Corporate tax divide could send Ontario to the polls

Fullcomment.nationalpost.com
April 24, 2014 
By Scott Stinson

One can be forgiven for generally ignoring the statements issued by one party at Queen’s Park when one of the other parties makes an announcement. They are written in a style best described as “boilerplate hyperbole.” Party A proposes to do X? Well, says Party B, once again Party A has shown that it cannot be trusted: Its reckless plan would leave cities in ruins and babies abandoned at birth to fend for their pudgy selves. Only Party B would prevent this dystopian nightmare.

But sometimes these missives contain a notable sentence or two. One of them, courtesy of Transportation Minister Glen Murray on Wednesday, raised the prospect of a spring election from “probably” to “almost certainly.” Unless it didn’t.

I’ll explain. Mr. Murray was responding to the transit plan, of sorts, unveiled by NDP leader Andrea Horwath on Wednesday morning. Though it was scant on specifics, the centerpiece of the proposal was a “modest” increase in the corporate tax rate to fund transit infrastructure. Though it’s far from clear how a small CIT bump could provide anywhere near the funding needed by the $2-billion-a-year Big Move project promoted by the provincial transit agency — the GTA portion of a half-point corporate tax increase might raise a tenth of that — the NDP suggestion seemed to be in line with the thinking of the provincial Liberals.

After hearing from expert panels on the matter, Premier Kathleen Wynne  made clear she would not adopt suggestions for increases in the HST or gas taxes, thank you kindly, but did not rule out a corporate tax bump.

After all, the Premier’s recent speech on her $29-billion transit plan, with its revenue mechanisms to be announced later, noted that a corporate increase was one of the few “revenue tool” options left. How could her plan be “guided by the experts” if she didn’t use any of their recommended revenue-raising mechanisms? Does it count if they guided her to print it on paper?

But then came the statement from Mr. Murray, a few hours after Ms. Horwath had issued her letter to the Premier.

The NDP announcement, the Minister said “underscores what we already know about the NDP — our economy can’t afford their risky indecision and lack of a practical, coherent plan.” Pretty standard stuff so far. He noted that the NDP has already promised to dedicate revenues from higher corporate rates to a variety of proposals, which is a fair criticism. And then this: “This is not the time for across the board corporate tax increases that will dampen growth and further job creation.”

Hmm. This was, as far as I know, the first time a Liberal cabinet member has used language that would seem to explicitly rule out a corporate tax increase in next week’s budget. Asked if that’s in fact what Mr. Murray was saying, his spokesman said  the statement spoke for itself: “This was not the time for across the board corporate tax increases that would dampen growth” and so forth.

And that would mean the Liberal and NDP visions for transit would now be totally incompatible with one another. The latter wants CIT hikes, the former says no way. So, election it is.

But there are a couple of caveats here: First, Mr. Murray has taken bold positions before, only to walk them back in the days following. And second, if you parse the words closely, there is a degree of wiggle room there. The Transportation Minister said that “now” is not the time to raise the corporate rate. That would suggest it will remain at 11.5% for the 2014-15 fiscal year. But “now” could in theory not include next year. Could the Liberals find enough one-time revenue in the short term — from selling Ontario’s stake in General Motors, among other measures — to keep business taxes unchanged, but plan to allow an uptick beginning in 2015-16? It’s worth nothing that the government’s transit advisory panel recommended the increase kick in for that fiscal year.

True, it would seem rather disingenuous for the Liberals to blast the NDP for demanding a tax hike while planning to raise it themselves a year later. But government policy on this file has been, to put it charitably, fluid.

But if the government means what Mr. Murray’s statement implies — that corporate tax increases are unwise while the economy is recovering — then the Liberals and NDP would have irreconcilable differences on transit funding, and by extension the budget. In which case: get your voting pencil sharpened.