Wednesday, March 31, 2010

The 6 Billion Dollar Question

As I mentioned briefly on Sunday, Ignatieff's proposal to cancel the corporate tax cuts should form the main ideological fault line of the next election campaign. That's not to say it's all the election will be about - let's not kid ourselves, we're still going to get "Harper's a dictator" and "Ignatieff's just visiting" attack ads. But when it comes to policy, we may finally have found an answer to the question "what would Ignatieff do differently from Harper?".

Is it good policy? Well, I'm not an economist. Most economists like corporate tax cuts, but Canada is already quite competitive in this domain, and even executives recognize that corporate tax cuts may have to wait until the economy improves. On the whole, I tend to think the cuts would be good for the economy, but investing the 5-6 billion in early learning or post-secondary education will also help us in the long run.

Besides, as we all learned during the Green Shift Self Destruction Tour '08, good policy doesn't always make for good politics. So how will this play out politically?


For the Tories

We've already seen them refer to this as Ignatieff's "job killing tax", and that seems like as good a way as any to message it. Corporations don't vote, so Harper absolutely has to connect this to individuals, and "job killing" is a whole lot easier to talk about than the nuances of international competitiveness and trickle down economics.

They'll try to frame the election as the "tax and spend" Liberals up against Harper, the sound and stable economic manager.


For the Liberals

This gives them some wiggle room to propose new programs and/or promise deficit reduction. In effect, it's their chance to differentiate themselves from the Tories and the success of this gambit is ultimately going to rest on what they propose to do with the 6 billion.

I personally don't think there's a lot of sympathy for corporations out there, so expect them to frame the campaign as the Conservatives in bed with big business, against a Liberal Party who will actually do something to make your life better.


For the NDP

Overlooked in the early analysis of this move has been what it means for the NDP. As is often the case when the Liberals take an idea of theirs, this isn't good news for our Dipper friends. Because really, if you care about the issue, why vote for the guy who can't do anything about it? And if Layton tries to out do Ignatieff and promises tax hikes...well...that just pushes him further away from the mainstream and makes Ignatieff's position look more centrist, by comparison.

In effect, NDP ads against big business and corporate tax cuts would now become de facto third party advertising for the Liberals. Jack's either gonna need a new wedge issue, or a convincing narrative that turns NDP/Liberal swing voters off Ignatieff.

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15 Comments:

  • The NDP's argument would be they are for permanent repeal of tax cuts to corporations, while Ignatieff's proposal is a temporary freeze on such cuts.

    By Blogger Scott Tribe, at 10:42 AM  

  • or a convincing narrative that turns NDP/Liberal swing voters off Ignatieff.

    For quite a few left-leaning voters (including some Liberals), Iggy provides his own negative narrative. If there is a Liberal alive bluer than Iggy... well John Manley has another job right now. Let's just say Iggy is a tough sell as a born again progressive.

    By Blogger Greg, at 11:00 AM  

  • Greg,

    Why is Ignatieff not a progressive?

    He believes in equality of marriage
    rights for all Canadians.

    He believes in a woman's right to choose.

    He has some interesting enviromental proposals.

    He is actually pretty liberal on social policy.

    NDPers will not agree on economic policy, thats a given, two different philosophies.

    I wish our two parties could cooperate together.

    Our goal should be to get rid of the conservatives.

    On that front the NDP, will get far more of their issues listened to and maybe acted on with a liberal government, than with a conservative one.

    Open mind, would love to know your thoughts.

    Thanks

    By Anonymous Anonymous, at 12:13 PM  

  • So are the Liberals going to force an election to prevent lowering the corporate tax rate any further?
    When Bob Rae was premier of Ontario, North America went through a six month recession. Ontario went through a four year recession because of Rae's business taxes. Liberals want to remind voters of that? Doesn't the high value of the Canadian dollar mean businesses need tax cuts to off-set the rise of the dollar?

    By Blogger nuna d. above, at 12:26 PM  

  • If we 'can't afford' $6B to create jobs,
    how can we afford $6B to create daycare spaces?

    It's the same $6B we can't afford to spend.
    One generates jobs and a return to the federal coffers,
    one generates 'a start' (as MI said) to spending on more social programs, a drain on federal coffers.
    Canadians are not stupid.

    By Blogger wilson, at 12:35 PM  

  • 'Doesn't the high value of the Canadian dollar mean businesses need tax cuts to off-set the rise of the dollar?'

    Yes, plus to offset the upcoming increase in interest rates.

    David Dodge will not be happy.

    By Blogger wilson, at 12:37 PM  

  • Maybe we'll trade and NDP will rediscover their principles, cf. Byers, and advocate carbon tax now ;)

    By Blogger Eugene Forsey Liberal, at 12:45 PM  

  • Hello Wilson

    Thanks for stopping by

    Have a nice day.

    By Anonymous Anonymous, at 1:02 PM  

  • I will agree that a lot of people on the left probably view Iggy as being more right wing - mainly since he was introduced to us through the foreign policy context.

    But, outside of that field, I don't think there's really any evidence that he's any further right than past Liberal leaders.

    Trading off corporate tax cuts for child care certainly doesn't come across as a very right-wing decision...

    By Blogger calgarygrit, at 1:22 PM  

  • "Trading off corporate tax cuts for child care certainly doesn't come across as a very right-wing decision..."

    Which is it? Spending the money owned by private corporations on favourite new spending by Liberals?

    Or is it that Canada can't afford to cut taxes now because of the deficit?

    You have to decide why you're taking my money before you take it, if you want any hope of support.

    By Blogger Paul, at 3:07 PM  

  • Ah yes, child care, the Liberals promised it in 1993 - and did nothing and promised it in 1997 - and did nothing and promised it in 2000 - and did nothing and promised it in 2004 and did nothing (unless you count Paul Martin's "hail Mary" the day before he knew he was going to lose a confidence vote). The Liberals will never do anything about child care because if they do - they can no longer keep recycling the promise election after election after election.

    By Blogger DL, at 3:10 PM  

  • In just one page you can see how the same issue can be spun two radically different but still equally accurate ways.

    Whether or not this is a good idea (politically) will depend on who can get their framing of the issue to stick.

    By Blogger Robert Vollman, at 4:12 PM  

  • DL "The Liberals will never do anything about child care because if they do - they can no longer keep recycling the promise election after election after election."

    Hmm, with a quick swipe of the pen we could have

    "The Conservatives will never do anything about spending because if they do - they can no longer keep recycling the same spending announcements budget after election promise after budget.

    By Anonymous Anonymous, at 4:29 PM  

  • Paul - Yup. And Iggy will make that decision. He is the decider, not me.

    By Blogger calgarygrit, at 9:26 AM  

  • DL - I agree that Child Care has been floating around as a Liberal promise for a long time.

    In Martin's defence, he had child care deals signed with most provinces in the year leading up to the '05/06 election.

    By Blogger calgarygrit, at 9:26 AM  

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