Globe and Mail, August 7, 2003
Eves' bribes rest on voter stupidity

By ERIC REGULY

It looks as if John Hamm's dismal showing in Nova Scotia will force Ontario
Premier Ernie Eves to open his chequebook again. Dr. Hamm's Tories were reduced
to minority status in the election. Mr. Eves' Tories, already trailing in the
polls, face the same outcome. If Mr. Eves was scared before the Nova Scotia
election, he must be doubly scared now. The question is: How much will his fear
cost Ontario taxpayers? With an Ontario election expected in the autumn, another
round of shameless bribery is set to begin.

Mr. Eves has left virtually no segment of voters unbought. For homeowners, he's
offering U.S.-style mortgage interest deductibility. Rich parents who send their
kids to private school get a tax credit on tuition costs. Seniors won't have to
pay education taxes. The residential and small-business electricity markets get
their juice at an artificially low fixed price. Corporations are being promised
a tax reduction worth billions a year. Who's left? Coffee credits for truck
drivers, Muskoka cottage writeoffs for investment bankers? The Tories will
doubtless find someone to buy off.

Winning elections, of course, is all about buying half-wit voters with their own
money. The Ontario Tories are breaking new ground on this front because most of
their pledges are unfair and unfaithful to Progressive Conservative economics as
well as being fiscally irresponsible (the latter is assumed).

Let's start with mortgage interest deductibility, an idea first floated -- and
later abandoned -- by Joe Clark's doomed Tories in the late 1970s. About
two-thirds of homes are owned (although not all homes have mortgages), so
deductibility would have broad appeal in theory. But a few problems arise.
Deductibility would do nothing for the significant minority of households who
rent, and the average annual household income for renters is about half of that
of owners'. Worse, it could actually penalize renters who aspire to be owners.
If house ownership were to come with tax breaks, ownership would be more
attractive. Demand would rise, taking house prices up with it.

The Tories' version of interest deductibility is all the more lame because, at
least initially, it would be worth slightly less than $2 for the average home
owner. Still, that would eat about $140-million a year (the Tories have no
formal budget for the program beyond the first year). To make a difference to
your disposable income, it would have to be worth $1-billion a year or more. But
that's a billion that could be thrown at education or hospitals. Remember,
Ontario, because of SARS, slow economic growth and a rapidly aging population,
is on the verge of another health care crisis.

The freebies on education are equally cynical, unjust and discriminatory. If the
Tories get re-elected, seniors will collectively save about $475-million a year
by not having to pay the education component of their property tax bills. The
Tories are apparently convinced that society does not benefit from good public
education. At the same time, Eves & Co. will tell you brain power is a
competitive tool in a borderless market. What the Tories plan to take away from
public education will be given to private education through refundable tax
credits. When fully implemented, the program, already in place, will cost about
$500-million a year and will benefit the rich almost exclusively. For the
Tories, it was a clever move. The idea was not so much buying the rich vote as
guaranteeing campaign contributions from Rosedale and Forest Hill. The Liberals
have promised to scrap the education freebies, as well as the mortgage
deductibility plan. There's the small matter of paying for it all.

Fixing the electricity price at 4.3 cents a kilowatt-hour was the mother of all
vote-buying attempts. Since its introduction last year, not a single watt of new
generating capacity has been built in the province because investors don't see
the wisdom of selling electricity below cost, and don't trust the government not
to change the rules of the energy game every time an election is in the offing.

Yesterday afternoon, true to form, Mr. Eves called a news conference. He didn't
announce the election date but did promise -- surprise! -- more tax cuts. He
gave no details, probably because he would have been incapable of saying where
the money would come from. Add all the campaign promises so far, including more
than $3-billion in corporate tax cuts, and he's already in the hole for
somewhere between $4-billion and $5-billion a year.

It's an open question whether the ploy will work. In Nova Scotia, the Tories'
tax-cutting pledge failed. In Quebec, it worked for Jean Charest's Liberals. The
tax cuts and giveaways might work for the Ontario Tories if voters are as dumb
as he hopes. Just expect to pay for them all with deficits and shabbier
education and health care.

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