Feds continue taking heat over proposed tax changes

It’s been an uncomfortable few weeks for Liberal MPs on Parliament Hill.

MPs have been getting an earful from angry small business owners, farmers, doctors, tax experts, opposition MPs and even some provincial premiers about the Liberals’ plan to change how Canadian-controlled private corporations are taxed.

Tax policy is a complicated world. It generally flies under the radar until election season, when lowering taxes or “targeting the one percent” is almost guaranteed to become a peg in a party’s political platform.

It’s probably why the Liberals thought their promise to make Canada’s tax system “fairer” while ensuring “wealthier Canadians” pay more would be a public relations slam-dunk.

To be clear, it was highly unlikely any government would have been able to roll out a complicated series of reforms like this without the discovery of areas that would require some reconsideration. Some backlash should have, and likely was, expected.

Still, the Liberals’ tax policy rollout has evolved into a classic case study of “what not to do” when unveiling a complicated piece of public policy.

The draft tax proposal, which Finance Minister Bill Morneau insists is not draft legislation, was made public July 18. That’s the middle of the summer, when the majority of Canadians (including bureaucrats) are on holidays.

More than half of Finance Canada’s 75-day consultation period, which closed Oct. 2, fell in July and August, when most Can-adians —including accountants — were at the beach, on vacation, camping or at the cottage.

The simple timing of the policy’s release made it an uphill battle from the start. Couple that with the fact the remaining portion of the consultation fell within the middle of harvest — despite the fact farmers are deeply affected by the policy proposal — and the message from the beginning (intended or otherwise) was, “we have something to hide.”

Since then, the Liberals haven’t made it any easier on themselves.

As a rookie minister, Morneau isn’t known for his communication skills in Ottawa circles. While political talking points are standard practice on Parliament Hill, the finance minister has earned a reputation among Hill reporters as someone who is particularly hard to get a straight answer from.

A good politician can differentiate between the times when talking points are useful and when talking points simply cause more trouble. If the past few weeks have dem-onstrated anything, it’s that the finance minister hasn’t figured out where that line is.

They also know that repeating a talking point when it has nothing remotely to do with the question being asked often results in more frustration and anger, rather than less.

And, while rhetoric, or as the finance minister calls it, “fear-mongering,” has overtaken at least part of the tax conversation — emotions that the opposition have capitalized on — it’s too late for the blame game.

The fear and anger among Canadians is real. So, too, is the economic and political risk.

And, it’s growing.

In the weeks since the Liberals unveiled their tax proposal, several Canadian tax experts have publicly said they’ve had clients pull investments out of the Canadian economy. Others have put a freeze on expansion plans or farm succession plans.

Many more are furious about being painted as “tax cheats” despite the fact their tax planning up until now has been entirely legitimate and legal.

Accountants and tax experts are particularly incensed with Ottawa’s accusations that they don’t know how to do their jobs and have been giving their clients bad advice — despite the fact many of them will by affected in some way by the proposals should they go ahead.

It will take more than “we are listening” and “we’re going to get this right” to heal those wounds and assuage those fears.

Ditching the talking points would be a good place to start.

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