Liberal record on taxes is a wash

By Kyle Carruthers

The meme of the “tax and spend liberal” has long been a convenient and powerful one for conservative politicians wanting to appeal to those centre-right swing voters who believe that government takes more than its fair share of our hard-earned money.

There is a perception among a certain segment of the electorate — a perception which has been around longer than I have — that Liberals just keep raising your taxes every time they come into power. There was a time when it was true. For a time after World War II, taxes went up and up and it was Liberal governments that presided most of these increases.

But the legacy of the past few decades have not necessarily supported this notion, at least not for governments affecting the Yukon.

The Chretien Liberals — who governed federally for 13 years — cut taxes in some places and raised them in others. The record was so mixed and their tenure so long that commentators can’t agree on the overall thrust of the changes. Here in the Yukon, Liberals haven’t really had enough time in office to establish any sort of track record with two short stints in office.

But the meme sticks. And lately, conservatives have been successful in turning even the whiff of a new tax — be they trial balloons, bureaucratic overreach or pro forma legislation — to reinforce this perception.

The Canada Revenue Agency recently created a stir when it announced — allegedly without any knowledge by its political masters — that they would be reversing policy and taxing employee discounts. Such a change in policy rightly struck Canadians as petty, cumbersome to administer, and destined to hurt lower-income Canadians working in retail and service industries.

The Liberals quickly nixed the idea but damage had already been done. The perception that Liberals want to nickel and dime taxpayers was reinforced in the minds of voters. (It also made it look like the Liberals don’t have control over what is going on within their own departments.)

This followed damage done to the brand earlier this year when rumours began to circulate that the Liberals intended to tax employee health benefits. This idea was also rejected although it was never clear if this was some sort of “trial balloon” leaked by the Liberals themselves to see how such a move might be perceived, or the kind of routine bureaucratic advice doled out to politicians and leaked to the media but never taken seriously by the party.

Locally, a row flared up here in the Yukon last week when it was inferred that powers contained in new legislation governing airports were a back door way to introduce an airport improvement fee. The legislation — part of a comprehensive statute to fill a legislative void with respect to the regulation of airports — contained a provision allowing cabinet to make regulations “respecting fees, rates and charges for the use of public airports and for the use of services at public airports.”

It seemed patently obvious to some that this was a deliberate precursor to the introduction of a new fee. As one tweeter noted to me “Can you think of a government that created the opportunity to tax without using that ability?”

But there is important context here: the provision was part of a comprehensive legislative package to regulate airports and no new fee has actually been announced. Similar provisions in statutes regulating airports exist in all other jurisdiction. And numerous territorial statutes including the Land Titles Act, the Environment Act, the Motor Vehicles Act (I could go on) give cabinet the power to set fees through regulations.

Personally I will defer any anger until a fee is actually announced — which as of this writing it has not. More importantly, the minister responsible for airports, Richard Mostyn, stated categorically that no such fee was being planned — an odd assurance if one was in the works. If the Liberals were trying to introduce an airport improvement fee on the sly they are doomed to fail. Whether introduced through legislation or regulation the public will know.

This followed closely on the heels of another wound suffered by the Yukon Liberals when its blue ribbon Financial Advisory Panel suggested a territorial sales tax as a way to close the budget gap — paid in part by visitors to the territory. The Liberals have to own this one more than any phantom airport improvement fee as the panel had their blessing to explore ways to close the territory’s fiscal gap. And so far the Liberals have not rejected to idea outright.

So what is the actual Liberal record on taxes these past few years?

There has certainly been a fair amount of shifting around of the tax burden around at the federal level. The federal Liberals eliminated income splitting and several other smaller tax credits, hiked taxes on those with incomes over $200,000 and are moving forward with (slightly tweaked) changes to the taxation of small businesses. There are also plans to increase CPP premiums in the long term but those increases will occur slowly and not start until 2019. And while controversial, the question of whether the carbon tax will increase government revenues will fall entirely to the provinces and territories.

On the other side of the ledger they also reduced the second lowest bracket, and substantially enhanced cash benefits to middle- and low- income parents early in their mandate. Now they have (perhaps cynically) announced a cut in the small business tax rate.

Here in Yukon? No new taxes so far. And while it falls short of what was promised in the last election we did see a cut in the small business tax rate.

With all these rumours and suppositions about taxing airline tickets and employee discounts, it is important to keep what has actually happened in perspective. And reality hasn’t really aligned with popular perceptions on the right.

Kyle Carruthers is a born-and-raised Yukoner who lives and practises law in Whitehorse.

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