Tax cut already cost Charest

Liberals paid for promise at the polls and in political capital in Ottawa

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by L. IAN MacDONALD
The Gazette, Friday, May 25, 2007

Jean Charest has already paid for the middle-class tax cut in yesterday's budget - out of his own political capital.

He paid for it dearly in the last week of the campaign, in Quebec, in Ottawa and in the rest of the country.

And now, if the opposition parties can be believed, he may pay even more for it. But in any case, it has already proved to be an unfortunate promise.

In Quebec, the $700-million tax cut pledge, on top of $250 million in the February budget, simply reminded voters of previous broken tax promises, $1 billion a year, of his first term.

In Ottawa, the Harper government had no advance warning that Charest was taking $700 million of fiscal-imbalance money from taxpayers in other provinces and giving it to taxpayers in his own province.

In the rest of the country, the blowback was immediate and intense. It's one thing to bribe the taxpayers with their own money, quite another to bribe them with other people's money.

Charest's tax-cut promise was made on the backs, and out of the pockets, of taxpayers in other provinces. This simply aggravated their annoyance about equalization payments to Quebec to subsidize lifestyle choices such as $1,668 university tuition and $7-a-day child care, neither of which is remotely available anywhere else in Canada.

It was all very inconvenient for the Harper Conservatives, who had promised to fix the fiscal imbalance in the name of open federalism. They didn't have any constitutional issue with equalization money being used in this manner - it can be used to equalize fiscal frameworks as well as government services such as health care.

But the Harper government did not bother to conceal its disappointment with Charest. As Finance Minister Jim Flaherty put it in an interview with Policy Options last month: "From a political perspective, it looks like it didn't help Mr. Charest. It may, in fact, have harmed his party, and it was certainly not helpful in the rest of the country."

If only Charest had packaged it differently, as part of a hard-won $2.3 billion of additional funding from Ottawa, much of which could have been earmarked for worthy causes such as higher education.

But Charest decided to focus on the $700-million tax cut, making it a whole different story, and focusing attention in the final days of the campaign on the broken tax promises of his first mandate.

This was his decision, and his alone, and was typical of the lousy campaign run by the Liberals - bad retail, bad creative and no message. It was the main reason Charest's poll numbers went soft in the final days of the campaign. At the very moment he was trying to close the deal for a majority government, voters were moving away from him to Mario Dumont. It was Dumont who got Robert Bourassa's famous ballot-box bonus, coming in four points higher than his 27 per cent in the final polls , while Charest came in four points lower than Liberal projections of 37 per cent.

In the circumstances, Harper had no choice but to go along with Charest's tax-cut announcement, coming as it did six days before the election.

While Harper was no less relieved than Charest by an outcome that left the federalist Liberals reduced to a minority but still in power, the truth is the prime minister could not have done have anything more to help the premier's re-election bid.

But Harper had a second horse in the race, and as opposition leader in the legislature, Mario Dumont has considerably more leverage with Ottawa than he did as leader of an unrecognized third party in the National Assembly.

For one thing, the next time Dumont goes to Ottawa, or the next time Harper comes to Quebec City, there will be a photo-op of the meeting, and not a stealth media availability in a basement press theatre, as was the case when Dumont saw Harper before the election.

For another, the Conservatives will be more than happy to give Dumont a high-profile meeting. Harper wants to walk in Dumont's footprint, the crucial battleground of 50 federal ridings off the island of Montreal.

It also suits their purpose to send a message to Charest and the Quebec Liberals. Not that things can't be patched up, but that there is some patching to do.

For example, on the environment, Harper gave Charest $350 million for climate change, more than Quebec was asking for. Then when Ottawa announced its climate plan, Quebec Environment Minister Line Beauchamp lined up with Al Gore to say it was inadequate.

Federal environment minister, John Baird plays by the hard rules of the game. The next time he goes to Quebec City, he may well meet Mario, not Line. It's a a new game, with new rules.

 
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