Jim Flaherty's Political Future Questioned Due To Income-Splitting Controversy

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Could this be the end?

That's the question pundits are wondering after Finance Minister Jim Flaherty, whose health issues have already spurred questions about his political future, appeared to break with his party on the issue of expanding income-splitting for Canadian families.

The concept, promised by Prime Minister Stephen Harper in 2011 en route to his majority mandate, would allow couples with children under the age of 18 to pool their income together in order to qualify for a lower tax bracket.

Harper vowed to only bring in the measure once the books are balanced, which is expected to be next year. Though Flaherty's latest budget shows Canada is essentially there already.

But the finance minister expressed doubts about the idea on Wednesday, telling the Ottawa Chamber of Commerce it would really only benefit some Canadians.

That's largely the same conclusion reached by the left-leaning think tank, the Canadian Centre for Policy Alternatives, which found 86 per cent of Canadian families would not benefit from the plan.

"It's an interesting idea. I'm just one voice. It benefits some parts of the Canadian population a lot. And other parts of the Canadian population virtually not at all," Flaherty said.

"I would pay down public debt and reduce taxes more, myself, but I am only one person."

Other Tory cabinet ministers — including, notably, Jason Kenney — publicly disagreed with Flaherty.

"All I know is we keep our platform commitments," Kenney said. "We made a platform commitment to introduce income-splitting when we get to a balanced budget. We'll get to a balanced budget next year, that's very clear."

And the finance minister was largely silent in question period Wednesday, leading many to wonder if he had been "benched" by his boss.

Now, the idea that the second-most powerful person in the Harper government would publicly question a key campaign pledge has many wondering if Flaherty can possibly stay on in the job.

Lawrence Martin, columnist for iPolitics, believes Flaherty is as good as done. Not only for demeaning a key Tory promise but for calling into doubt the Harper government's reputation as sound fiscal managers by opining about Canada’s "large public debt."

The Tories' success in slaying the deficit without hiking taxes is a big part of what makes the party appealing to some voters, but Martin now thinks they have "lost control of the narrative."

Now it's not about the erasure of the deficit. Where before there was little controversy over the government’s economic policy there is now controversy aplenty — over the future of income splitting, the future of Jim Flaherty and the national debt.

Here's betting that it's Flaherty who goes and the income-splitting promise which stays. There is no stellar heir-apparent on the Conservative front benches to step into finance — which makes the situation all the more difficult.

Postmedia's Andrew Coyne wrote that the entire affair shows Flaherty, who has showed signs of fatigue and erratic behaviour of late, is in need of a break.

But, much like Martin, Coyne suggests Flaherty has now backed himself in such a corner that he may not stay be able to keep his position.

It is difficult to see how Flaherty can carry on in the job. As a matter of tax policy, income-splitting is squarely within the finance minister’s purview. It is inconceivable that the minister, having attacked the policy in public, should then be charged with putting it into effect — and defending it from opposition attack. Or would someone else have to answer for this part of the minister’s portfolio? No. If it is a choice between the policy and the minister, the minister will have to go.

Coyne concludes that if Flaherty is now unwilling to carry out Harper's agenda, it may be time for someone new in time for the 2015 push.

And the Toronto Star's Chantal Hebert believes Flaherty's remarks have poured fuel on the fire concerning speculation about his future and signaled that all is not well in the Harper cabinet.

Flaherty may have decided that he is done with budgets and, as a result, he may feel freer to speak his mind — regardless of where the chips may fall.

Worse — from Harper's perspective — he may have decided that he would rather be done as finance minister than have to deliver on the prime minister’s income-splitting promise next year.

What is certain is that in a week when Flaherty could be celebrating his imminent triumph over the deficit he is not coming across as that happy a camper.

Flaherty has had a number of unusual moments in the last year.

In November, after Kenney publicly called on Rob Ford to resign in the wake of his crack cocaine admission, Flaherty angrily confronted him in the House of Commons. According to CBC News, Flaherty told Kenney to "shut the f--k up" about the Toronto mayor and the two ministers reportedly had to be separated.

Flaherty is a long-time friend of the Ford family.

In December, Flaherty's behaviour at a meeting with provincial finance ministers renewed speculation about whether treatments for his rare skin condition, bullous pemphigoid, were wearing him out.

Sources told Postmedia's Stephen Maher that Flaherty sat in silence for most of the meeting, occasionally with his eyes closed, and allowed minister of state Kevin Sorenson to quarterback things.

"He did not seem like a well man," someone who was in the room told Maher. "He kind of closed his eyes a number of times, but whether that was just him sitting there listening or not, I don't know."

And, in January, Flaherty was accused of stepping on the toes of the Bank of Canada Governor Stephen Poloz by predicting that Canada will be under international pressure to jack up interest rates this year.

Flaherty, who has been in the post since 2006, is the fourth longest-serving finance minister in Canadian history.

What do you think? Will Flaherty still be finance minister by the time the next election rolls around? Tell us in the comments. 

With files from The Canadian Press

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