For a government so focused on its image, Justin Trudeau’s Liberals are stupefyingly blind to the damage caused by their dawdling on tough political files.
Exhibit A: the government’s protracted stumble on small business tax changes.
We’re now into Month 4 of punishing headlines on this file, which is deeply impressive when you consider that two of those months covered the dog days of summer, where all news usually goes to die.
Can anyone remember when Finance Minister Bill Morneau, the frontman for the tax changes, was the putative heavyweight in the relatively unseasoned Trudeau cabinet? Yeah, well, neither does Morneau, such is the thumping he’s taken on the small biz file from Pierre Poilievre, the Conservative finance critic.
The opposition-generated heat on taxes forced Morneau into issuing a Thanksgiving weekend armistice, in which he dropped several large hints of an impending retreat.
So sure were the Liberals of Thanksgiving misery on small business and other issues, they deemed it necessary to arm their supporters with “turkey talk” talking points to guide discussion with their friends and relatives over the holiday.
These are the same Grits, remember, who delighted in calling Stephen Harper a scripted control freak.
What’s worse, everyone returned to work to discover a brewing Exhibit B, the government’s stated desire to tax employee discounts, as outlined in the Canada Revenue Agency’s latest tax “folio.”
Because why not add “petty” to the government adjective file on tax changes, right next to “insatiable”?
The Liberals, perhaps learning from the small business debacle, or their electoral reform goat rodeo, or their multiple failed attempts to change the rules of the House to their partisan advantage, moved to discount their retail tax plans, but not before the entire sector (which, by the way, employs many in the middle class and those hoping to join them™) got up their nose.
But it still took three days of painful fumbling by Revenue Minister Diane Lebouthillier for the government to get its act together. And even then, it was the prime minister who had to interrupt his trip to Washington D.C. — where he was busy fighting for NAFTA’s future — to scotch all doubt with a definitive tweet.
It’s worth asking how a government cruising on an annualized growth rate of 4.5 per cent got suckered into picking these brutal political fights on taxation.
Again we turn to Morneau, who (at Trudeau’s bidding) opened the taps in his first two budgets to spend us into a long series of deficits and accumulated debt.
Of course, the problem with saying yes to most spending is you eventually have to say yes to most of the tax hikes needed to cover it.
To date, the government’s ‘oui oui’ routine has produced (among others) a carbon tax, a payroll tax, the small biz tax jamboree, and the now-reversed employee discount tax, with more to come (pot?) if the budget is ever to balance.
For those keeping score at home, that’s a mountain of tax to cover an orgy of spend, with no balanced budget on the horizon. And most of it wasn’t necessary.
Pace the Liberal election rhetoric of two years ago, there was no recession requiring geysers of money to escape. Nor has circumstance conspired in the interim to hammer the revenue side: oil prices are higher now than they were when Trudeau was elected and the economy is expanding. The spending has been deliberate, and cushioned politically by low interest rates.
And now a rookie government, with a rookie leader, and a rookie finance minister have to find a way out of a rather deep hole.
Had Trudeau’s cabinet been blessed with more government experience, it would have known that keeping public finances in check lets you keep the bits of the inefficient tax system that favour your political constituencies. Heck, keeping spending under control lets you propose even more distortions to our funhouse mirror tax code (tax credits, anyone?) to keep your allies sweet.
Trudeau’s early mandate profligacy has flipped this equation around; he will now have to find groups he can afford politically to tax, with small business owners having already proven to be disappointments.
As the prime minister totters up to the back half of his mandate, he will need to sort out his tax and spending quickly. If there are more taxes to be hiked, they need to be hiked now, so that voters might forget them by the time they next go to the polls.
So for God’s sake, Liberals, if you are going to hike taxes don’t lollygag. Don’t consult. Just rip the band-aid off and implement your decision.
The reason everyone continues to bellyache about small business taxes is because they’re still not done and they know you probably don’t have the stomach for the fight.
Andrew MacDougall is a London-based communications consultant and the ex-director of communications to former prime minister Stephen Harper.