Phendrana Drifts

Before I dissect the Liberal policy announcement today I would like to first say kudos to the opposition for actually introducing genuine, honest-to-blog policy. It is well-costed out, it presents its values front and centre and it does not resort to using vague promises of cost-savings from other departments or something otherwise disingenuous to tell people how to pay for it. It is a large carbon tax that will in turn pay for a income tax cut and a serious of other income-supplement programs. Good on them.

However, it is not a simple tax shift. And while I remain a fan of consumption taxes over income taxes, Dion and the Liberals miss a piece of basic math. An income tax cut plus new programs in exchange for a new tax is not a simple shift. Of the $15 billion policy, only $6.7 billion is an income tax cut and $3.3 billion is a corporate tax cut (and actually $500 million of that is lost revenue because the Liberals must be assuming that corporations will produce less profit and therefore pay less taxes). Of the remainder, $4.5 billion is new social spending. Given that the income tax cuts are weighted heavily to the lower end of the income scale as is the majority of the "Benefits for Working Families and Canadians" this new policy in fact is not a tax shift, but a state transfer of wealth from corporations and wealthy Canadians to poorer Canadians. Who will pay for this policy? It isn't polluters - it is the rich. Not that I have a problem with that - I mean I have strong opinions on economics and faith in the free market - but let's not gloss over the fact that is a tax and spend program, not a neutral policy meant to discourage polluting.

On the topic of discouraging polluting (which I'm not 100% convinced it will do), the policy doesn't seem to plan on success. $15.3 billion of revenue at $40 per tonne - what if there are less tonnes? I mean, that's fantastic and wonderful but how are we going to pay for all those cool new tax cuts and Liberal spending promises? I'm just saying...

Like the majority of the critics I think the price increases we are going to see will be far deeper and will be compounded by the fact that the things that will increase most in price as a result of the "green shift": fuel, energy, consumer goods, FOOD are all things whose price is escalating from other global pressures. The price of imported food is about to go through the roof and in a country where the diesel to transport that food will have an additional $0.07 a litre charge on the fuel that drives it to Safeway it is going to be even worse. I also can't imagine this is making the 2,000 laid off workers from Air Canada or the soon-to-be-former employees of GM in Oshawa feel any better about their plight, knowing that hundreds if not thousands more will be joining them.

I really want to like this policy more. I want to reward a political party - particularly one that does not have access to the vast bureaucracy of economists, policy analyists, lawyers and engineers that the government has - for a policy that honestly will probably see me better off and tries to tackle the problem of climate change. But Dion needs to do better to win the election. This policy is difficult politics that is going to need one heck of a salesperson and communicator to get Canadians on-side. As of yet, Dion has not proven to be that kind of guy.

Labels: climate change, federal politics

3 Comments:

At 7:05 AM, Toby said…

The plan is much better than I expected and I haven't seen a non-politico/pundit who has slagged it yet. It has impressive support from environmentalists and economists.

The sale job has been pretty bad so far. You never let discussion of your policy go on for that long without actually releasing the policy. And you don't give your policy a name that lets Jason Kenney say "Shift Happens."

That being said, can you remember a time when the governing party spent so much time talking about an opposition policy? I can - the Conservative childcare plan. And that wasn't such a stellar strategy for said governing party.

Looking at the Liberal vs Conservative ads you can't help but wonder about the old saying - If you audition for opposition you are likely to get it.

I'm confident Harper will eventually release a communications strategy that doesn't look like it was designed by a campus Conservative club, but until then spending so much time talking about the ideas of the opposition party seems to be unnecessarily legitimizing them.
At 4:36 PM, Six meetings said…

Well I enjoyed both the comment and the post. I think that the impact of price increases is being drastically underscored. With our central bank determined to manage inflation, a job they have done admirably, you can bet that this type of a policy will lead to upward pressure on interest rates. Higher rates will have a devastating effect on GDP growth, and I tend to think most economists are downplaying it. If you can separate those that work in the GTA from the rest of Canada you can see pretty clearly where allegiances lie. Anyways, it will be fun to watch this play out.
At 1:28 PM, Anonymous said…

In case you haven't heard:

The polluters are the rich.

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