Winnipeg Free Press - PRINT EDITION

Governments like to bait and switch

Pre-budget leaks meant to deceive

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OTTAWA -- Many times in politics it's tough to separate the truth from fiction.

No more so than when governments are trying to hide or play down something they know voters won't like.

You saw the provincial government try it last week, leaking news of a $50-million tax cut for seniors to help distract from the fact the budget was going to inflict a nearly $300-million hit on all taxpayers in the form of a one-percentage-point hike in the provincial sales tax.

However, the federal government was far more successful at the taxpayer bait and switch a month ago when it pre-empted its budget with a leak to the media it was going to eliminate import tariffs on 37 pieces of sports equipment and baby clothes.

The cut was the shiny bauble for taxpayers in the budget and was highlighted twice in main budget documents.

Less promoted, mentioned just once and without specifics, was the fact the General Preferential Tariff system was being "modernized."

No matter that this change meant a $300-million increase in tariffs that likely will be passed on to consumers in the form of higher prices on more than 1,200 items from toothpaste to rocket launchers, and would more than offset the $76 million in savings from tariff cuts to hockey skates and baby bibs.

The government is now left with a logic gap in trying to sell the message that the elimination of the tariffs on 37 items will save people money, but the increasing of tariffs on more than 1,200 items won't increase prices.

And opposition parties smell blood. The biggest strength of the Conservative government, almost any Conservative government, is the idea, rightly or wrongly, that it will be the most likely of the parties to protect your pocketbook. This tariff hike has handed the opposition a very sharp stick with which to prod the government repeatedly.

The NDP and Liberals tripped over each other last week to see who could be the better party on the subject.

New Liberal Leader Justin Trudeau even used it as his very first question in the House from the leader's chair, going as far as to quote the dictionary to prove a tariff is a tax, and therefore, by raising tariffs the government is raising taxes.

"So the prime minister can couch this in any terms he likes but the fact is when middle-class Canadians go to a store to buy a tricycle, school supplies or a little red wagon for their kids, they will pay more because of a tax in this government's budget," Trudeau said.

The NDP snatched its own headlines, finding a bike shop owner who, six months ago, backed the Conservatives and let Finance Minister Jim Flaherty use his store as a backdrop to promote his budget policies, promising he wouldn't raise taxes.

That same bike shop owner now says he feels he was lied to since the changes to the import tariffs will see import taxes on bicycles rise to 13 per cent from 8.5.

Flaherty, who hasn't been in the House of Commons since budget day, finally emerged Friday with a real explanation in the form of a newspaper op-ed.

The General Preferential Tariff is a program intended to aid developing economies by keeping import tariffs on their goods low. Since the 1970s, the program has helped countries such as China, India and Brazil. But Flaherty says many of those countries no longer need the help and to keep giving them preferential treatment doesn't make sense.

China, India and Brazil all have bigger economies than Canada and don't deserve the help, he said.

Plus, he said, making this move provides incentive for trade negotiations with countries that don't give similar tariff preferences to Canadian goods. And, he has the backing of the Canadian Manufacturers and Exporters Association.

But what is easier to sell to the public?

That raising tariffs is going to make everything from toothpaste to red wagons cost more, or that doing so ends support for nations such as China and India who no longer qualify for it.

For the same reason the Conservatives can scare Canadians with talk that any effort to put a price on carbon will be a "tax on everything," the opposition parties have a much easier time crucifying this change as a tax hike than the Conservatives have defending it as a legitimate trade exercise.

Republished from the Winnipeg Free Press print edition April 22, 2013 A8

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