Thursday, March 20, 2008

Good Answer

McGuinty's response to the Flaherty/Harper rhetoric is a terrific frame:
"Seventy-five per cent of all the money we spend around here goes to health and education and supports for the vulnerable, so you can't take $5.1 billion out and not close hospitals, and not fire nurses, and not make cuts to education, and not give rise to dramatic increases in tuition, and not fire water inspectors and not make cuts to social assistance," McGuinty told reporters.

"It just can't be done. There's just not enough money in the other 25 per cent to fully give effect to that $5.1 billion tax cut. It's not there. I'm not prepared to do that."

What this type of answer does is completely declaw Flaherty, while at the same time reminding voters of the past regime. McGuinty presents a simple choice, corporate tax cuts vs cuts to hospitals and schools. I don't think it takes much imagination to see where mainstream voter opinion would side.

Quite clever of McGuinty to position himself as the champion of health care and education, defending a perceived threat. The federal argument means taking away resources for core departments, it reminds everyone of the Harris regime, a very unattractive alternative.

McGuinty frames the question down to a most basic premise- do you sacrifice your children's education, access to health care in order to give corporations a tax break? I know which side of that argument most resonates with voters. The "strategic geniuses" have been out-flanked by the calm Liberal Premier, BADLY.


MarkCh said...

Because it will be so easy to pay for hospitals and schools in years to come, as businesses move and are formed in other provinces, and Ontario economic activity dwindles.

Anyway, McGuinty is saying that 75% of the total tax take goes to these things. Ontario's total tax revenue is over $80B. So, $60B goes to these areas. Corporate tax brings in $10 B. So, if they cut non-priority expenditures by 25%, they could cut corporation tax in half. Seems to me like McGuinty is just blowing smoke. As usual. Source for figures

Steve V said...

Because it will be so easy to pay for hospitals and schools in years to come, as businesses move and are formed in other provinces, and Ontario economic activity dwindles."

I love this nonsense, as if McGuinty's government hasn't invested in business, luring new operations with provincial support, an aggressive re-training program.

If you actually listen to what the businesses are saying, taxcuts only work if you have profts, which isn't the case right now with struggling manufacturing. The Conservatives love these simplistic silver bullets, that just gloss over the real problem, while simulateneously cutting and slashing.

Short mark, deficits are good. Maybe McGuinty should go for the taxcuts, and then just fudge the numbers like Flaherty did.

If Flaherty is so worried about what is good for the economy, then maybe he shouldn't have went forward with the GST cut, which was PANNED by EVERY ECONOMIST in the country as the wrong approach. Political optics trump sound economic policy, and given Flaherty's abysmal performance in his past job, don't expect Ontarians to buy his cheap rhetoric now.

Steve V said...

I would add Mark, you don't win an international award like this, unless you are showing a commitment to expanding the business climate.

Anonymous said...

so why doesn't McGuinty raise our PST by that 2% ?

I keep hearing that reduced consumer tax is bad ...

Anonymous said...

Many years ago when I was in grade school we used to use mathmatics to try to find the "sweet spot". We would try to figure out the best shape to minimize the surface area of a volume or figure out the best price to ensure maximum profit. After all selling the product for less does not mean you will sell more nor does selling at a higher price mean you are making the most money. There is a point at which the increased price and decreased volume meet and the profit is maximized. This has been evidenced by other jurisdiction who have lowered their tax rates, their revenues went up.I think Ontario should try it. After all what would it hurt except some foolish pride.

Steve V said...

"I keep hearing that reduced consumer tax is bad"

Tell that your boy Flaherty, then get back to me with suggestions.


We tried that already with Harris, as I recall, not exactly a pretty picture.

I'll say it again, we are losing jobs, because there are no profits, so your analogy doesn't quite jive. Corporate taxcuts don't help industries on the brink.

Steve V said...

On of the arguments I've heard to try and rationalize Flaherty's attacks on McGuinty, Ontario bashing makes for good copy outside of the province:

"A poll suggests Ontario Premier Dalton McGuinty has a lot of public support in his continuing feud with federal Finance Minister Jim Flaherty.

The Canadian Press Harris-Decima survey in February looked at the war of words between the two politicians, in which McGuinty accuses Flaherty of concentrating too much on the oil-and-gas sector while giving short shrift to troubled manufacturers.

