Millennials do not seem to have forgiven or forgotten what Trudeau failed to deliver for them earlier in his mandate
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It generally takes a week after a federal budget before finance ministers know whether they have produced a hit or a miss.
It may still be too early to say definitively but the early polling evidence does not indicate Justin Trudeau and Chrystia Freeland have struck on a comeback song that will revive their dormant fortunes.
An Ipsos poll on Tuesday said more than twice as many people viewed the budget negatively as gave it positive reviews. Opinion about the Liberals remains overwhelmingly negative and the Conservatives maintained a 19-percentage-point lead, the poll said. A Nanos survey that also landed Tuesday was in similar territory.
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The budget was intended as a springboard to a Liberal recovery, with its focus on “generational fairness” for the under 40s.
But millennials do not seem to have forgiven or forgotten what Trudeau failed to deliver for them earlier in his mandate.
Reports suggest Team Trudeau has set an internal goal of narrowing the gap with the Conservatives to five points by July.
The hope was that by targeting “multi-millionaires” with a tax measure that raised the inclusion rate on capital gains tax, it would “wedge” Pierre Poilievre and entice him to defend “the rich.” To this point, the Conservative leader has not taken the bait.
The prime minister made the claim that only 0.13 per cent of taxpayers will be impacted by the proposal to increase the inclusion rate from half to two-thirds over $250,000, even though the budget documents clearly state that 307,000 corporations will also be affected, many of them professionals who have incorporated to help pay for their retirement. Senior Liberals circulated tables that purported to show that over a 10-year period, 80 per cent of taxpayers didn’t generate a capital gain, and of the 20 per cent who did, the average was just $5,200.
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Canadians have been assured that the $21.9 billion extra in revenue the government expects to take over the next five years will come from rich people who aren’t paying their fair share at the moment.
There appears to be a realization that investors and business owners should be recognized and rewarded, not penalized
But the early indications are that Canadians are no longer prepared to give Trudeau or Freeland the benefit of the doubt, the most precious commodity in politics.
They don’t believe the government’s claims that middle-class people won’t get sideswiped.
There appears to be a realization that investors and business owners should be recognized and rewarded, not penalized.
Anecdotal evidence and casual observations are not scientific but many people who do not consider themselves rich say they have been caught up by this proposal. Here are just a few of the stories sent to the Post.
David Howard wrote to say that in 1999 he purchased a duplex in Ottawa as an investment property to provide for his retirement. A self-employed salesman who lived on commission, he struggled to raise a down payment and cover repair bills “but in the end we knew we would have a property to sell where we would only pay tax on 50 percent of the gain in value. I retired last year and decided to sell the property — until Tuesday when Justin Trudeau changed the rules. Now I have to wait and hope a future government will change it back,” he said.
Bruce Carmichael said his 90-year-old father-in-law lives on a retirement income of $45,295, owns a 14-year-old car and a modest property in Newmarket, Ont. But he also has a vacation home he bought in the early 1980s that would generate a capital gain of $750,000 if sold today. “Apparently this is enough for him to be labelled one of Canada’s ultra-wealthy individuals,” said Carmichael.
Daniel Babcock sold his business recently and the proceeds — “just enough to fund retirement” — sit in a holding company.
“This tax hits me hard,” he said. “Why start a business and take such huge risks, if the government considers you rich, if you succeed at finally ‘making it’, and then taxes your retirement investments at a higher rate than regular salaried employees?”
Voters are not tax accountants. Some may take at face value the example in the budget document of the nurse earning $70,000 who faces a combined federal-provincial marginal rate of 29.7 per cent on his or her income. “In comparison, a wealthy individual in Ontario with $1 million in income would face a marginal rate of 26.86 per cent on their capital gain,” the budget claims.
But common sense tells most people that the millionaire has already paid more than 50 per cent on his or her employment income before investing it.
They know that capital gains are not assured and that investors could lose money.
They realize there should be a premium for taking risk, otherwise why bother?
They seem to have finally awoken to the fact that Canada desperately needs more investment and they sense this tax measure was implemented to pay for the government’s past profligacy, rather than because of any fresh commitment to generational fairness.
The Liberals have not learned the lesson from their “war on the wealthy” in 2017, which was that in every tax measure there have to be offsets — there can’t just be losers and no clear winners.
There is a sense in caucus among some MPs that the capital gains increase should have been offset with some personal income tax cuts, and new spending should have been pared to a minimum. The $6.1 billion earmarked for the new disability benefit was one example offered of a measure that the country just can’t afford at the moment.
But that didn’t happen. Freeland chose to tax and spend, while her explanations for doing so do not appear to have broken through.
One Liberal MP said he will reassess things in the summer. He said if the Liberals have not narrowed the gap by five points or more, there will be enormous pressure on Trudeau to go, even from normally quiescent colleagues who are nervous about the existential nature of the Conservative threat.
“It’s his (Trudeau’s) decision. But we don’t want to just turn the keys over to that smug prick (Poilievre). I want a scrapper,” the MP said.
If I Could Turn Back Time revived Cher’s career in 1989, when it seemed to have stalled. Trudeau and Freeland need this budget to spark their own “turn back time” moment.
The problem for them is that the comeback looks to be over before it began.
National Post
jivison@criffel.ca
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