Little Fish in a Giant pond

Friday, June 27, 2008

The Best Laid Plans of Mice and Liberals

I've been meaning to post about St├ęphane Dion's ambitious new plan to fight climate change for about a week now, but I've been busy with the bar course and preparing a move to my new apartment, so life just keeps getting in the way!

Anyways, I've got to say that at least on paper, The Green Shift looks good so far. The gist of the Liberal plan is basically to introduce a carbon tax that will encourage private companies to cut their production of CO2 in order to save costs. It also includes a tariff on goods being imported from other countries that do not have a similar program, in order to encourage other countries to do their part for the environment, and also to ensure that Canadian goods remain competitive.

Inevitably, the implementation of such additional taxes on their own would basically amount to less money in all of our pockets and frankly, now that I'm no-longer in university and will soon be paying taxes, paying more taxes is not a good thing! Fortunately, the plan also includes a 10% tax cut, for the lowest income tax bracket (such as yours truly!), and a 3.8% tax cut for the middle class tax bracket. It also includes replacing the current $1000 emloyment credit with "a $1850 refundable refundable employment credit targeted at those Canadians who earn less than $50,000 per year". According to the plan, this will put up to $250 back in my pocket. The plan also contains additional goodies for Canadians living in rural and northern areas.

All in all, it's a pretty impressive plan. The problem? Frankly, the Leader of the Official Opposition is going to have a hard time selling this plan to Canadians. It's not that Canadians don't care about the environment, or that they run and hide everytime they hear the word "tax", as the Prime Minister would have us believe. The problem is that people have heard this before. Jean Chr├ętien's failure to get rid of the GST is still very fresh in the minds of Canadians, and even though Prime Minister Harper has done an about face on many of the positions he took as Leader of the Official Opposition and during the last election, he did make good on his promise to reduce the GST.

There's also the fact that Dion himself once opposed the introduction of a carbon tax. He said he would never introduce one, and that it was "bad policy". To be fair, if memory serves me, he was being questioned about a bare bones carbon tax on its own, and there was no discussion of offsetting the carbon tax with major income tax cuts. But still, most people aren't aware of these little details and the Tories can be counted upon to use their sound bites to chip away at Dion's credibility. I can't really say that I blame them.

There is some hope though. Here in Ontario, Premier Dalton McGuinty took a lot of heat for introducing a health tax, after promising that he would not raise taxes. McGuinty was able to defend himself with an independent auditor's report which found that the previous Conservative government had mistakenly calculated that it was running a surplus and that the province was in fact running a deficit. That, combined with some huge Tory blunders led to the Conservative defeat last fall.

Simply put, it's all a question of marketing. Dion is going to have to persuade Canadians that this is a good plan, that their taxes won't be affected, and most importantly, why he has changed his position. It is a tall task to be sure, but he has all summer to give it his all.

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