Tories fall into Trudeau’s tax trap: Watt

Tories fall into Trudeau’s tax trap: Watt

Jaime Watt

As Parliamentarians made their return to the House of Commons this past week, there was a marked difference in the moods of Liberal and Conservative members.

Andrew Scheer’s Conservatives were cheerfully optimistic about their future, while Liberal government members were considerably less upbeat.

The reason: the federal government had just endured weeks of critical commentary from media outlets and interest groups from across the political spectrum and the country itself.

In mid-July, Finance Minister Bill Morneau announced the government intended to overhaul the system under which Canadian small businesses pay tax, cracking down on “loopholes,” including income splitting, and the taxation of passive income held within a business. The government’s said the changes would affect roughly 50,000 families across Canada — no small adjustment.

The resulting media attention was widespread and highly negative for the government.

The announcement sparked one critical headline after another, coverage that was helped by high-profile campaigns by professional associations like the Canadian Medical Association and the Canadian Bar Association, whose members benefit greatly from the current tax regime.

Stories sympathetic to independent business owners proliferated, describing the challenge the changes would pose to their existence in the gravest of terms.

The media circus even began to undermine caucus solidarity among the Liberals with several MPs making their criticisms public; never a positive sign as many a veteran politician will tell you.

So, it’s hard to blame the Conservatives for being so thrilled. After all, they have had precious little to cheer about since their October 2015 defeat. Their long leadership race to replace Stephen Harper coincided with glowing, almost “criticism-free” coverage of Prime Minister Justin Trudeau. Many partisans were left to wonder if they were now in the beginning stages of a long stint on the Opposition benches.

Then, the Conservatives spotted, what they thought, was a winning opportunity in this tax issue. They then used this fracas to focus MPs and hammer Prime Minister Justin Trudeau in Question Period. They have even been inspired to launch an advertising campaign blasting the proposed changes.

And yet, none of this has budged Trudeau or altered his approach. And it seems that while unusual, the Prime Minister’s approach is an astute one.

It is well accepted that the last U.S. presidential election demonstrated there is a latent fury among citizens who feel their system is fundamentally rigged in favour of the privileged.

That belief that the game is rigged in favour of the rich is true here in Canada as well. And it is growing.

While it may seem as though there has been less turbulence here, that is because of some structural differences between our countries.

The American system was built to be highly susceptible to changes in mood. In Canada, political parties exert far more central control.

As well, in America, markets are large enough to sustain alternative media points of view for long enough to ferment a wider audience. American political culture is also strikingly more public-facing than it is here.

But that doesn’t mean the same turbulence doesn’t roil underneath Canada’s seemingly politically serene culture.

Canadians believe the system is rigged just as much as Americans do. They believe rich Canadians don’t pay their fair share of tax, and that the system delivers advantages to the privileged that are not available to them.

Canadians of all political stripes, of all demographic groups and from all over the country believe this. No amount of campaigning by doctors and lawyers will convince them the wealthy will be unduly hurt under a new tax regime; in fact, these campaigns may be more likely to push Canadians toward the Liberals.

The Conservatives have fallen into the trap of defending a group of privileged Canadians and allowing themselves to be boxed in against the middle class.

It seems that Justin Trudeau has adopted a lesson Donald Trump taught us all in 2016: conventional commentators, more often than not, are drastically out of touch — and leaders should trust their instincts.

Jaime Watt is the executive chairman of Navigator Ltd. and a Conservative strategist.

(As published in The Toronto Star on September 24, 2017 and OurWindsor.ca on the same date)