Liberals should not play defence on corporate tax cuts?

This article was last updated on April 16, 2022

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The nature posture of this government is aggressive and accusatory, no matter the issue. On the economic front, the CHIEF point of divergence to date- between the Liberals and Conservatives- is this issue of corporate tax cuts. It’s just one policy distinction, but it speaks to a much wider philosophical gap and looks to be a central election debating point. 

To date, the Liberals messaging on corporate taxes has been a bit to sporadic and defensive for my liking. Depending on the speaker, we hear different talking points to justify or "sell" our position. Much of this defensive rationale is clearly in response to what I first mentioned, a belligerent opponent. You start with "the Liberals want to raise taxes on corporations", followed by "job killers" who want to "stunt economic growth" and it’s an alarmist rhetorical carpet bomb approach. The Conservatives, positioning themselves as the one’s who want to keep Canada competitive, a simple message that attempts to trap the Liberals. I assume more policy surprises come a campaign, but I would argue, dealing with the know, if the Liberals lose this tax cut debate, they will have lost the economic file.

I’ve heard Ignatieff a few times now on the topic, and while he raises the key points, it’s more in rebuttal mode, rather than instigator. Liberals need to make the case, over and over and over, that Canada is already very competitive, relative to our competitors, by almost ever measure you can cite. Canada has already cut corporate taxes, a simple graph visual tells the tale and shows the relationship to other jurisdictions. This knee jerk concept that you just keep slashing corporate tax cuts loses its practicality when you show clearly, the current state not a drag but a stimulant. The former "unanimous" sentiment amongst business and analysts is no longer, there is a divide within this community whether further cuts are really needed at this time. This development alone, wherein self interest seems somewhat trumped, speaks volumes about the current state, speaks volumes about the simplistic approach of this government.

The real kicker in this entire debate is the HST. A new development, in two key election provinces, the HST represents a massive shift in taxation. No matter your opinion of the HST, every citizen knows that the provinces have sold it as "business friendly", that spin tattooed on our brain. The Liberals can use this political hot potato for rare advantage. We’ve already cut corporate taxes, 20% lower than the Americans AND we’ve completely overhauled our taxation system to make it more attractive to business growth. The Premier’s use these arguments all day to long to justify, the Liberals merely reinforce without the responsibility. The HST is the current reality, why then do we have to do more, why do we need "corporate welfare", everyone should pay their share. The argument speaks to fairness, people think they are already paying to much, if you remind what governments have already done on the competitive argument, you render further concessions almost obscene.

Ignatieff is on record saying Liberals support the spirit of the HST, for economic reasons. The HST will be discussed during the campaign, in some form or another. Why not pivot and use the HST to undercut the government’s hysterics on corporate tax cuts? At the very least, it provides another vein to counter. While you don’t want to unilaterally highlight an unpopular tax and risk detached ownership, it is also true that this tax is high on voters mind, in crucial jurisdictions. Pointing to the already shifted tax burden will only make the Conservatives look that much out of balance, that much more ideological, rather than practical.

I see no reason for the Liberals to play defence on this issue. We have the facts, and we have a certain voter anger that we can exploit to neuter the Conservative distortions, which attempt to frame the Liberals as jeopardizing our economy. 

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