Trudeau’s tax reform fiasco
Liberal comedy of errors might yet end on a political tragedy
OTTAWA — As the crow flies — or in this instance a government jet backed up by a string of chauffeurdriven vehicles — it is doable to travel from Parliament Hill to the town of Stouffville, northeast of Toronto, in about 90 minutes.
A person using more conventional means of transportation on the other hand would take at least double that time. In either case, the travel there and back will use up most of a normal day’s work.
If that sounds like a long way for the prime minister and a gaggle of ministers to travel as they did Monday — and with Parliament sitting — just to use the backdrop of a family-run restaurant to announce a reduction in the small business tax rate, it’s because it is.
A charitable explanation would be that it may have been hard, in the midst of the small-business backlash that has attended Finance Minister Bill Morneau’s plans to change some of the rules that govern private corporations, to find a friendly venue for the announcement.
A less charitable take would be that Stouffville has the not-insignificant advantage — given the pummelling the finance minister had endured at the hands of the Conservative opposition in the House — to be so located as to make it logistically difficult to be back in time for question period.
Be that as it may, it is to Stouffville that Trudeau, Morneau, Small Business and Tourism Minister Bardish Chagger, who happens to double up as the government House leader, and her Indigenous Services colleague Jane Philpott, who happens to be the MP for the area, repaired Monday to eat some pasta and then some crow.
For, were it not for the headwind that the government has faced over its fiscal reform, chances are Canada’s small businesses would not have received an unexpected mid-mandate gift from the federal government.
Notwithstanding some breathtakingly brazen prime ministerial talking points, Monday’s announcement was first and foremost testimony to the force of that wind and to the communication weaknesses of the reform’s chief salesperson, the minister of finance.
That’s because the fix Trudeau is relying on to try to take back the initiative in the fiscal reform debate is straight out of the ever-expanding scrapyard of broken Liberal promises.
In 2015, the Liberals committed to maintaining the small business tax rate on the downward course the outgoing Conservatives had set it on in their pre-election budget. Under the plan Morneau inherited when the Liberals took power, the rate was already scheduled to be down to 9 per cent by 2019.
But once in government he curtailed the rate cut. It neither reappeared in last spring’s second instalment nor in any of the projected spending laid out at the time.
Instead, the last budget signalled the government’s intention to move on private corporations, a plan Morneau has attempted to execute since late July.
This is a government that treats the business of well-calibrated optics like an art form.
In the lead-up to its last budget, Trudeau’s office even got involved in a discussion over whether the model posing as a boy on a bridge on the document’s cover should be wearing eyeglasses.
Had the government been contemplating an imminent return to the downward path charted out by the Conservatives for the small-business tax rate, surely Morneau’s controversial fiscal changes to private corporations would have been coupled with that announcement.
What government would not choose to sugar-coat its intentions to reduce the tax benefits of some by offering a break to many others?
Will Monday’s intervention combined with a weeklong climbdown from some of the more contentious aspects of the planned changes to the private corporations rules appease the biggest public relations storm this government has endured to date? Possibly, but it remains to be seen whether Morneau himself will find his way out of the hole he has dug himself into.
If the goal of Monday’s Stouffville theatrics was to reinforce the minister’s credibility, it missed the mark.
This is the kind of sectorial announcement that would normally be part of a budget, a fiscal update or a ministerial speech to a business venue. In any of those scenarios, the finance minister would have the lead role.
But in Stouffville, Morneau was relegated to a cameo role. And even the small role was apparently not silent enough for the prime minister. As if he was doing the world, or possibly his government, a favour, Trudeau twice insisted on answering media questions directed at his minister before begrudgingly letting him come to the microphone.
This comedy of errors might yet end on a political tragedy for the government.
Chantal Hebert is a national affairs writer. Her work appears in Torstar newspapers.