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On with the show, this is it!

By John Williamson
web posted August 18, 2008

Stephen HarperFederal politics is beginning to look a bit like the Looney Tunes.  Stephen Harper has somehow held together a minority government since 2006 and is playing the crafty Road Runner.  Stéphane Dion meanwhile is acting the hapless Coyote.  The Opposition leader can't get a break and doesn't appear to understand why.  Like the cartoon character he is caught between a rock and a hard place.

There is no position Mr. Dion hasn't turned from to avoid an election.  Canadians are therefore left wondering what's next for Prime Minister Harper.  For the third time in as many years he is expected to advance a new governing agenda when Parliament returns in September.  

By working with the opposition, the Conservatives passed most of their original election promises.  The Federal Accountability Act was enacted; the GST was reduced from 7% to 5%; a proposed state-run daycare scheme was replaced with a universal child care allowance; and medical wait-times guarantees were established (but more importantly provinces were permitted to quietly experiment with medicare reform).  Some legislation to get tough on criminals was passed while other crime bills were repeatedly stymied by the Liberal-dominated Senate.  

The federal government's second set of priorities were unveiled last October.  A throne speech announced Canada could not meet its Kyoto targets to reduce greenhouse gases and less onerous goals were needed; it made Senate elections a priority; and signaled Ottawa would lower taxes on families and businesses.  With help from the opposition the throne speech passed as did the subsequent economic update and budget.  Together, they dramatically reduced business taxes, shaved the bottom personal income tax rate by half a point, and created new personal tax-free savings accounts.  All along the party of Wile E. Coyote howled in protest, ducked and dodged, but supported the government by abstaining from key votes in the Commons.  Beep-beep!

The government is again looking for fresh ideas.  Since Prime Minister Harper does not appear worried by Liberal threats to force an election, he should continue advancing legislation favoured by taxpayers.  Start by lowering tax on fuel to give Canadians a break.  Such a move would help family budgets and force taxpayers to consider the benefits of the Liberal plan to make energy more expensive with a carbon tax.  Another smart proposal is to reduce and harmonize employment insurance tax rates paid by businesses and workers.  This would eliminate the program's massive annual surpluses and lower the cost of hiring and retaining workers.

Senate reform might put some people to sleep, but many voters do not appreciate being governed by unaccountable and non-elected lawmakers.  Let the Grits defend the status quo if they choose.  Ditto for Canada's public service, which has seen its costs balloon by an astounding 50% since 1999.  Ottawa should pass a law to ensure the public sector does not expand faster than the population.  Such a reform was recently enacted in Saskatchewan.  Why not in the nation's capital?

And is a government monopoly still necessary to distribute paper around the country?  The postal service should be opened to competition.  As well, a number of Crown corporations -- such as Purolator Courier, CMHC and VIA Rail -- should be sold with proceeds applied against Canada's $457-billion debt.  Debt retirement remains popular among Canadians and the goal should be its elimination.  Ottawa should enact a debt repayment schedule and make it law.  

We now know taxes can be lowered.  The 2008 budget proposed a modest spending increase of 3.4%.  Yet, during the first two months of the fiscal year Ottawa increased spending by a whopping 7%. If Ottawa has that much dough to spend it can return some to taxpayers by reducing income taxes.

Canadians pay more personal income tax than the French and Italians, despite being neighbours to lower-taxed United States.  Income taxes in Canada are complex, relatively high and create significant economic distortions.  The Conservative government should consider the impressive tax reforms on offer in New Brunswick.  A discussion paper recently released by the province's Liberal government proposes replacing its four provincial income tax brackets with two rates of 9% and 12% or a single-tax rate of 10%.  The Conservatives should similarly press the tax reform agenda by swapping Ottawa's four federal brackets of 15%, 22%, 26% and 29% with two rates of 15% and 25%.

When the Prime Minister seizes the legislative initiative, he governs well.  The Liberal plan to raise energy prices with high taxes as a way to win votes is a Coyote-like plan that might as well have sprung out of an ACME box.  It is unlikely to dislodge the Conservatives from government.  In the meantime, taxpayers hope Mr. Harper is ready with taxpayer-friendly legislation that test Mr. Dion's readiness to pull the pin. ESR

John Williamson is federal director of the Canadian Taxpayers Federation.






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