In a small town in rural Atlantic Canada there is a doctor there – let’s call him Dr. Bob – who everyone in this town of several hundred people thinks is a swell guy.
They look up to Dr. Bob. He is a trusted leader in their community. Parents encourage kids to be like Dr. Bob.
Those in this town also know that if Dr. Bob leaves, it’s going to be difficult to find a new general practitioner who wants to set up shop in their community. And without a GP, it will be that much harder to convince people to move to the town and to attract new business.
In short, Dr. Bob is vital to the town’s well-being — and not just because he treats the aches, pains, and fevers of its residents.
Since mid-summer, though, Dr. Bob has been under attack.
The federal government in Ottawa, in the person of Prime Minister Justin Trudeau and Finance Minister Bill Morneau, have been pretty much calling Dr. Bob a tax cheat.
Neither Trudeau nor Morneau uses that exact phrase and neither one calls out Dr. Bob by name, but everyone in Dr. Bob’s town can read between the lines.
They’ve watched the evening news about a proposed tax reform plan that would eliminate tax shelters commonly used by people like Dr. Bob and they’ve heard Liberals sell that plan by suggesting those who use these tax shelters are not paying their fair share. Indeed, just this week in the House of Commons, Trudeau defended these proposed reforms and described those who use these tax shelters this way: “Those are wealthy Canadians we want to make sure pay their fair share of taxes.”
When Morneau announced the proposed reforms back in July, he said, “We are asking Canadians for input into how to close loopholes and address tax planning strategies that give unfair tax advantages. Many of the richest Canadians are unfairly exploiting the tax rules designed to help businesses thrive.”
Hold on a second, they say back home, is the prime minister saying Dr. Bob doesn’t pay his fair share of taxes? Loopholes? Unfair exploitation?
“The business community finds this sort of communication offensive,” accountant Terry Solomon told the House of Commons finance committee on Tuesday. Solomon, about as mild-mannered as you might imagine a tax expert to be, had travelled from Charlottetown to Ottawa to deliver this message to MPs.
“These are the most significant tax changes put forward … since the 1970s,” Solomon warned the MPs on that committee and described at least part of what the Liberals planned to do as “egregious.”
Ron Bonnett, the president of the Canadian Federation of Agriculture, has said that in all his years of being active in farm politics no issue has ever got farmers as worked up as this one. And one of the reasons farmers are upset is because of the language being used by Trudeau, Morneau, et al.
“I hear ‘loopholes’ but it’s tax planning! This is what farmers are telling me,” an indignant Bonnett said at the same finance committee meeting.
Liberal MPs, as a result, are getting pushback from their own constituents about the way Dr. Bob — and others like him — are being branded. And they’re not happy.
For one thing, they’re worried Dr. Bob will leave town if the federal government proceeds with its proposed tax reforms, that he’ll set up shop in a bigger city, another province, or even another country if the tax rules are changed. For another, they just don’t like their beloved Dr. Bob coming under fire unfairly.
So where the original fight the Liberals may have picked where with doctors, the fight they’ve now got is with the millions of Canadians who like their doctors and disagree that their doctors are getting “an unfair tax advantage.”
This is not, incidentally, a hypothetical story. There are towns in rural Canada just like this. And there are Liberal MPs who, speaking on a not-for-attribution basis to protect the identity of the Dr. Bobs in their riding, are worried about the political damage being done to their own party’s brand by their own party’s leadership.
“I get a lot of ‘why are you making us out to be tax cheats?'” one Atlantic Liberal MP told me.
“People are extremely upset,” said another Liberal MP, this one from a suburban Ontario riding, who says he’s getting deluged from constituents who do not use a CPCC tax shelter but who see the issue as an unfair attack on the values of entrepreneurship.
It’s clear that what the Liberals hoped would be a narrow, focused discussion on tax equity that affected 1.8 million tax filers has mushroomed into a broader and more rancorous political debate about fairness, social justice, and economic development.
That debate has millions of Canadians involved and involves significantly more political peril for the Trudeau Liberals.
Consultations on these proposed tax reforms are set to close next week.