Four Billion Reasons the Liberals Polls are Dropping

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Well.

Again, the Liberals are dropping even farther in the polls as the election campaign continues.

Why?

Well, first of all, they are betraying their ignorance of reality.

They are suggesting that business is the evil bogeyman of the Canadian economy.  That corporate tax cuts which have been slowly implemented by the Conservatives, which, have in fact, contributed to a strengthening economy (which equals increased jobs) are wrong, and that everything will just be set right if we increase corporate taxes, and then increase spending by some $4.1 billion per year.

The problem is, like so many Liberal efforts in the past (see Gun Registry) it's all smoke and mirrors.

Firstly, with respect to the general suggestion that Corporations in Canada are getting some sort of "sweet deal",  as reported in the Windsor Star:

"...in fact, Canada's corporate taxes aren't as competitive as they need to be. According to the Organization for Economic Development and Co-operation, the combined federal-provincial business tax is nearly four percentage points above the average among OECD member countries."

So.

Before Liberal Tax increases being announced, we are 4% points higher already than the OECD average.

Who cares?

Well, another little reality that escapes Michael Ignatieff is that corporate income is not static, and, in fact, responds to taxation levels.  Many, many corporations have the ability to shift income from one country to another - and increases in Canadian tax levels from levels beyond other OECD countries, may, in fact, not result in the savings Michael Ignatieff suggests.

In fact, as explained by Jack M. Mintz - economist and Palmer chair of public policy at the School of Public Policy, University of Calgary, the net cost of the current tax reduction to corporations will not be the "Phantom Six Billion Dollars" suggested by Michael Ignatieff, but, in fact, will cost Canadians approximately $100 million dollars - which, in turn, will be offset by increased business investment, increased jobs, and an improved economy.  But even ignoring these collateral benefits, the net cost to government of the recent 3% corporate tax cut will be only $100 million.

Michael Ignatieff is planning, therefore, to do away with these tax cuts - which will, as indicated, save a net of some $100 million, and, he will immediately start spending $4.1 billion per year.

To draw a picture for Michael Ignatieff, the net result of his announced economic plan will look something like this:

See that huge red bar at the right side of the graph.  That's a $4 billion more in spending which would be added to our deficit annually based upon Liberal promises.

And, keep in mind, that nothing ever costs what government says it will (see Gun Registry).

So.

No great shock then that the Conservatives have risen again in the polls, now holding a commanding 42.3% of committed voters to the Liberals who have dropped again, now sitting at 28.4%, according to today's CTV/Nanos Poll.

Way to go Michael.

Move farther to the left..  as the world comes to grips with the reality that a strong social safety net DEPENDS upon a strongly functioning economy, the Liberal Party of Canada introduces itself as "NDP Lite".