In politics, timing is key
The federal government could have released its proposals to reform the taxation of small corporations with more finesse
for some reason, governments everywhere think they can escape the public’s wrath by announcing bad news late on Friday afternoons or in the dog days of summer, when politics tend to be the farthest thing from people’s minds.
No matter what party is in power, they all do it — the logic being that if the bad news is announced when everybody is in leisure mode, whatever is reported, if it is at all, will have diminished impact.
This standard practice, known as “taking out the trash,” probably worked in former years. But in this era of the 24-hour news cycle, that doesn’t work anymore. If anything, this practice now probably has the opposite effect, as the federal government now is finding out.
Let’s look at Finance Minister Bill Morneau’s consultation paper on private professional corporations, announced one sleepy Tuesday in mid-July, when Canadians were on vacation or barely lugging their brains to the office.
Morneau told the summering citizenry he would accept their views on the tax fairness proposals until Oct. 2. That would be less than a month after Labour Day and exactly two weeks after Parliament would reconvene after the summer break.
The Carter Commission of the 1960s may have needed four years to look at tax fairness. But this government thought it would need to listen to Canadians for only 72 days.
As we know now, this communications strategy by the government of sunny ways has been somewhat less than successful. The nation’s doctors have been near hysterical. Self-employed Canadians, from farmers to accountants, are giving their Liberal members of Parliament (MPs) an earful. Those same MPs have been giving their government an earful, and the Conservatives think they finally have a cudgel with which to beat up Prime Minister Justin Trudeau.
The draft legislation to limit “income sprinkling” and other l oopholes made possible by private professional corporations springs from a campaign promise in 2015 to clamp down on tax strategies the wealthy use to impose an unfair burden on middle-class Canadians.
The trouble is those who are the angriest look rather middle class. And this government loves the middle class. Remember?
But before anyone thinks this issue is the beginning of the end for Trudeau’s government because of a reckless act of hubris, there are quite a few things to consider.
The Liberals are still 10 to 12 percentage points ahead of the Conservatives in the polls. Canada’s economy is thriving. Andrew Scheer has been less than successful at mounting a charisma offensive as Conservative leader. And the New Democratic Party (NDP) needs more — a lot more — than just a new leader.
So, the current government still has plenty of time to learn from its mistakes. For example, there were signs of a strategic retreat shortly after Labour Day. The prime minister reassured us there was still time to tweak the bill. Morneau is talking a little softer since a government caucus retreat after Labour Day.
And while those who oppose Morneau’s changes are making a lot of noise, where most voters stand still isn’t clear.
The electorate could very well be split, in which case the finance minister will get his way. A lot of those who voted Liberal, especially those cannibalized from the NDP, would like to see Ottawa stick it to the rich people.
Regardless of what happens in the end, this proposal has been a costly mistake — all because the government tried to implement major tax changes while the electorate was thinking about the cottage and beer on the patio.
Now would be a good time — because the economy is performing so strongly — to declare victory in the use of deficit stimulus and come up with a deficit elimination plan. Instead, Morneau’s consultation paper will suck up a lot of oxygen and political capital as the government approaches the midpoint of its term of office.
Once the fuss dies down, the Liberals will take their time before producing legislation on small-business tax reform. Perhaps former prime minister John Diefenbaker was smarter than we realized, when he sent the Carter Commission away for four years to study tax fairness in 1962. A slow-moving royal commission on tax reform probably looks very good to Trudeau right about now.
Morneau’s paper will suck up a lot of oxygen and political capital