Posted by John Ibbitson on 5/19/2004, 8:05 pm By JOHN IBBITSON Ontario Premier Dalton McGuinty has handed Paul Martin a most unwelcome gift. He has just made Liberal tax hikes an election issue in Ontario. In yesterday's provincial budget, Finance Minister Greg Sorbara significantly increased the provincial income tax. He tried to pretend it was something else, by calling it a health premium. But the tax is progressive, and it's deducted from your paycheque along with your income taxes. Taxpayers will treat it like an income-tax hike, because that's what it is. And it will hurt, hitting a middle-income earner ($48,000 to $72,000 a year in taxable income) by $600 a year. That's the equivalent of a 1-per-cent pay cut. Taxes are also increasing on cigarettes, liquor, beer and -- here they go too far -- wine. Middle-class taxpayers elect and defeat governments. Both the upper and the working classes have relatively little voting power, which is why the former get taxed to death and the latter get ignored. Those middle-class voters thought that by electing Dalton McGuinty their taxes would go neither up nor down. It turns out they were only half right. In his first budget, in March, federal Finance Minister Ralph Goodale did not raise taxes but did not lower them, either, despite a healthy surplus. The money, he said, was needed for health care. Prime Minister Paul Martin has starkly defined the difference between himself and Conservative Leader Stephen Harper on this issue: Mr. Harper, according to Mr. Martin, would jeopardize health care by cutting taxes. Mr. Martin will rescue the health-care system, and then cut taxes if he can. Where does that leave an Ontario voter, in one of the 106 ridings that are absolutely essential to the federal Liberal Party's re-election hopes? The voter knows that the Ontario Liberals promised not to raise taxes and then broke that promise. The voter also knows that Paul Martin has promised not to raise taxes. Because Mr. Martin, unlike Mr. McGuinty, is a man of his word on fiscal issues, the voter can assume that federal taxes will remain unchanged for several years, while provincial taxes will increase. The voter, in other words, will get poorer. In compensation for this loss of income, the quality of health care is supposed to improve. But it will only improve slowly, and over time, if at all. It will need federal-provincial co-operation, as well as co-operation by health-care providers. (Unlike the ones in B.C., who went on strike to gain a share of any increases in spending on health care.) It will need to break a mould now set for almost 20 years, in which health-care costs increase as service declines, and no promises to improve the situation can be believed. And there stands Stephen Harper, promising to cut taxes, which, to the Ontario citizen, will appear to even out the tax increase imposed by Dalton McGuinty. How convenient. On the other side of this argument, former Conservative premier Ernie Eves promised to cut taxes in last autumn's Ontario election but lost to Mr. McGuinty. Mr. Eves, however, was leading a tired and discredited government. In the federal election, it is not the opposition Conservatives who are tired and discredited. It will be fascinating to watch the extent to which the actions of the provincial Liberals influence the federal attitude of Ontario voters. It may be that there will be no political cost. The Liberals at both levels may have correctly judged that there is a consensus in favour of short-term financial pain for long-term health-care gain. Or maybe voters will get mad at Dalton McGuinty but decide not take it out on Paul Martin. But if the anger does spread, Paul Martin will be in considerable trouble. For how can he promise tax cuts during the election campaign, when his Finance Minister ruled them out only two months earlier in a budget? Polls show that most people say they prefer spending on health care to tax cuts. But no one has asked them to make that choice after their taxes have just been raised. Who's ready to bet on what they're thinking now? jibbitson@globeandmail.ca
Will McGuinty make Martin pay?
Wednesday, May 19, 2004 - Page A8
Message Thread:
« Back to thread