Monday, September 27, 2010

Why Play Defence On Corporate Tax Cuts?

The nature posture of this government is aggressive and accusatory, no matter the issue. On the economic front, the CHIEF point of divergence to date- between the Liberals and Conservatives- is this issue of corporate tax cuts. It's just one policy distinction, but it speaks to a much wider philosophical gap and looks to be a central election debating point.

To date, the Liberals messaging on corporate taxes has been a bit to sporadic and defensive for my liking. Depending on the speaker, we hear different talking points to justify or "sell" our position. Much of this defensive rationale is clearly in response to what I first mentioned, a belligerent opponent. You start with "the Liberals want to raise taxes on corporations", followed by "job killers" who want to "stunt economic growth" and it's an alarmist rhetorical carpet bomb approach. The Conservatives, positioning themselves as the one's who want to keep Canada competitive, a simple message that attempts to trap the Liberals. I assume more policy surprises come a campaign, but I would argue, dealing with the know, if the Liberals lose this tax cut debate, they will have lost the economic file.

I've heard Ignatieff a few times now on the topic, and while he raises the key points, it's more in rebuttal mode, rather than instigator. Liberals need to make the case, over and over and over, that Canada is already very competitive, relative to our competitors, by almost ever measure you can cite. Canada has already cut corporate taxes, a simple graph visual tells the tale and shows the relationship to other jurisdictions. This knee jerk concept that you just keep slashing corporate tax cuts loses its practicality when you show clearly, the current state not a drag but a stimulant. The former "unanimous" sentiment amongst business and analysts is no longer, there is a divide within this community whether further cuts are really needed at this time. This development alone, wherein self interest seems somewhat trumped, speaks volumes about the current state, speaks volumes about the simplistic approach of this government.

The real kicker in this entire debate is the HST. A new development, in two key election provinces, the HST represents a massive shift in taxation. No matter your opinion of the HST, every citizen knows that the provinces have sold it as "business friendly", that spin tattooed on our brain. The Liberals can use this political hot potato for rare advantage. We've already cut corporate taxes, 20% lower than the Americans AND we've completely overhauled our taxation system to make it more attractive to business growth. The Premier's use these arguments all day to long to justify, the Liberals merely reinforce without the responsibility. The HST is the current reality, why then do we have to do more, why do we need "corporate welfare", everyone should pay their share. The argument speaks to fairness, people think they are already paying to much, if you remind what governments have already done on the competitive argument, you render further concessions almost obscene.

Ignatieff is on record saying Liberals support the spirit of the HST, for economic reasons. The HST will be discussed during the campaign, in some form or another. Why not pivot and use the HST to undercut the government's hysterics on corporate tax cuts? At the very least, it provides another vein to counter. While you don't want to unilaterally highlight an unpopular tax and risk detached ownership, it is also true that this tax is high on voters mind, in crucial jurisdictions. Pointing to the already shifted tax burden will only make the Conservatives look that much out of balance, that much more ideological, rather than practical.

I see no reason for the Liberals to play defence on this issue. We have the facts, and we have a certain voter anger that we can exploit to neuter the Conservative distortions, which attempt to frame the Liberals as jeopardizing our economy.

10 comments:

Tof KW said...

Here's an easy way to go from defense to offense...

Edmonton Journal - 'Worst time' for proposed hike to EI premiums

The Harper government is scaring Canadians that the Libs would crease taxes that could kill the recovery ...when all along Harper & Co are planning to do just that.

By the way, welcome back Steve. Your blogging was missed.

Tof KW said...

Oops, that should be 'increase' in that line.

Steve V said...

Thx.

It seems like it's hard to get traction on this EI front.

Tof KW said...

But you have to admit it's makes the hypocrisy-meter go off the charts. True it doesn't seem to be resonating, but then again we're not in the middle of an election either. All the Reformatory hyperbole about scary coalitions and phantom Liberal tax hikes isn't really helping their numbers much either.

Kirk said...

The Liberals could state that the Conservatives already paid BC and Ontario billions to implement a HST which shifts taxes from businesses to consumers and already cut the corporate income tax rate on profits so they've done enough for businesses. If they can pair that with some tax break for the average Joe, some specific tax credit, then they can make this an issue about the Conservatives favouring business over citizens.

Listening to some Conservative ministers recently they are really pushing the lie that the Liberals will raise taxes while they are lowering them even though that lowering is for businesses. The Conservatives are actually just milking their GST cut to push an image as tax cutters.

They portrayed the Green Shift as nothing but a tax increase and that worked well for them last election. I suspect imaginary Liberal tax increases to be their attack line in the next election more than this `scary` coalition crap.

Steve V said...

KW

Oh, it's such hypocrisy. I just think it's like those "fees", but we should still push it.

kirk

I agree. I really think tax and spend was going to be their big thrust. Recent events have made the latter attack just bizarre, but they will try and make themselves look business friendly and us as job killing socialists.

Liam Young said...

I think it'd be easy to structure a campaign that would make great hay out of the 'big breaks for big business' and EI hikes for everyone else.

The Liberals (or NDP) have to go on the attack on this and talk about how they'll make the cost of doing business - for small businesses only - the lowest in the world. No one in their right minds would attack this approach because small business is the life of this country.

The HST could also be addressed in a progressive and positive way. Speak to greater transfers to municipalities from consumption taxes (set the structure in place) and reduce transfers with the hundreds of programs that probably exist as a proxy.

Obama has somehow gotten away with tax cuts for everyone but the rich. How come our progressive parties can't?

Steve V said...

Liam

I agree completely. We need to go on offence. You can also attract some left wing support by making a distinction between big business and the little guy. It's the classic argument, and because we've already done much to help corporations, you can deflect some of the nonsensical retorts.

Kirk said...

Just want to add that coalition talk is largely `tax` talk. A coalition puts the big taxing and big spending NDP in charge of the country`s finances according to the Conservatives so that even if people are not as horrified by coalitions as the Conservative like to pretend they are it still allows them to use the `Jack Layton as finance minister` line to attack the Liberals.

So looked at this way the Conservatives are always pushing a mantra of be afraid of `tax and spend Liberals` whether the topic is coalitions or taxes.

The Liberals need to do more than say `no we`re not`they need to be aggressive on this issue just as Steve proposes.

Tof KW said...

The Liberals need to do more than say `no we`re not`

Agreed 100% Kirk. Just saying no we're not is allowing Harper to set the tone. The Grits need to go totally on the offensive here and continually hammer away at the Reformatory record of wasting tax dollars at a time of record deficits.

Also, answer to coalition talk with 'Liberal majority'. If the Reformatories laugh, just remind them their poll number show they have as much a chance of winning a majority as the Grits do.