Ever heard of Janet Ecker?  She was a former Conservative Finance Minister who actually delivered her budget outside the Ontario legislature in an auto parts research facility.  I ask you that question because there is one more part to the answer.  She was the subject of my very first “At Issue” now over five years ago.

I thought of her recently as the provincial Liberals are now getting set to release their provincial budget Tuesday.  What’s in it I don’t know?  However, what I do know is federal finance minister Jim Flaherty is standing on his head goading the provincial Liberals to reduced Ontario’s corporate tax rates.  According to Flaherty, Ontarians are poorer for it, losing jobs and wealth at the hands of the dozy Liberals.

There is a lot to this, and certainly one aspect of it has to do with dueling tax philosophies.  However before I get into that, let’s recognize Ontario’s troubled economy.  If you have read the last two editions of “At Issue”, you’ll know the American economy is being compromised.  Its pretty clear Ontario is going to get royally sideswiped by it.  Add the Canadian dollar into the mix and you have the perfect economic storm descending on Ontario.  Jobs and wealth are leaving this province as I write.  Finance minister Dwight Duncan surely has a challenge ahead of him.

Ontario gross domestic product growth forecast is set to jump .5% this year.  Nationally the rate is 1.1% with super heated economies like Alberta and Saskatchewan leading the way.  Ontario corporate tax rate is 14%, higher than every province except Nova Scotia and PEI.  That’s one reason why you have the diminutive Jim Flaherty snarling at the sidelines.  In his day as the finance minister in Mike Harris’s government, he made Mike Harris look like a Liberal.  Cutting spending and taxes was his trademark.

The McGuinty Liberals and the Harper Conservatives have very different taxing philosophies and that’s at the crux of Flaherty’s argument.  Conservatives believe in cutting taxes and reducing government spending while Liberals typically believe government has a role in our economy.  However, many times when Liberals get into government they act like Conservatives.

This is how I see it.  The Conservatives in Ottawa have cut quite a few taxes since they got into office.  The big ones were the two successive cuts of 1% to the GST.  Don’t quote me on this but by my estimation that’s about $8-$10 billion a year in tax revenue, a huge chuck out of the federal government coffers.  For the average Canadian it has meant cheaper Tim Horton’s coffee in the morning plus reduced costs on every thing from thimbles to new Porches.

Conservatives have trumped this as forward thinking.  Liberals have gone along with it, but for the life of me I cannot understand why they didn’t feint this way when they had the chance.  Needless to say the federal government gave up a lot of money when the GST was cut.

Politicians gnash their teeth on these apparent accomplishments.  However, the money just didn’t disappear.  That $8-$10 billion is still circulating within the economy, its just not in government hands.  Individual Canadians can decide what to do with it.  Investing and saving that money create jobs and economic activity is generated.  However that economic activity is uneven and the poor in our society suffer for it.

That’s why Dwight Duncan and the Liberals should resist the manifestations of the right wing zealot Flaherty.  To his credit he believes in what he speaks.  However, there is something to be said for what Liberals and NDPers think.  Managing that money through government can sometimes be very valuable for society.

Things like skills training, money for education and health care are very important facets within our economy.  It is one thing to get huge tax cuts via the GST reductions, but when that was done, the levers of government to handle these issues were greatly emasculated.  A good balance is key and that’s one area where I think federal finance minister Jim Flaherty falls off the wagon.

One of the big problems are governments waste gobs of money and that’s the reason tax cuts are so sexy.  At least if they don’t get the money it will be managed more wisely.  However, if we were really honest, we’d admit that always isn’t the case either.

So Jim Flaherty is flat wrong and his tactics of publicly criticizing Ontario’s government will eventually bite him.    The provincial Liberals might have been elected in a big wave against “faith based schools”, but they have more of a mandate than the federal Conservatives these days.  Dwight Duncan, Ontario needs some economic stimulus.  Bring it on.