Canada's Prime Minister Justin Trudeau speaks during Question Period in the House of Commons on Parliament Hill in Ottawa, on Dec. 3.Blair Gable/Reuters
The Trudeau government spent a lot of time congratulating itself last week after it teamed up with the NDP to push a bill through the House of Commons that will give Canadians a two-month holiday on the federal sales tax, a.k.a. the GST.
Prime Minister Justin Trudeau boasted on social media that a burger and a pint in a pub would be cheaper from Dec. 14 to Feb. 15, and taunted the Conservatives for voting against the measure.
The whole thing was rife with politics. The Liberals’ last-minute embrace of a tax holiday induces that clammy feeling that the move might just possibly have been announced more for the headlines and attack ads than the savings, carrying over as it does into an election year.
Not that voters won’t be happy with a drop in the price of kids’ clothing and toys, in beer and wine, in Christmas trees, in restaurant meals and prepared foods, and more besides.
But beyond the odour of populist desperation, there is another problem with the Liberals’ tax break, and that is its trademark lack of thought and preparation.
Too often, the government has announced measures that didn’t live up to their billing, either because the Liberals didn’t anticipate obvious consequences that compromised the measures’ effectiveness or simply because, for the sake of a headline, they rushed things into being too quickly.
You can put the GST break in the latter category. The Liberals waited so long to play Sales-Tax Santa that the measure won’t take effect until 11 days before Christmas. Small business owners are waking up to the reality that it will cost them thousands of dollars to make complicated adjustments to their point-of-sales equipment and that the late start will mean a crush of last-minute purchases.
The same lack of forethought applies to the other half of the Liberals’ off-the-cuff relief package: the $250 cheques they promised every working person who filed taxes in 2023 and made less than $150,000. The enabling legislation is on hold because the government failed to anticipate a backlash from retirees, students and people with disabilities, who are cut out of the largesse. The Liberals can’t get enough support in the House to move ahead with the plan and have had to drop it, at least for now.
It was another Liberal tax measure – the increase in the capital-gains inclusion rate announced without warning in the 2024 budget – that epitomizes this government’s current streak of poor planning.
The measure, announced in April and meant to take effect just 10 weeks later, has become an utter hash. A months-long filibuster by the opposition over the Liberals’ failure to respond fully to a document production order has prevented the government from introducing the required legislation. The Liberals have meanwhile announced changes to the measure in response to criticism. The Canada Revenue Agency now says it can’t have the required tax forms ready until January, which means some people could be in breach of the law, which requires them to file by year-end.
Another classic of the genre is the Liberals’ underused housing tax (UHT). Marketed as proof of their determination to fight foreign real estate speculation and to raise money to build affordable housing, it had brought in just $74-million as of mid-June of this year. Worse, 98 per cent of the 670,000 UHT returns filed to that date had no amount owing, confirming criticism that the tax would put an unnecessary filing burden on Canadians.
Yet another example is the Canada Disability Benefit, which the Liberals said when they announced it in 2020 would lift hundreds of thousands of Canadians living with disabilities out of poverty. Advocates for the disabled hoped for monthly payments of around $2,000. The government then revealed in the 2024 budget that the payments would be $200 per month and go only to 600,000 of the 1.6 million Canadians living with disabilities, starting next year.
In June, it came to light that, according to the government’s own numbers, the benefit will only actually lift 25,000 working-age people living with disabilities over the poverty line – by 2028.
This is what happens when politicians devote themselves to generating talking points and social-media content instead of making sound policy. Good governance requires serious planning and execution, something obviously lacking in this late-stage Liberal government.