Since this is apparently Green Shift (X) week around here - it had to happen sooner or later - it seems as good a time as any to tackle one of the other central questions around Stephane Dion's carbon tax plan: Is it really revenue neutral?
Short answer: Only if you accept the broadest possible definition of what qualifies as a tax cut. But then, that's pretty much the definition we've been accepting for years.
Straightforward tax cuts, in the form of reductions to business and income taxes, add up to roughly $9-billion in Year 4 of the Liberal plan. The rest of the more than $15-billion the party expects its carbon tax to generate would go mostly toward spending initiatives dressed up as tax benefits and credits - a $465-million supplement for low-income workers, a $150 supplement for every rural resident (totalling $749-million) to help pay their bills, a $600-million capital cost allowance for green technologies, another $400-million for R&D, an $800-million boost to the guaranteed income supplement for low-income seniors. Biggest of all is a nearly $3-billion child tax benefit - quite possibly a worthwhile expenditure, as are many of the others, but not exactly a tax cut in the traditional sense of the word.
Personally, I'd prefer the Liberals would just acknowledge that they want to use the revenues from the carbon tax to help fund a platform that combines tax cuts and social spending aimed mostly at alleviating poverty - a defensible method of putting Dion's "Three Pillars" business into effect. But for the Tories to accuse them of being disingenuous, even if it's not inaccurate, is a bit rich.
I'd elaborate, but Andrew Coyne already covered this ground rather well in response to last year's budget:
"We had been conditioned to expect very little in the way of tax cuts by the Tories' constant trumpeting of their risible “tax-back guarantee,” in which the interest savings from paying down the debt by $3-billon a year - a whole $20 per taxpayer - were to be dedicated to tax reduction. But I had not realized quite how little it would be. Because even the “tax-back guarantee,” it turns out, involves no actual tax cut of any kind. Rather, “the interest savings enhance the Government's ability to deliver on new personal income tax reductions” - mark those words - “including the introduction of the Working Income Tax Benefit, the $2000 child credit, raising the spousal amount, and increaseing the age limit for converting a registered retirement savings plan.”
"Now, what do the items on those list have in common? They are not tax cuts, in the usual sense of a reduction in tax rates. Rather, they are spending programs, delivered through the tax system. The “$2000 child credit” is in fact a $310 baby bonus. The Working Income Tax Benefit is an earnings supplement. These may be fine programs, but they're programs: money the government gives you, depending on whether you fit the program criterion. That's why they're called tax expenditures - and why they're accounted as such on the government's books."
In fact, the Tories have deployed "tax cuts" even more dubiously than the Liberals - offering rebates for everything from public transit use to children's sports.
It appears as though our parties have decided that Canadians like the sound of tax cuts, but they like the effects of social spending. So they pay lip service to the former, and give us the latter. The Liberals are merely attempting to pick up where the Tories have left off.
