The Tax-Cut Game

Those impolite and most politic campaign advertisements have been launched for an election campaign that everyone claims not to want, but which they see nevertheless in the not too distant future. Setting aside the small-minded and ineffective taunts one party levels against the other and the personal attacks on the credibility and trustworthiness - and lack of - the leaders, it can be usefully assumed that no one is seeking to occupy the 'high ground'.

On the other hand, there is a great disservice done to the country and the voters when the opposition parties claim truths that are less than self-evident, because they represent half-truths or downright evasions of reality. Take, for example, the government's beyond-debate federal corporate tax cuts, already set in motion because they received general agreement as a positive economic step to enhance financial recovery.

The federal corporate tax rates have been cut back to 16.5%, and another cut is planned for next year, to 15%, making Canada very competitive for investment among the G8. Although the Liberals had initially agreed with the economic utility of the cut-backs, now they're in campaign mode and their leader is fulminating that this is the wrong time for tax cuts when the country is in deficit mode with a stunningly high debt.

Mr. Ignatieff speaks passionately to the issue: "I listen to Mark Carney and the studies from the Bank of Canada that make it very clear that cutting corporate tax doesn't necessarily create jobs, it doesn't necessarily increase productivity". But the governor of the Bank of Canada has clearly stated he is not in opposition to corporate tax cuts.

"Corporate tax competitiveness, particularly for new investment, has improved markedly over the past decade and is now among the most attractive in the industrialized world. Canada has actively pursued trade openness through new agreements and unilateral tariff reductions. Staying the course in these regards is likely the single most important contribution of the public sector", claimed Mr. Carney.

And, this just in: Japan and Australia plan to reduce their corporate tax rates, and so is Britain, for starters. Ireland, in the economic doldrums from its former glory, is resisting an austerity plan that urges it to raise its low corporate income tax rate; it knows that to stoke growth it must invite investment. Most Canadian provinces are moving to reduce their own business tax rates to 10%; in tandem with the federal government.

While Prime Minister Stephen Harper has proudly celebrated five years of fairly successful minority government, Mr. Ignatieff sneers that the Conservative government has failed Canadians. Hardly surprising since the initial warnings that emanated from the NDP and the Liberals warned Canadian voters of dire consequences to follow resulting from the Conservatives' "hidden agenda".

That hidden agenda has revealed itself as a moderate, steady-as-she-goes administration that has resulted in some economic advantages, despite the global financial crisis. Despite the belt-tightening that Canadians have had to accede to, and while we're still on the cusp of some vulnerabilities, our per capita GDP has increased, as well as hourly wages and personal disposable income.

Retired couples pay less income tax, allowed to combine-and-split, and we're paying less GST. Canada has agreed with many of the moves taken by this government on the international scene; a leadership role within the G8 and G20, a defence of our allies in the United Nations, and a defining move to support the health of women and children in developing countries.

Within the country Mr. Harper has travelled widely and made himself better acquainted with the nation, acquainting Canadians with his personal endowments, and more people think he presents as finer mettle for the post of prime minister than his opposition.

And it couldn't come at a better time, for it is expected that at the World Economic Forum coming up in Davos, Switzerland, it will be revealed that we've nowhere to go but up, and fast. There is informed talk that the world may be entering a long-term growth cycle that will impact favourably on all economies throughout the world simultaneously.

Now that's ample reason for waiting with bated breath. We're waiting.