with the one-year anniversary of Flaherty's income trust announcement, which was made on Oct. 31, 2006. I can't, unfortunately, reveal the name of the individuals who told me that but their pedigree and position within the Conservative party is pretty much impeccable.

    The AG was just drive-by collateral damage.

    By Blogger David, at 11:57 PM  

  • "jimtan is so blindly devoted and filled with hate for harper he would campaign on almost anything."

    I speak with logic supported by the facts. You're free to disagree with anything I say as long as you explain yourself clearly.

    I can't put it more simply than that.

    By Blogger JimTan, at 12:57 AM  

  • I do think it would be interesting to see the Liberals come out and promise to raise the GST 2% if they were to cut income tax (or other taxes) by an equal amount. Now THAT would make for an interesting campaign...

    By Blogger calgarygrit, at 1:59 AM  

  • I'm not sure I neccesarily buy the income trust argument. I mean, would "Income Trusts: 1 year later" really be front page news either way? It'd get a mention on A4 either way...

    By Blogger calgarygrit, at 2:00 AM  

  • Can the Liberals at least agree on whether these tax cuts were (a) bad for Canadians, or (b) a Liberal Party Original Idea (tm)?

    Ruby Dhalla was only the latest Liberal minion to go on air to claim both at the same time.

    Or is the Liberal Party officially saying that they originate bad ideas?

    By Blogger paul.obeda@, at 3:08 AM  

  • "Now THAT would make for an interesting campaign..."

    CG,

    You’re got to keep an eye on the ball. Afghanistan is a crucial difference between harper and dion. It should be an important election issue. And, lives are at stake.

    Last week, harper said three years. And, Hiller said ten years. Well, ten years is the number being talked about in Kabul.

    Do Canadians want to fight for ten years in Afghanistan. What does it mean when it takes ten years to train the Afghan security forces? That is, if it can do done!

    By Blogger JimTan, at 11:24 AM  

  • On the other hand, the citizens like tax cuts in any form. I wonder how many would care whether it came as a GST or income tax cut. For that matter, dion could campaign on a promise of more services for a rise in GST. Lot’s of possibilities.

    There are a lot of bad things about GST cuts, but the good thing about it is its visibility. If you mess with it, people understand it easily.

    The income tax code is so complicated, you can make changes without taxpayers clearly understanding the implications.

    By Blogger Möbius, at 7:30 PM  

  • I do think it would be interesting to see the Liberals come out and promise to raise the GST 2% if they were to cut income tax (or other taxes) by an equal amount. Now THAT would make for an interesting campaign...

    It certainly would be an interesting strategy, except the counter-strategy would bury the Libs. Past promises to "scrap" the GST would be dragged up quickly.

    Dalton McGuinty and Chretien knew enough to promise lower taxes, at least until elected. I think Joe Clark campaigned on increased gas taxes once as well. We know how that ended.

    By Blogger Möbius, at 7:37 PM  

  • I guarantee this - the second Harper does anything remotely conservative (as jimtan argues he should on principle), the same people talking about "a lack of leadership" will jump up and down shouting "hidden agenda".

    Harper was elected with a mushy mandate. His job was to be the Liberals, but not steal so much. He is doing that.

    As for a GST hike, if Dion thinks that is an election-winner, I have some great beachfront property in Iqaluit to sell him.

    By Blogger hosertohoosier, at 10:39 PM  

  • "I guarantee this - the second Harper does anything remotely conservative (as jimtan argues he should on principle), the same people talking about "a lack of leadership" will jump up and down shouting "hidden agenda". "

    You're irrational. Why should I accuse harper of a secret agenda if he comes out of the closet.

    BTW, I don't jump up and down.

    By Blogger JimTan, at 1:21 AM  

  • As always CG, you're insightful and intelligent.

    I agree that there probably is something coming down the tubes in the next budget. Why else would they do so much now? Or are they afraid the next budget will fail?

    By Blogger SouthernOntarioan, at 2:32 AM  

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