Alberta Politics

Tax Increases no longer Political Kryptonite in Canadian Elections

It’s been a rough year for Conservatives in Canada as two major elections in six months have resulted in major blows for Conservative parties in Alberta and Ottawa.

Justin Trudeau
Justin Trudeau

In May 2015, former federal cabinet minister and bank vice-president Jim Prentice, a political moderate and patrician of the province’s Conservative establishment, led the 44-year long governing Progressive Conservatives to a stunning defeat by Rachel Notley‘s New Democratic Party.

This week, Prime Minister Stephen Harper‘s Conservatives were swept from office by Justin Trudeau‘s Liberal Party.

These two major election defeats shattered many common beliefs about politics in Alberta and Canada. In both cases, Conservative parties were defeated by parties promising moderate progressive platforms that included tax increases and significant increases to public infrastructure investment and explicit commitments to run deficit budgets, for at least the short-term period in the case of the NDP. In Alberta, both the PC Party and NDP promised various tax increases.

On the final Sunday of the federal election campaign, Mr. Trudeau spoke to an energetic crowd of more than 2,000 supporters in the Edmonton-Mill Woods riding, home of now elected Liberal MP Amarjeet Sohi. During his speech, he explained to the crowd that if the Liberals were elected on Oct. 19, that they would raise taxes by asking Canada’s wealthiest income earners “to pay just a little bit more.”

Rachel Notley Alberta NDP leader
Rachel Notley

If these words sounded familiar to anyone in the crowd, it’s because they might have heard Ms. Notley deliver nearly the exact same message five months earlier when speaking to similarly energized crowds during the provincial election. And they in both cases, the message resonated with the crowd, and on election day with voters.

This new reality will certainly come to a shock to those gathering at Preston Manning‘s institute on Oct. 22 to watch the Canadian Taxpayers Federation present former Alberta Treasurer Stockwell Day with a “TaxFighter Award” for his role in implementing Canada’s first 10 percent flat-rate personal income tax in the late 1990s and early 2000s. This is the same flat-tax that Ms. Notley’s NDP replaced with a progressive income tax system only a few short months ago.

These tax increases and other changes brought in by the NDP have not been without their critics, some more vocal and violent than others. But perhaps the biggest irony of these criticisms is that even with the tax increases brought in by Ms. Notley’s NDP, corporate and small business tax rates are still lower than they were when Mr. Day served in Premier Ralph Klein‘s cabinet.

While taxes might not have been the only issue that drove voters to the polls, it didn’t drive them away. These two elections have shattered the myth cultivated by conservative politicians, newspaper columnists, think tanks and lobby groups for decades that promising to increase taxes is political kryptonite.

As Rachel Notley proved on May 5 and Justin Trudeau showed on Oct. 19, voters in 2015 are willing to reward political leaders who present smart, sensible and responsible plans for increased taxation and government revenue.

3 replies on “Tax Increases no longer Political Kryptonite in Canadian Elections”

I wonder if voters are finally cluing in that “reversing a tax cut” isn’t the same as “increasing taxes” (in the same way that your boss making a production of giving you a “raise” doesn’t have the same effect when you’ve been taking pay cuts for a few years – you’re not getting ahead, you’re just catching back up).

It is extremely important to note that both the proposed Alberta and Federal tax increases are not across the board, but only on higher income earners (in Alberta’s case over $125,000 and in the Federal case over $200,000). Therefore most voters will not notice any change in their tax rates. The Alberta 10% rate will remain the same for most taxpayers and the Federal tax rate is actually proposed to decline by 1.5% for people with taxable income between $44,701 and $89,401 and stay the same for all others under $200,000/yr.

In both cases Conservatives and Wildrose talked about those tax increases as if they would affect everyone, but this is not the case and most voters were smart enough to figure that out. I suspect the Conservative hyperbole just undermined their own credibility on this issue.

In part the Conservatives and the Alberta PC’s themselves also planted the seeds for these changes by making tax changes over the last ten years that mainly benefited richer people, while the middle class struggled. This led to a strong feeling in both Alberta and Federally that a few have done well in recent years at the expense of lower and middle class earners.

Voters were not voting for across the board tax increases and they generally realized it. These increases will only affect fairly small percentage of taxpayers, who are arguably in the best position to be able to afford them. Most of us have to get by on less than $125,000 so there probably won’t be much sympathy for someone who has to delay buying a new Mercedes because they have to pay a bit more tax this year.

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