Friday, January 29, 2010

Run For The Hills, It's The T Word

I find it a fascinating question, the tension between frank honesty and political survival. On the one hand, you can see why the Liberals would avoid the issue of tax hikes at all costs. First, because last time I checked the words TAX INCREASE are the equivalent of political suicide. Second, because you're dealing with an opponent who distorts and manipulates with unprecedented zeal. On the other hand, I don't care what any politician says today, the odds are a tax hike will be required, we are in structural deficit. Avoiding this discussion amounts to a certain dishonesty, we do need to have this debate and all considerations should be on the table.

I would imagine Gerard Kennedy is feeling some heat today for his very candid, not to mention refreshing, comments:
For months, Liberals have recoiled at any talk of raising the GST. But a senior Liberal MP says the idea needs to be on the table as the party crafts its long-term plan to balance the country's books.

Toronto MP Gerard Kennedy, the party's infrastructure critic, says he's speaking for himself - the Liberal leadership want nothing to do with his remarks.

"I think we do need to talk about it," Mr. Kennedy said yesterday in an interview with The Globe and Mail.

"I do think we need to talk about a fiscal plan. That debate is internal to the Liberal Party now and I'm not pronouncing on it."

"I wasn't afraid to raise it," he said. "I think we're very prepared to put things on the table. I'm not the economic lead on the tax discussion. I'm not unilaterally trying to launch that into the public. I do think we need to have the debate."

He said tax increases shouldn't happen now while the economy is struggling, but should be considered as part of a longer-term deficit plan.

Policy wise, Kennedy is spot on. I do see a way that the Liberals can propose a "five year plan" that CONSIDERS tax measure in the final year or two. This type of proposition allows the government to truly see where we are, once economic recovery is well under way, without harming said recovery. The Liberals can focus on other measures to eliminate debt, and no one should underestimate job creation, but when other avenues are exhausted, THEN it's time for sober calculation.

The trouble with this type of plan, it still remains an easy target for a Conservative government, seemingly bent on denying simple realities, instead focusing on politically palatable arguments. With that in mind, it's easy to see why the Liberals might be better off playing the same game, keeping their heads down and putting off the "adult conversation".

However, in so doing, the Liberal position doesn't provide a great deal of differentiation. Focusing on jobs instead of deficit reduction, well that's a strange argument, that has the potential to fall flat. I'm sure the Conservatives will highlight job creation to, there are plenty of levers available in the budget to make that argument, rendering our thrust a "saw off" of sorts.

Do we applaud Kennedy, or do we cringe? Depends on the particular moment from here.


ottlib said...

Yes an adult conversation about taxes would be a good thing.

However, now is not the time.

The Conservatives are busy defeating themselves and their opponents should just let them do so.

For the first time in a very long time the full glare of the media and the chattering class is focused on the government and that government is visibly wilting under it.

The Liberals should be trying their best to keep it that way and not give them a reason to change focus.

Omar said...

As far as I'm concerned Kennedy's honesty is a breath of fresh air. John McCallum's insistence that the official party line is still adamantly no GST increase now or ever, is what made me cringe.

Gayle said...

I kind of thought he was sent out to float this as a trial balloon. If it catches on the party will grab it. Otherwise they won't.

Either way, taxes are going to have to go up. There is no way around it. Both parties know that. They just want the other to be the one responsible for it.

Cathie from Canada said...

Oh, for crying out loud.
Canadians are barely surviving the recession, so let's talk about tax increases?
Sorry, but I think Kennedy is being ridiculous or disingenuous, or even trying to sabotage Ignatieff.
The very last thing Canadians want to talk about right now is how the government needs more money.

Tomm said...


You said:

"... we are in structural deficit."

Please tell me what you know about a "structural" deficit and what the term means?

Just because McCallum or Ken Page use the term doesn't mean very much. Before you repeat buzz words you should check that are actually making sense.

Wiki says:

"Structural deficit forms part of the public sector deficit. Structural deficit differs from cyclical deficit in that it exists even when the economy is at its potential.

Structural deficit issues can only be addressed by explicit and direct government policies: reducing spending (including entitlements)..."

So is that where we are? I thought the infrastrucutre spending was for two years? How does two years from now link back to spending that can't be re-couped from an economy running at its potential?

Also, please note that there are other ways to lose a deficit without raising taxes. Sometimes Liberal's conveniently forget that part.

I guess taking money out of my pocket to pay for a nationally funded day care program (for Toronto), or the Court Challenges Program for people to stretch the fabric of the charter is the only path forward. Well, not necessarily.

I suggest the next time someone uses the term "structural deficit" in a way that makes you think about Chicken Little and the necessity to raise my taxes, you take a deep breath and then look for a bucket of ice water to throw on whoever it was.

Start with Gerard.

Steve V said...


I actually think Kennedy is being honest, so I'm not sure about the sabotage or disingenious reaction. We can debate going "public", but I see it as nothing more than conviction. Nobody is talking about raising taxes in the short term, it's more a strategy when the economy has recovered.


Thanks for the definition, but I was well aware without your HELP. Repeating buzzwords eh? Ummm, we were in structural deficit PRIOR to this economic downturn, and I suggest you go back and look, Flaherty's shell games aside.

Seems to me, you're the one who LAPS up Dear Leader's dishonest presentation. He squandered the surplus PRIOR to the recession, that is an objective fact, John McCallum irrelevant. Why do you THINK all these economists are saying we will need new revenue streams? Are they Liberal stooges Tomm?

Your party already has a payroll tax in the offing, why do you think that is so?? Sorry, but your tone here is amusing. Keep reading up, you need to :)

Tomm said...


I enjoy your posts, so I will indeed keep reading.

The Liberal's aren't in power. Gerard Kennedy has precious little knowledge of what the Treasury Board and Finance is saying to the government. Yet he is banging the drum for more taxes.

It seems to me that He thinks Canada would run better with a higher percentage of GDP circulated through the government.

For him to know so little, and assume so much, and speculate on my behalf, lowers my view of him and of course the rest of the Liberal crowd he hangs with.

RuralSandi said...

Tomm, you have precious little knowledge of it yourself and I'm sure Kennedy has more info than you do.

Kennedy talked about a "debate" about it.

The Cons, as usual, stretch discussion like old used underwear.