Jean Chretien

Liberal Party

Pierre Trudeau

Canadian Alliance

Bancruptcy of Liberal Tax Plan Exposed

Date: OCT20-00
Source: Edmonton Journal
Keywords: taxation, hypocrisy
Posted: OCT27-00
Liberal Party Index

Subject: Liberal Red Book III - The rich get the biggest break
Questions, questions, questions
By Lorne Gunter

Questions. My head is just brimming with questions. Questions about Paul Martin's mini-budget.

Or should I call it Red Book III? Because, truth be told, it is more of an election platform than a budget document.

A budget document would reveal the spending planned, as well as the tax cuts. It would have to, if this were really a budget. The government, through the finance minister, has an obligation once each year to lay its revenue and spending plans before the House of Commons, and seek the approval of MPs.

But there were no spending plans in Martin's announcement, or precious few. Reports since assure us these plans will be revealed in due course by the Prime Minister. But that's what I mean about this being a campaign brochure, rather than a budget. If this were a budget, the requirement would be that it contain an outline of the government's spending for the coming year. And there would be the requirement that it be debated in the Commons. And be submitted to Parliamentary committees. And voted on by MPs.

Almost none of that is going to happen, so we are free to conclude that this is the Liberals' latest Red Book, nothing more. And Canadians all remember what happens to tax cut pledges in Liberal Red Books. They get ignored once the Liberals are safely in office, like the 1993 Red Book promise to eliminate the GST.

Only one tax cut announced Wednesday actually takes effect immediately; the cut to the capital gains tax. All others depend on the Liberals being re-elected so they can actually pass the mini-budget.

Which raises another question: If the Liberals are, as they assure us ad nauseam, the champions of ordinary Canadians, how come the one cut they implemented before the election is the one they themselves claim helps the rich most?

I like the capital gains cut. It will benefit not only those who own businesses (and through those businesses create jobs). It will also benefit any Canadian with a mutual fund, company pension or RSP.

I don't quibble with the capital gains task. I just wonder why the one tax cut Martin announced that does not require Canadians to re-elect the Liberals is one aimed, according to the government's own rhetoric, at the richest Canadians?

Moreover, if the Liberals are as committed as they claim to the lowest-income Canadians, how come the Alliance tax plan does more for the working poor than the mini-budget?

Oh sure, the Liberals won the sound bite war by under-bidding the Alliance's bottom tax rate by one percentage point, 16% versus 17. Commentators with no clue of how taxes work then dutifully fawned about how the Liberals care more for the poor.

But the truth is, Martin refused to raise by much the amount of income each Canadian can earn annually before paying taxes. The Alliance permits a working-poor couple to shelter $20,000 from the taxman, the Liberals only permit $13,000.

That difference of $7,000 in tax-free income drops over a million working poor from the tax roles. They don't have to pay a nickel under the Alliance plan. The Martin plan merely promises to tax them one percentage point more lightly.

If health care is the Liberals top priority, as we will be assured again and again during the coming campaign, how come they are putting $100 billion more into tax cuts over the next five years, but only $23 billion more into health? I like those priorities, but they seem to be at odds with Liberal propaganda.

If tax cuts are not vote winners - if, as the Liberals have claimed in response to Alliance calls for them, cuts are well below health and education and social programs among voters priorities - how come tax cuts are the cornerstone of the Liberals' attempt to win the election?

And where are the economists? Two weeks ago when the Alliance released its tax plan, much was made of the fact that prominent private sector economists claimed it was unsustainable.

Never mind that these were the same economists hand-picked by Paul Martin to advise him on budget matters, or that two days later it was announced the most vocal critic, John McCallum of the Royal Bank, would be a Liberal candidate. The economists said the Alliance's $125 billion in tax cuts could not be achieved without "leaving a big hole in the budget" or "20% (spending) cuts."

Wednesday, Martin proposed $100 million in tax cuts and hinted at $25 billion in new spending. That's $125 billion in total. The same total for which the Alliance was chastised. The same total that caused Bay Street economists to cast doubts on the credibility of the Alliance plan.

Where are these same economists to cast the same aspersions on the mini-budget?

Ah, that's better. Now rather than just filling my head, these questions can bounce around in yours, too.

Lorne Gunter, Columnist The Edmonton Journal & Host, Essential Talk Network P.O. Box 2421 Edmonton AB CANADA T5J 2S6 off tele: (780) 429-5267 fax: (780) 429-5500 (requires a cover page) cell: (780) 916-0719

Tune in to 'Lorne Gunter Live' exclusively on the Internet at, Monday thru Friday, from 3:00 to 4:00 p.m. Eastern, 1:00 to 2:00 p.m. Mountain.

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