The federal government flubs the politics of tax reform

The federal government flubs the politics of tax reform

The federal government has gradually been trimming their fair taxation proposals. They are trying to focus on the top 3% of Canadian Controlled Private Corporations and are backing off on taxing so-called passive investments.

Unfortunately the federal government seems to have completely botched the politics of tax reform. In fact, the media and opposition focus is mainly on Finance Minister Bill Morneau’s personal finances. As mentioned in a previous post, the federal government’s tax reform proposals won’t touch the biggest tax avoidance mechanisms of stock options and capital gains. Mr. Morneau (and Mr. Trudeau) seem to be beneficiaries of these tactics. And, he didn’t put his assets into a blind trust as was recommended by the ethics commissionaire. On Thursday he announced he would donate any money he has made to charity. But the public discourse seems to have moved away from tax reform and is now focussed on Morneau’s fight for political survival.

Some commentators think Morneau was brave to try tax reform at all, but the federal government’s political ineptitude might stall meaningful tax reform for several years.

We have been recently reminded that economic fairness goes well beyond fair taxation. As Linda McQuaig outlined this week, Sears Canada’s demise left thousands of workers with no pensions while the US based owner paid himself huge dividends and drained the company of hundreds of millions of dollars. McQuaig points out that the workers’ plight was not so much an act of nature as one of laws biased to the well-to-do.

Another Toronto Star columnist, Tom Walkom notes that we also need to expand the Canada Pension Plan to protect workers’ retirement benefits.

The fight for economic and social justice is never smooth. We need a broad and long perspective to make Canada a more equitable country.