Walkom: The political necessity of Morneau’s tax reform plan

Justin Trudeau’s agenda has stalled. On issues ranging from peacekeeping to climate change, the prime minister’s Liberal government is treading water. It needs to show it can get more done.

Hence the government’s stubborn insistence on pushing ahead with Finance Minister Bill Morneau’s modest – albeit controversial – tax reform plans.

In the first months following its election two years ago, the Trudeau government was a whirlwind of activity. It negotiated a health accord with all of the provinces and a climate change accord with most of them.

It outlined bold plans to recast the relationship between Ottawa and Indigenous peoples. It promised a return to United Nations peacekeeping.

It began work on so-called democratic reform plans designed to revolutionize the system for electing MPs.

It completed talks, begun by the previous Conservative government, for a comprehensive economic and trade pact with the European Union.

It expanded Canada’s on-the-ground military role in the war against Daesh.

It shifted some of the tax burden from the rich to the not-quite-so-rich and replaced a universal child benefit system with one based on income.

It expanded the Canada Pension Plan and rolled back Conservative measures that had raised the age of eligibility for Old Age Security.

As all of this was going on, the American public chose to elect Donald Trump president – a decision that put the North American Free Trade Agreement between Canada, the U.S. and Mexico in jeopardy and forced Ottawa to reorder its priorities.

The new Trudeau government was busy.

But not all of that hustle and bustle translated into action.

The democratic reform plans were summarily dropped. The oft-promised UN peacekeeping role has still not yet materialized.

Experts say that the centrepiece of the climate change accord – a national carbon tax – won’t be enough to let Canada reach its promised emission reduction targets.

In any case, those promised targets aren’t enough to forestall global warming.

Trudeau’s vision of a grand bargain between fossil-fuel proponents and foes that would give “social licence” to crucial oil pipelines has foundered on the reality of politics in British Columbia and Quebec.

In these two provinces, essential for any pipeline aimed at bringing Alberta heavy oil to the Canadian sea coast, it seems there is no social licence to be had.

Meanwhile, Trudeau’s ambitious Indigenous agenda has ground to a halt as the new government comes face to face with the complexity of the issues at hand.

Ottawa’s response, a massive bureaucratic reorganization, may be useful in the long run. But it is unlikely to provide quick relief.

For a government getting ready to face the electorate in two years, this is a problem. Trudeau needs to demonstrate that he still has the chops.

In particular, he needs a success to burnish his claim that this government is committed to helping the middle class.

For Trudeau, tax reform is the necessary adjunct to free trade. As he said once to the Star editorial board, liberalized trade may create wealth but it does so unevenly. The trick is to share the gains from globalization more equitably. The mechanism for doing this is tax reform.

Which is why the Liberals promised, in their 2015 election platform, to take aim at tax breaks that favour the rich.

They have already broken one campaign pledge – to eliminate tax breaks for corporate executives paid in the form of stock options. They need something in its stead.

Morneau could have opted for comprehensive tax reform. He could have taken aim at the entire panoply of breaks written into the income tax act.

Wisely perhaps, he didn’t. Allan MacEachen, the last finance minister who tried that gambit, raised such an outcry from enraged special interest groups that he was forced to beat an ignominious retreat.

By contrast, Morneau is trying to limit his enemies to just one category – well-heeled professionals who incorporate themselves as small businesses simply to pay less income tax.

Even this is politically dangerous. But for a government desperate to present itself as the tribune of the middle class, it is also politically necessary.

Thomas Walkom is a national affairs writer.

Just Posted

Finance Minister Bill Morneau talks pot bucks with provincial counterparts

OTTAWA — Finance Minister Bill Morneau can expect a lot of provincial… Continue reading

Canadians swindled out of $1.7M via cryptocurrency scams this year to date

TORONTO — Canadians have been swindled out of than $1.7 million via… Continue reading

VIDEO: Replay Red Deer Dec. 10

Watch news highlights from Red Deer and Central Alberta

UPDATE: Train hits hydro pole, causes outage near Deltaport

No injuries reported but traffic in and out of Deltaport is blocked

VIDEO: Replay Red Deer Dec. 10

Watch news highlights from Red Deer and Central Alberta

VIDEO: B.C. to end geographic area rent increases, close fixed-term lease loopholes

Both clauses allowed landlords to raise rents above the max annual allowable rent increase

UPDATE: Train hits hydro pole, causes outage near Deltaport

No injuries reported but traffic in and out of Deltaport is blocked

A Red Deer daycare coordinator wins provincial award of excellence

Nicole Morrell is a coordinator at Johnstone Daycare

Holiday shopping season picking up in Red Deer

With 18 shopping days left until Christmas, Red Deer businesses are cautiously… Continue reading

Gord Bamford Foundation adds more beneficiaries

The Gord Bamford Foundation has added more names of charities that will… Continue reading

Red Deer astronomer witnesses unknown object in the sky on Tuesday

It could be space junk in our atmosphere, says the expert

Red Deerians tax scam victims out thousands of dollars each

In the last few days Red Deer RCMP has received 30 tax scam reports

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month