Stanley Hartt, writing for iPolitics, says it’s time for across-the-board tax breaks.
This column is based on an article that originally appeared in the June 2015 edition of Inside Policy.
By Stanley Hartt, June 8, 2015
Finance Minister Joe Oliver did what his government said it would do — he tabled a balanced budget with room for a few pre-election measures meant to build on the Harper government’s image as a tax-cutter, such as income-splitting for families, a hike in the annual contribution limit for Tax Free Savings Accounts and enhancements to the Universal Child Care Benefit and the child care expense deduction.
His problem, and that of his government, is that a great many Canadians don’t see themselves in the list of beneficiaries favoured by these tax incentives — and may even feel left out of the prosperity they’re told is all around them.
Workers too old to employ and too young to retire. Laid-off manufacturing and white collar employees living in a shrinking sphere of opportunity. Younger people just starting their working lives, sensing that the lifestyle their parents enjoyed will be harder to come by. These are the people who feel they’re on the outside looking in.
While no electoral strategist would advise dismantling the tax measures that have won support from a large swath of the Canadian middle, it’s no offence to Conservative philosophy to recognize that one really good way to generate a strong boost to the economy, to produce investment and employment opportunities, is to lower marginal tax rates across the board — through revenue-neutral tax reform eliminating most tax expenditures.
On social issues, Prime Minister Stephen Harper has managed to sideline the most polarizing questions. Now he needs to show his government has a softer side, a broader appeal — it needs to reach outside of its comfort zone and offer Canadians something new. A few suggestions:
- A joint tax return for spouses. The Americans have had this since 1948 — the ultimate recognition of the principle of “family income”. The downside — it would be extremely expensive.
- Assistance to municipalities to improve infrastructure, including transit, something the government has started addressing already.
- Privatization: State-owned enterprises, especially those engaged in commercial activities with mandates to operate as if they were private sector businesses, should be considered for sale.
- Veterans and seniors: The stories about veterans being nickeled-and-dimed over benefits must stop. The response to the Supreme Court decision on physician-assisted suicide will need to appear compassionate, even as it’s designed to prevent abuse.
- Government support for medical research: Flow-through shares for life sciences and medical research would stimulate the commercialization of Canada’s leading biotech research capabilities — in much the same way that the flow-through mechanism has enabled early-stage mining and oil and gas companies to explore and develop their resources with access to capital and stock exchange listings.
- Balancing the push for mandatory criminal sentences with initiatives to speedily exonerate the wrongfully convicted, saving significant sums in incarceration costs and damage awards.
Stephen Harper can no longer position his government as the tough but realistic outside force for change — not after ten years in power. A fourth mandate requires a softer touch.
Stanley Herbert Hartt is counsel at Norton Rose Fulbright. He is a former deputy minister of finance and, in the late 1980s, served as chief of staff in the Office of the Prime Minister. This article is based on a longer piece in Inside Policy, the magazine of the Macdonald-Laurier Institute.