Thursday, November 02, 2006

Taxing Income Trusts

The Canadian government broke an election promise, yesterday. They announced they will tax income trusts.

There is no policy problem to which the proper solution is the increase of taxes. Furthermore, the Tories' explanation about how they needs to "plug a hole in their revenue" just days after the revalation of their massive surplus simply isn't credible.

And that doesn't even mention the appalling political consequences of flat-out breaking an election promise. The only way the Conservatives were going to form a long-term governing alternative was to appear trustworthy. They've been widely viewed as unrelentingly evil for a decade; overcoming that should be their number one priority. This broken promise badly hinders their progress on that front.

There is simply no way this is a good decision. If the imbalance is a problem, you can fix it by lowering corporate taxes. Any reduction in federal taxes can be sold as a solution to the fiscal imbalance.

This was a terrible decision, and because Harper's such a micromanager this will all end up being his fault in the public's eyes. This government is doomed.

2 Comments:

Blogger the Wild Right said...

I saw this post and figured I'd point out that economists around Canada praised the government's move as the correct one. If you've read the budgets over the years you'd know the consequences of not closing the income trust loop hole. However, I more decided to respond to this over the fact that you said the government was doomed. Well your post was in 2007 and they won two elections after that. What do you think now of these kinds of predictions?

1:13 PM  
Blogger Ira said...

To be honest, I was intentionally staking out extreme positions to attract traffic. It was an experimental foray into blogging, one that was soon abandoned. If you'll notice, I haven't actually posted a new article here in years.

Though, looking back, I'd say that my primary error here was in misreading the political landscape. I didn't correctly identify the persistant and sustained decline of the Liberal Party, and I didn't recognise that the people mostly likely to be annoyed by the broken promise were the people least likely to support any of the other major parties. As I said in the post (quoting Stephen Harper, actually, from his time at the National Citizens' Coalition), "There is no public policy problem to which the proper response is higher taxes." People who think that tend not to vote Liberal or NDP.

Instead, I was looking at the CPC as still a new party, liable to break up or fall apart. Not only did I think (incorrectly) that this flip-flop could be used effectively by the opposition, but I thought (apparently also incorrectly, though this still surprises me) that the supporters of the new Conservative Party weren't yet wed to it, and would, if it showed itself to be something other than the party they wanted, form splinter groups again.

1:23 PM  

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