Big business isn’t feeling the love

Big business has benefited from policies of the Harper government in the past but lately they’re not feeling the love. While the ways of government and business may coincide, the objectives are not necessarily the same.

income splitting

Take taxes, for instance. Harper wants to reduce taxes because, as a libertarian, he wants to reduce the size of government. Tax cuts insure that governments will be starved of cash and be unable to fund social programs like Health Care.

Big business like tax cuts because they lower input costs and make them more competitive.

At other times, the goals of government and big business diverge. Harper is counting on income splitting as a vote-getter. Income splitting is not helpful to business. As former Conservative Finance Minister Jim Flaherty warned, it benefits only rich Canadians.

Income splitting leaves most Canadians paying more taxes to make up for the tax break for a few. But besides being a questionable vote getter, it appeases certain conservatives with an antiquated view of family. This is the kind of family from the misty past where mom stays home to raise the kids and dad goes off to work. It’s a fantasy that has long since evaporated with the needs of two-income families and the desire of women to have careers.

Removing mothers from the work force is bad for business. Union economist Jim Stanford puts it this way:

“The latest gimmick – income-splitting – hasn’t gone over any better. After all, corporations have no time for social conservative mantras about subsidizing stay-at-home parents; they’re more focused on securing future labour supply.”

Now Harper thinks he has found another vote-getter: the outrage over the difference between what we pay for goods compared to Americans. He will interfere in the marketplace by investigating Canadian businesses that charge more.

Businesses who are investigated and found to be charging an “unjustified price discrimination,” will be fined. Perrin Beatty, president and chief executive officer of the Canadian Chamber of Commerce, fumes:

“No bureaucracy should have the right to demand an explanation as to why you asked that extra $5,000 when you sold your house, or why the last copy of a hot Christmas toy costs so much. It’s called a free market.”

Why is Harper promoting these business-unfriendly policies? Both the CEO of the Chamber of Commerce and the union economist agree on the answer.

“Now, Ottawa insiders recognize this as theatre,” says Beatty. The Harper government is making a show of appeasing cross-border shoppers knowing that nothing will come of it because investigators are understaffed.  In 2013, a Senate Finance Committee studied the price differential and found that changing import tariffs and reducing our high regulatory costs would help but Harper would have nothing to do with real solutions.

Stanford comes to the same conclusion through a different analysis. The possibility of price equity was only an illusion in the first place brought about by the brief parity with the U.S. dollar. And our dollar was inflated because of speculation on an oil-based economy. “Moreover, the only reason such gaps exist – a substantially overvalued Canadian currency – is disappearing before our eyes. So the legislation is pure theatre.”