Flaherty should call Manitoba

Just over a week ago, Finance minister Jim Flaherty delivered his fall economic update to room of Toronto elites at the Albany Club.
The polite applause he received probably was the reason he chose to deliver that speech to his friends rather than to the democratically-elected MPs in the House of Commons, where he would have to face some serious questions about his abilities and the fact the Bank of Canada again is saying the economy is slowing under his watch.
Upon reading the minister’s remarks, three things really stood out for me. Mr. Flaherty is now saying his deficit last year officially was the largest on record, that this year’s deficit will be larger than he predicted just six months ago, and that he will run deficits through 2015–one year longer than we were told in the March budget.
What’s worse is that the finance minister still is refusing to accept any responsibility for the mess we are in.
No one will argue that the last recession was global in nature, and that the struggling U.S. economy was a drag on ours, but this finance minister manufactured our record deficits by recklessly cutting taxes, and corporate taxes, in particular, to the bone.
I think most people will agree that tax-cutting is not a bad thing, generally speaking, but most also would agree that this should be done only so long as we can afford them in the short-, medium-, and long-term.
However, this government cut corporate taxes by a staggering $60 billion over just five years. The fact that last year’s deficit came in at about $56 billion tells me this fiscal imbalance likely would not exist, or would have at least been several magnitudes smaller, if it were not for the misguided and reckless corporate tax cuts enacted by this finance minister.
Mr. Flaherty’s economic update also acknowledged this year’s deficit would be larger than he calculated just six short months ago, and that his timetable for the elimination of deficits was being pushed back by one year.
?Mr. Flaherty has never been correct about such matters, so that was not so surprising.
What was shocking, though, was his admission that the deficit this year is higher than he anticipated because of the transfer payments the Harper Conservatives doled out to Ontario and British Columbia to implement the HST.
That’s right. Not only did the Conservatives urge the provincial governments to increase our sales tax and give them $6 billion to follow through with it, they also had to borrow that $6 billion and are forcing us to pay interest on that money every year moving forward.
So, Jim Flaherty can’t see the deepest recession in a generation coming until it actually hits, is running the largest deficits in Canadian history because he has cut corporate taxes to the bone, and is making those record deficits larger still by borrowing money to increase our sales tax.
Does that sound like sound fiscal policy to you?
With the Bank of Canada sounding some alarm bells last week, and suggesting Canada is headed into more “uncertain” economic times, my simple advice to the finance minister is to pick up the phone and call the NDP government of Manitoba to ask them for guidance.
That government has found a responsible way to phase out and eliminate entirely the income tax for small businesses while balancing the books for 11-straight years—and avoiding a recession when Canada and the rest of the world fell into one.
Clearly this is the kind of responsible government we need in Ottawa.