Wednesday, March 26, 2008

Who's Strategy Will Work?

In a nearly unprecedented situation, federal finance minister Jim Flaherty advised the government of Ontario to cut its business taxes. This is only one of several times that the Conservative finance Minister has issued this particular advice (in a very public way) to Dwight Duncan, finance minister for Ontario's ruling Liberal party.

Duncan and his boss Premier Dalton McGuinty obviously aren't being swayed. Instead of cutting taxes to cure the looming economic troubles, they have decided to invest in infrastructure and retraining.

Perhaps neither of these strategies will be sufficient to allow Ontario's manufacturers to better weather this storm, but I have to say that the federal Conservatives vision of low business taxes likely won't be helping anyone except for corporations that are already profitable.

For the struggling manufacturers, tax breaks won't help a bit as unprofitable business already doesn't pay tax.

What's most striking here is the fact that a federal government sees fit to publicly lecture a provincial government on a provincial budget. For whatever reason, the Harper Conservatives seem to think this to be acceptable in Ontario, where the wouldn't dream of doing the same in other provinces (namely Alberta or Quebec). Imagine the firestorm that would emerge if that were to happen.

The federal strategy seems to be one where they are preemptivly blaming the government of Ontario should the economy underperform (as it is expected to do) so that they can avoid taking any responsibility themselves. I don't think many people are fooled by this strategy, and I believe it to be a strategy that Harper will soon regret.

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