On taxing considerations

It remains to be seen how far Michael Ignatieff will backtrack from yesterday's comments about the possible need to raise taxes in order to balance the federal budget once the recession is over. But as in the case of the asbestos comments which Ignatieff was so quick to flee from, he seems to have landed on the right answer to begin with.

After all, Deficit Jim's fiscal mismanagement has ensured that eventually the federal government will have to accept at least one of sustained deficits, service cuts or tax increases. And looking at those three options, tying the Cons to tax increases looks to be the better course of action both for political purposes and for the public interest in the meantime.

It might be tempting to call for budget cuts instead, particularly given the Cons' propensity for implementing useless and costly programs for the sole purpose of buying votes. But focusing there - even if it likely makes for the easiest target on the surface - would carry a couple of serious problems.

First, it would reinforce the Cons' political advantage in targeting the voters involved to begin with. But perhaps more importantly, it would also give them political license to cut deeper into the programs which they want to see gone - resulting in damage to Canada's public services which might be far more difficult to fix than a tax rate.

So what about allowing for longer-term deficits in order to preserve taxes and spending where they are? The obvious issue there is that it would allow the Cons to portray themselves as being comparatively serious fiscal managers if they make even token efforts at deficit reduction. And considering the force of a critique that the Cons need to bear responsibility for making the mess in the first place, the Libs surely can't afford to take the position that the problem isn't worth solving.

That leaves the tax hike option. But while it too carries some costs on the surface, those are likely to prove illusory in the long run.

Wherever taxes are at any given time, one can generally count on the Cons to promise more cuts in any campaign - or indeed implement new ones without any particular reason for doing so. Which means that a Lib call for tax hikes from current levels serves primarily to frame the tax level which the two parties will argue over, rather than actually creating a policy gap which wouldn't exist otherwise. And the fact that the Libs are pointing out a need for caution rather than egging the Cons on (as Dion did with corporate tax rates) can only make it more difficult for Harper to carry out any more budget-busting cuts.

Of course, Ignatieff still deserves plenty of blame for keeping the Cons in a position to continue draining Canada's federal coffers. But from that starting point, it'll at least be for the best if he does something to minimize the damage. And a public stand to the effect that taxes can't go any lower (and will ultimately have to be increased because of the Cons' mismanagement) is probably the best strategy the Libs have left after giving up their previous leverage over the Cons.