Bill Clinton’s signature in his acceptance speech of the Democratic nomination in 1992 was: “The most important family policy, urban policy, labor policy, minority policy, and foreign policy America can have is an expanding entrepreneurial economy of high-wage, high-skilled jobs.” With that sentence, he turned the page on forty years of “liberal Democrat” charges of welfare queens and big government, while offering real hope to average Americans.
This week, I pointed out the crushing challenges that children of the unemployed face, including more trips to hospital, higher likelihood of abuse or neglect, and greater incidence of self-destructive behaviour among adolescents.
Liberals are comfortable fighting on the terrain of jobs, and the HST is quickly shifting to be a jobs issue, not a tax issue.
This places rookie PC Party leader Tim Hudak in a bind.
Hudak’s party has long advocated harmonizing the GST and PST. Both former leader John Tory and interim leader Bob Runciman made lots of warm sounds about harmonization. It’s for good reason, as the PC Party’s business base strongly favours the move and will not support its reversal.
However, Hudak has personally staked his reputation on getting Dalton McGuinty to back down rather than follow through on his commitment to introduce the HST.
Hudak now finds himself with a series of tough choices.
If he pledges to reintroduce a separate provincial sales tax after the next election, he will jeopardize his own business support AND be responsible for the loss of 591,000 jobs.
If he doesn’t pledge to reintroduce a separate Provincial Sales Tax after the next election, he’s open to charges of politician flip-flopping.
What is worse, either way Hudak will find it tough to cobble together a jobs plan that creates 591,000 jobs.
The Harris recipe of deep income tax reductions will be hard to finance or justify, given the already low personal taxes in Canada’s largest province. Under Harris, Ontario moved from one of the higher income taxes in Canada to one of the lower. But today, Ontario’s income tax is already the second lowest. Ontario’s average income tax rate and marginal tax rate are lower than every single province except British Columbia, and not unfavourable to the Great Lake states. Further reductions will find little bang for the buck.
The Harper recipe of cutting the sales tax is popular politically, but awkward economically. While it can be marketed as a tax cut, it will be a major challenge to find a single economist to endorse such a move as a job creation strategy. Hudak can try to turn the election into a referendum on taxes, but to do so would sacrifice any claim to having a plan for the economy or jobs.
Hudak can attempt a strategy of populism, pointing fingers at scapegoats like teachers, but polling continues to show little appetite for broad cuts to the public sector. While voters believe there is waste and mismanagement to find, two years of McGuinty cuts will likely have trimmed any obvious fat long before the election.
In a phrase, the rebirth of the HST as a jobs issue places Tim Hudak in a box.
He cannot support it. His earlier statements prevent such a reversal.
He cannot repeal it. His base could revolt and he would be running against creating hundreds of thousands of jobs.
He cannot out-flank it. No other series of measures will create more jobs, making any jobs plan he produces a faint echo of McGuinty’s.
Make no mistake. The HST still presents the potential of a pure populist backlash against the government.
Hudak can attempt to ride a populist wave of resentment into office.
But equally, don’t underestimate the importance of this report. It was a 591,000 point return by McGuinty in a four-quarter gridiron fight against Hudak.
The ball is now the challenger's to return.
