Down Memory Lane of Liberal Corporate Tax Freeze Policy

Sometimes it’s fun to go back to your initial reaction to certain issues and see if you "analysis" had any objective merit or if it was just crap. When the Liberals introduced the corporate tax policy, I was excited because it wasn’t just a tax, but a philosophical departure with potential impactful tenticles. Anyways, here is my gut reaction post from March 2010, the day after the Liberals came out with the corporate tax freeze.

"Corporate Tax Freeze Puts Liberals In The Game"

Everyone was waiting for policy, and the ground the Liberals chose was shrewd, for a host of reasons. I’ve commented before, or more correctly criticized, the duplicity of trying to argue fiscally responsiblity while offering new big ticket spending initiatives. Fair to say the Liberals were guilty of "sucking and blowing", there was a certain incoherence within our presentation, which left the party open to easy retort. In one move, Ignatieff has repositioned the Liberals on the fiscal front and given himself latitude.

I note today, a piece detailing business executive sentiment. Not only does a freeze on corporate taxes seem reasonable, but people are actually arguing for increases. These views are indicative of some sober realities, and the Liberals now have a new credibility.

The idea of further corporate taxcuts isn’t exactly an easy sell with Canadians. We’ve already seen many corporate reductions, the record is clear and the facts support an already "competitive" climate in Canada. If the argument centers around to reduce further or not, the Liberals can expect some sympathy for their position. The Conservatives are effectively reaching, if they think voters will reject the Liberal position- ordinary Canadians won’t shed any tear if corporate Canada doesn’t get another break, good luck with the "Tim Horton’s" crowd. The optics are on our side, and this "savings" can be manipulated by the Liberals for other initiatives.

I don’t mean to be to cynical here, but it’s pretty easy to massage the numbers to present a fiscal framework. Where a party gets in trouble, is when they are offering competing narratives. The Liberals were guilty, but by now giving themselves some fiscal room, any new initiatives gain some credibility. With the pricetag in the range of a 5-7 billion dollar savings, the idea of a childcare initiative no longer looks reckless. The Liberals can present priorities as investments, and still give the appearance of reigning in the debt. Contrasted with the slash and burn Conservatives on the one hand, "fat cat" reductions on the other, I wonder what is the easier sell?

The Liberals bought themselves some hope "capital" with this tax freeze. We can still provide a measure of vision, investments, and argue we’re being responsible. Ignatieff also offered a realistic deficit forecast, which denotes an overall plan. A bit early to tell, but these ideas put forth in Montreal look to put the Liberals back on the "economic front" radar. Given the entirely feeble response from Conservatives today, I am even more confident that we’re now a more elusive target.

My post the next day on the subject was titled "Tim Horton’s vs Bay Street". 

I still like our chances on this issue anyways, today’s column by Susan Riley explains why.

Click HERE to read more from Steve Val.

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