A VAT danger for Democrats

October 7, 2009

A good point on the political dangers of a VAT from David Henderson of EconLog:

But here’s what’s not a quibble: what happened to the political fortunes of the Canadian government that imposed that tax, something that Leonhardt doesn’t mention. Brian Mulroney, the Canadian prime minister at the time, imposed the tax at an initial whopping 7%. It’s true that it replaced a narrower hidden 13.5% tax on manufacturing and that it was designed to be revenue-neutral. But precisely because the GST was visible, it generated enormous opposition. The Liberal Party made repeal of the GST one of its main issues in the 1993 election. By then, Mulroney’s party, the Progressive Conservatives, had kicked him out and replaced him with Kim Campbell. Granted that Campbell ran one of the most incompetent campaigns in Canadian history and granted that there was a recession on at the time. But do you care to guess what happened to the number of seats in Parliament that the Progressive Conservatives won in that election? Let me give you a hint. They started with 169 out of 295 seats. And they ended with a number that can be counted on the fingers of one hand. To be precise, they ended with 2 seats, a 99% drop, and, a few years later, the Progressive Conservative Party disappeared via merger.


We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/


We already know Harry Reid’s polls are lowest ever, we know how popular Nancy Pelosi is, oh did I mention Chuch Schumer, all we need is MORE TAXES and MORE ACORN perhaps a PING PONG match with the CHINEZE PRESIDENT, and some Vodka photos with PUTIN right?.

Can you imagine our president “O”-lympic 3 million appearance all the CNN, ABC, CBS, MSNBC appearances and he hasnt even Met his own GENERAL?

I “BET” Obama is biting his nails and so is Gibbs..

Posted by Ian | Report as abusive

Hmmm, seems you people know very little about Canadian politics and come up with kooky correlations. In the 142 year history of Canada, the Liberal party has been in power for over 125 of those years. The fact Mulroney and his party came to power in the 80s was because the Liberal candidate was laughable (John Turner, ugh) and a far cry from the swagger and brashness of Pierre Trudeau. As well the New Democrats, essentially the Socialist party, made enormous in-roads in those years on the back of the terrible economy in the early 80s. Think of the Perot candidacy taking votes from Bush I and you get the picture – neither wins and they cannabilize each other’s base. GST had nothing to do with 93, the Quebec nationalist movement and the Alberta oil culture cannibalized the PCs (most of their successful candidates were in fact PC members in the previous election). Look at the vote totals for that 93 election and it tells a far different story than the number of seats. Add up the PQ and Reform party seats and add in the 2 for the PCs and you’ll find a MUCH different story too.

There was a helluva lot more important things than the GST going on in Canada at the time… namely re-writing our Constitution and dealing with a declaration of Independence by Quebec. The Liberals nominated a Quebecor as their leader, crazy ol Jean Chretien, to stem the tide in their favour. Unfortunately, he was at best a Trudeau wannabe, but at least he surrounded himself with excellent people and his hand-picked successor won in a landslide as well when he stepped down. But I digress.

And after all this… Kim Campbell posing (seemingly) nude for a national magazine did more to kill her campaign than anything else. We were/are still quite prudish. By the way, how many politic sex scandals has America had this year…?

Posted by the Shah | Report as abusive

Many years ago I represented a Canadian company in Mexico. In a trade show Brian Mulroney stopped at my booth and chatted with me for a while.
When the owner of the Canadian company heard about this he said that he would have punched Mulroney on the face.
Now I understand why. Thanks.

Posted by Eduardo | Report as abusive

The party that significantly raises taxes digs itself an electoral grave. This is despite necessity and or fiscal soundness.

A good example in NJ was Governor Florio. He had no choice but to raise taxes due to significant budget shortfalls during the late eighties-early nineties recession. His successors, certainly benefited, but he was voted out after one term.

Taxes are very tricky politically, and the more you can obscure their effects, and make them less visible overall the better.

Posted by Greg | Report as abusive