Prime Minister Justin Trudeau, Deputy Prime Minister, Minister of Finance Chrystia Freeland and cabinet ministers pose for a photo before the tabling of the federal budget on Parliament Hill in Ottawa, on Tuesday.
Justin Trudeau’s Liberal government is veering to the left. They have determined that this is where the votes lie for them when an election is eventually called this year or next. They have put Jagmeet Singh’s New Democrats on notice.
The leftward tilt runs all the way through Finance Minister Chrystia Freeland’s budget Tuesday. It is there in the plans for government-supported housing. It is there in Freeland’s decision to ignore deficits. And it is particularly there in the Liberal government’s flirtation with tax reform.
The Liberals are taking aim at the practice of allowing the well-to-do to treat income as capital gains. This allows the wealthy to shield a good chunk of their income from taxation, a break that is not available to most workers and salary earners.
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Freeland’s proposed changes would limit the ability of high income earners to use the capital gains break. It would affect only the richest of the rich — the top one cent of income earners. As Trudeau put it Wednesday, it would force these well-to-do Canadians to “pay their fair share.”
History shows that this modest goal will not be easy.
The Liberals have tried before to reform the tax system. The most serious attempt, mounted by former prime minister Pierre Trudeau and his finance minister, Allan MacEachan in 1981, would have made the tax system markedly fairer by limiting the use of capital gains.
But the 1981 attempt soon ran into a buzz-saw of opposition. Big business argued that tax increases of any kind would harm productivity.
More importantly, small business attacked the proposed reforms as communistic. Lobbies formed across the country. From hockey players to accountants, Canadians clocked in to vilify tax reform. It was, said one prominent opponent, “a bag of snakes.”
In the end, the Liberal government killed tax reform. MacEachan resigned. Wealthy Canadians continued to use the capital gains tax break to shield their income from the taxman.
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Until now. Now, it seems, the Liberals have rediscovered the capital gains tax break as a target in their campaign to present themselves as the champions of ordinary Canadians.
Those who disagree are admonished for putting their self interest ahead of the general good. At Wednesday’s caucus meeting Trudeau urged his party to be generous toward young people, even if that generosity resulted in higher taxes for the wealthy.
The Liberals are setting out on this leftward course at a time when the NDP appears unusually confused. Singh has largely ignored the capital gains controversy. Instead, he blasts the government for failing to take on “corporate greed” — whatever that means.
On the climate-change front, Singh has sent out equally contradictory signals. Sometimes he says he supports the Liberal carbon tax. Sometimes he suggests he opposes it.
On the foreign affairs front, the NDP confusion continues. It has called on the government to recognize Palestine as a state. And it has also called on the government to do no such thing.
Now that the Liberals have made it clear that they are heading leftward in the next election, the New Democrats are left in an unenviable position: What is the point of Singh’s NDP? If the Liberals are willing to support leftish policies, ranging from tax reform to limited pharmacare, why not just vote for them?
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