Tuesday, March 25, 2008

Playing in the Political Sandbox

Federal Finance Minister Jim Flaherty held a press conference in Toronto today to try and 'convince' the Ontario Government to reduce the corporate tax rate in tomorrow's budget. Flaherty is well aware that budget's are extremely complex calculations that take months of planning. Such a drastic change in policy could not be adopted and ready to implement in a single night. His provincial counterpart Dwight Duncan was quick to call Flaherty on his political grandstanding and pointed out that citizens rejected the tax cut philosophy "in 03 and 07". Technically the Liberal mandate endorsed tax hikes that occurred in the Liberal's first mandate and status quo on taxes for now. Nobody will argue that the Liberals got reelected on their tax policy.

With election fever peeking in early spring the feud between Ontario & Ottawa over how to structure their counterparts budget has grown. People have a tendency to place blame for the feud based on which philosophy they happen to agree with. This ignores key elements of the feud.

When McGuinty was elected in 2003 he argued as a Liberal he was the best person to work with a federal Liberal government to best serve Ontario's needs. In the end it made very little difference. During the last federal election Martin did not want to be scene anywhere near the unpopular Premier.

McGuinty has long complained about the feds not giving enough money to the country's economic engine. There was the $26 billion in taxes that we not coming back to Ontario. He joined in on 1% GST and gas tax going to municipalities. McGuinty wants the Harper to cut GHG without in any negative results for the Ontario manufacturing sector. When Toronto, the economic engine of Ontario asked the province for money, McGuinty gave them new taxing powers and told them to deal with their own problems.

This game between Queen's Park and Ottawa has gotten old fast. They each have their own responsibilities and tax payers expect them to do them. When kids can't play together nicely in a sandbox the parents need to have them removed. McGuinty already has his mandate to stay and play until 2011. Sometime in the next year and a half Harper/Flaherty will have to answer to voters. If everyone can play together nicely, we can have an effective strategy for dealing with the consequences of the United States tanking their own economy.

If only it could be that easy.

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