Nationally, the poll suggests 47 per cent of respondents sided with McGuinty, with only 27 per cent backing Flaherty.

In Ontario, the poll found 56 per cent support for the premier and 25 per cent for the minister."

RuralSandi said...

Flaherty's attacks on McGuinty are a Harper/tactic strategy to ready Ontarionians to blame McGuinty rather than Harper for his lack of help and ingenuity for Ontario.

You know, it's everyone else's fault, especially Liberals, for whatever has gone wrong in the Harper government.

Fact is, the Mike Harris/Baird/Clements/Flaherty government who cut taxes and "downloaded" reponsibilities to municipalities, regions and counties - promising great economic benefit. Well, we all know how well that went.

Why in hell would McGuinty follow a "failed" plan?

MarkCh said...

The "no profits" thing is a bit of a red herring. What we should want is for profitable businesses to be created and expand, not for unprofitable ones to be propped up. The dollar is not likely to go back to 70 cents US any time soon.

The idea that Ontario should harmonize PST with GST, raise it, and cut corporate taxes, is perfectly sensible. Should Flaherty have kept the GST and cut corporate taxes even more than he has? Yes. So what? What has that go to do with McGuinty? At least Flaherty is cutting corporate taxes, which is more than McGuinty can seem to manage. And Canada as a whole is doing pretty well with business growth and formation. Ontario is a particular laggard.

Steve V said...

"The dollar is not likely to go back to 70 cents US any time soon."

If that's your rationale, then there is NO solution.

"Should Flaherty have kept the GST and cut corporate taxes even more than he has? Yes. So what? What has that go to do with McGuinty?"

Hello in there mark, Flaherty has a MASSIVE surplus to work with, whereas McGuinty has just now got us out of the mess Flahertly left in his wake. Besides, last time I checked Ontario is part of the federal government's budget. You act like they are mutually exclusive jurisdictions.

As ruralsandi said, why in the world would we want to return to failed policies? Only an idiot repeats a failure.

"And Canada as a whole is doing pretty well with business growth and formation. Ontario is a particular laggard."

Tell that to Quebecers, or any other jurisdiction with a manufacturing base. You are mixing apples and oranges to make a torture point, which is really a reflection of your own bias, than an accurate read of WHY there are regional distinctions. Maybe Ontario should start drilling for natural gas, or oil, or open up a port for Asian imports. Good grief man.

ottlib said...


There is not much point arguing with Conservatives about tax-cuts.

It is Conservative dogma that tax-cuts are the solution to most problems.

Hell, if there was an announcement that a planet killing comet was going to hit the earth by Christmas the Conservative response would be "cut taxes". (Although in this scenario I might agree).

Mr. McGuinty has the right idea. Go over the heads of the Conservatives and talk directly to Ontarians. As you say most of them would choose health care and education over more tax cuts for corporations.

Anonymous said...

For those that can, put politics and personalities aside and try to look at the situation and decide what is in the best interest of the people of the province. We know that industries can move where and when they want so we do have to ensure our tax structures are competitive and attractive. Politics aside, answer the question - are they? Independant evidence shows they are not. What does this mean for workers - it means the chance of corporations investing and maintaining facilities in Ontario is not great when they can easily go elsewhere. For those old enough to remember the Rae era, you will remember the results of his policy of keeping taxes up and spending up in the hopes of waiting out the recession. That proved to be a disasterous policy - so much so that people eagerly supported the Harris policies for two consecutive elections. Do you honestly believe McGuinty's policy of keeping taxes up and spending up will have a different result this time? His job is to do what is in the interests of the whole, not the interests of his ideology - sometimes the two correspond; however, in this case, I believe his economic policies are bad for the current climate and will lengthen and deepen the downturn for Ontario. Perhaps he should reconsider his choices.

Steve V said...


You can't look at tax policy in isolation. McGuinty has invested heavily in innovation, modernizing industries, training, all part of a strategy to create an attractive climate. I would add, McGuinty has lured business to Ontario, with aggressive work. The Liberals believe in investment, the Cons say slash taxes and the market will work. I find the latter far too simplistic. Should he cut taxes? Yes, but only if he has the financial room, and when revenues are soft, you don't sell the farm. BTW, don't be surprised if the genius Flaherty ends up with a deficit, with his inability to properly forecast growth this year (latest estimate he is off by a full 1%, which he has LEFT NO ROOM for). Is that prudent fiscal management?