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Dispute over tax cuts hallmark of resumed Parliament

Prime Minister Stephen Harper speaks during Question Period in the House of Commons on Jan. 31, 2011.


The politicians are back, but they appear to be terminally at loggerheads over tax cuts, with the party leaders reciting their lines for a possible March election call.

As Parliament resumed after a seven-week recess, Stephen Harper's Conservative government laid out a slender agenda for the next five months:

Members should ratify trade agreements with Panama and Jordan.

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They should pass legislation that would inter refugee claimants who arrive en masse by boat - to prevent "turning Canada's shores into a parking lot," as Dimitri Soudas, the Prime Minister's director of communications, put it.

They should send a bill that would toughen prison sentences for the worst offenders off to the Senate for approval.

And they should pass the budget that Finance Minister Jim Flaherty said would be unveiled in March. That won't be so easy.

The Liberals and NDP clung to a single theme in attacking the Conservatives during the first Question Period of 2011: Why are you giving lavish tax cuts to big corporations instead of using that money to "put kids through postsecondary education and look after their moms and dads in their homes" (Liberal Leader Michael Ignatieff); "train more family doctors and nurses" (NDP Leader Jack Layton); reverse a decision to "cancel funding for successful anti-gang programs," in Winnipeg (Liberal MP Anita Neville); and so on.

The Conservatives insist they don't want an election and won't force one, and as a gesture of good faith promised that no bills that come up for a vote in this session will be considered a matter of confidence, meaning the government would be defeated if the bill was voted down.

The budget is the obvious exception, of course; a government whose budget is defeated is defeated. And on the question of tax cuts, the parties are polar-opposite opposed.

The Conservatives insist that reversing a staged series of corporate tax cuts announced and implemented in the 2007 budget would lead to corporate confusion and lost jobs.

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"It's dangerous to create uncertainty in a fragile business and economic environment … by saying, 'Oh well, we will raise these taxes going forward,' " Mr. Flaherty said in the suburban Toronto riding of Vaughan, where he gave the latest update on the Conservatives' $60-billion economic stimulus program. "We're going to stay on our low-tax plan and if others want to advocate a higher tax plan, that's their choice."

To which NDP MP Thomas Mulcair responded that his party had voted against the tax cuts in 2007 and would almost certainly do so again. "It made no sense then and it makes no sense today," he said outside the House.

Both sides agree it's a debate about jobs. Conservatives see tax cuts as the best way to position Canada as an attractive place for investment. The opposition argues there are better ways to boost employment. Still others, including Laval economist Stephen Gordon, argue the debate has nothing to do with job creation even though lower corporate taxes do boost investment and wages.

The basic problem in sorting it all out is that it's impossible to say with certainty how many jobs declining corporate tax rates create.

In an interview, Philip Cross, the chief economic analyst for Statistics Canada, said the agency has never studied the economic impact of corporate tax cuts, nor will it, because it is impossible to measure with precision.

"It just gets mixed in with so many other things," he said. "It doesn't mean it's not important. … It's just saying we can't measure it precisely enough."

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All this will be grist in an election, which the opposition parties will attempt to make all about corporate tax cuts and which the Conservatives will attempt to make all about leadership and trust in managing the economy.

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About the Authors

John Ibbitson started at The Globe in 1999 and has been Queen's Park columnist and Ottawa political affairs correspondent.Most recently, he was a correspondent and columnist in Washington, where he wrote Open and Shut: Why America has Barack Obama and Canada has Stephen Harper. He returned to Ottawa as bureau chief in 2009. More

Parliamentary reporter

A member of the Parliamentary Press Gallery since 1999, Bill Curry worked for The Hill Times and the National Post prior to joining The Globe in Feb. 2005. Originally from North Bay, Ont., Bill reports on a wide range of topics on Parliament Hill, with a focus on finance. More

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