This article is published by National Post, Full Comment on May 5th, 2015. Click here to read the article.
Justin Trudeau’s first major foray into election giveaways has a number of positive attributes.
The tax cut he proposed Monday, coupled with a richer child benefit, is simple, straightforward and easy to understand. Everyone thought Prime Minister Stephen Harper had (once again) been deviously clever in engineering his own child-care plan so that nice juicy cheques would start arriving in the mail in mid-summer, just as the October election campaign gets going. Now the Liberal leader can counter that his cheques would be even fatter, and come with fewer strings attached. Under Trudeau’s plan you don’t have to be in the middle class to get a cheque. You just have to aspire to it. A family with three kids and earnings of $45,000 would see a 33% jump in income under the plan.
Everyone can understand a tax cut and cheques in the mail. Nonetheless, the Liberal proposal isn’t the ticket to Sussex Drive they may have hoped. In throwing money at two important voting groups, they’ve reduced their ability to cozy up to others. Liberal strategists must have spend many hours calculating whether they would create enough winners with Monday’s offering to offset the losers they would be creating – and upsetting – at the same time.
Foremost among these may be seniors. There are a lot of seniors in Canada. Not only do they tend to be well-versed and attentive when it comes to politics, but they turn out to vote in large numbers. The Conservatives knew exactly what they were doing when they pledged to double the maximum contribution to tax-free savings accounts, which appeal strongly to seniors. Overall, two-thirds of Canadians say they support the TFSA plan; among seniors that is especially so.
To finance his child-care plan, Trudeau has to cancel the TFSA proposal, which won’t play well at all among late-stage boomers in the 55 + age group. They don’t have small children, they managed to raise families without Justin Trudeau’s help, and they’re worried about having enough to live on as they age. Having the millionaire trust-fund son of Pierre Trudeau snatch away a popular savings plan may remind a lot of people of the elder Trudeau’s ill-received question to Saskatchewan farmers: “Why should I sell your wheat?” And why should his son fund their retirements?
On Monday Trudeau said he’d jettison two expensive Conservative proposals: the TFSA increase, and income-splitting for families. He’d use all the money that saves to fund his tax cut and child benefit. Unless he finds something else to cancel, there’s no money left for other goodies, despite all the markers he’s laid down since becoming leader two years ago. While careful to make no firm commitments, Trudeau has portrayed his Liberals as the caring face of Canada, the ones who would funnel money to municipalities, spread infrastructure projects across the land, eliminate the squeeze on health care and foster a new world of environmental protection.
He also held himself out as the champion of retirees. In an October speech to the Canadian Association of Retired Persons, he decried the “mean-spirited” Conservatives and their “attacks on seniors”. He vowed to “work with the provinces” to “enhance” the Canada Pension Plan, code for increasing the payout to retirees. He also declared that “Canadians need to save more now,” to ensure dignity and security in the later years. Yet he’s now committed to cancel a popular savings plan, and made no mention Monday of his CPP promise.
Where’s the money to come from? Having already promised a “soak the rich” tax to finance his tax cut, despite previously promising not to raise taxes, he can’t go back down that road without risking dire consequences. There are always places to save money: defence procurement is one area crying out for someone to take away the credit card. But each cutback produces new dangers from powerful interest groups, and the Liberals have particular baggage to worry about when it comes to starving the military.
There are still six months to the election, and the Liberals say there are more announcements to come. No doubt there will be goodies for seniors somewhere in the package. They question will be how they propose to pay for whatever comes next, while sticking by their commitment to maintain a balanced budget. If every new promise means cancelling someone else’s benefit, it will be a delicate balancing act to maintain.