Editorial Playing games with tax laws

Taxes are a necessary evil, the cost of living and doing business in Canada. It’s easy to complain about them until one considers the alternatives.

But if taxes are a fact of life, the games that go on determining who will pay how much and to whom are a sad sideshow of political posturing that has little to do with principle and a lot to do with saying whatever is necessary to buy votes. We have the case of Manitoba’s government saying it will boost mining taxes because they are now making record profits. How quickly they forget the tough years earlier this decade when record losses were also recorded.

Then there’s British Columbia saying it will abolish royalty taxes on that province’s mining industry in order to bring it into line with other industries. It’s finally paying attention to what the industry has been saying for years and while the relief will be welcome, it comes awfully late for many who have suffered irrepairable damage.

But the one that is most dismaying comes at the federal level. It would be amusing, if it were not so discouraging, to find New Democrat Party leader Edward Broadbent urging the continuation of flow-through financing for mineral exploration. Many of these companies would probably fit into the NDP’s “corporate welfare bums” category.

Flow-through financing, in tandem with the earned depletion allowance, has been a boon to the exploration industry for the past five years. The tax incentive allows an investor to deduct 133% of the amount of his investment in flow-through shares from income from any source. Finance Minister Michael Wilson has declared his government’s intention to phase out the allowance, a move that many in the industry fear will effectively put an end to flow-through financing.

One might think that the industry should welcome Broadbent’s support for flow-through. Disregard the irony of Broadbent’s position on flow-through in light of the NDP’s intentions to nationalize major industries, including the mining industry, if it were to form a national government. It may seem that the more support for retaining the tax incentive, the better the chance of convincing Wilson to change his position.

Unfortunately, that’s not the way politics works.

Broadbent’s partisan efforts — abandoning policies in order to support a tax measure simply because the government is getting rid of it — are discouraging enough in that the NDP leader is considered the most popular of our national politicians. What’s worse is that Broadbent’s position may have backed Wilson into a political corner.

If Wilson was wavering in his commitment to do away with the earned depletion allowance, if there was a faint hope that he might be swayed by the groundswell of support from mining communities such as Kirkland Lake and Sudbury, the NDP leader’s eagerness to abandon principle may have steeled Wilson’s determination not to make any changes.

In politics, it seems to matter less what one does than that one does the opposite of “the opposition.” Lost in that adversarial approach is an honest effort to do what’s best for the people.

Broadbent will support flow-through because Wilson says he’s scrapping it. It may well be that if Broadbent supports it, Wilson will be convinced that it should be done away with.

If so, it will be the mining industry that suffers from these politicians’ games. But then, what else is new?