10/25/2017 12:13 EDT | Updated 10/25/2017 13:10 EDT

Morneau Scandal Distracts From Real Injustices Of Our Financial System

The larger issue concerns the tax masquerade system created by the Liberals and Conservatives over many years that works to aid the already wealthy.

The so-called "Bill Morneau scandal" has been a farce in many ways, with mainstream media failing to recognize the real scandals plaguing the government's financial control system.

First, the tempest in a teapot. While Morneau wasn't legally required to do so, he made the mistake of not putting his financial holdings, which may run to $40 million, into a blind trust. The office of the Conflict of Interest and Ethics Commissioner didn't object to the fact that Morneau didn't put his fortune in a blind trust. Nevertheless, the vultures sensed an opportunity to embarrass and possibly bring down the Trudeau government's No. 2 man.

"This finance minister used a loophole to keep himself invested in a financial company which he regulates," Conservative Finance Critic Pierre Poilievre said in the House of Commons, "all the while going across the country calling honest plumbers and farmers tax cheats."

Chris Wattie / Reuters
Canada's Finance Minister Bill Morneau takes part in a news conference on Parliament Hill in Ottawa on Oct. 19, 2017.

Morneau skips out of Parliament

National Post columnist Brian Platt criticized Morneau for not being in Parliament all week, and instead travelling out of province to make announcements on the government's small-business tax reforms. But this was a case of Parliamentary press gallery journalists being so hungry for blood that most of them ignored the truth about blind trusts and never looked for the bigger issues behind the story.

Duff Conacher, co-founder of the advocacy group Democracy Watch, said that a blind trust would offer no guarantees that Morneau — or any elected official — can operate without conflicts of interest. Conacher called blind trusts "a sham" because they don't absolve a politician of the knowledge of the shares they own or investments they've previously made. If some economic development threatened Morneau's fortune, I'm sure he would find a way of signalling the trustees as to what they should do.

Morneau's assets are so widespread that it would be almost impossible for him to create a budget that would not touch companies and funds he owns shares in. And his wife Nancy McCain is part of the massive french-fry making family, which is worth more than $3 billion. Together they own the Morneau McCain Family Trust.

Elijah-Lovkoff via Getty Images

Bill will help Morneau's family company

One conflict has popped up already. Morneau has been pushing a bill through Parliament, Bill C-27, that would improve business opportunities for firms like Morneau Shepell. Incidentally, the Public Service Alliance of Canada (PSAC) wants the bill withdrawn because it says it would open the door to a disturbing trend of shifting all the risk of pension plans onto workers and retirees. So much for progressivism!

Now that the Liberals have dipped into the Bay Street pool to get their man, it comes down to a matter of trust. Do we trust Bill Morneau not to fiddle with the government budget to benefit himself? I trust him when it comes to personal ethics.

Interestingly, when this all blew up on Morneau, he was trying to put a tax change in place that would have accomplished little to improve tax fairness in the country. Morneau's old Bay Street crowd and others had such privileged access to mainstream media that they've been able to beat up on the plans.

The larger issue not discussed concerns the tax masquerade system created by the Liberals and Conservatives over many years that works to aid the already wealthy.

Bloomberg via Getty Images
Parliament Hill in Ottawa.

Does Morneau have too many conflicts?

Should a man who is part of the most wealthy and powerful clique in the country be made Minister of Finance? The conflicts and decisions he has to make are much more complicated than whether he has a blind trust for his own money.

Morneau has all kinds of numbered companies. Writes Kelly McPharland in the National Post:

"He has holdings in Alberta, though he lives in Ontario, perhaps because Alberta offered tax advantages. He has a chateau in France owned by a company he forgot to mention. He has holding companies for his own family, and participates in one for his wife's family. He's got investment companies, real estate companies and condos in Florida. And, of course, he has the companies that hold his shares in the family firm, if technically indirectly."

This is the Liberal way, and I think the job calls for someone who does not have so many complicated assets and doesn't have all those connections and obligations to serve the power elite on Bay Street.

A greater test will come for Morneau, Trudeau and the Liberals: Are they serious about creating a more just tax system? With the gap between the one per cent and the rest of us continuing to get larger, there certainly is a need for action.

The capital gains exemption should be one target. It benefits the wealthy by giving them a 50-per-cent tax break when they make profits from investing in things like the stock market. The break was created based on the largely belief that those profits would be reinvested in the economy. This costs the government about $5 billion a year. About 50 per cent of the savings go to the top one per cent of income earners.

Getty Images
Skyscrapers in Downtown Toronto, Financial district.

Don't reduce corporate taxes

Corporate taxation should be re-evaluated. Already the government's knee-jerk reaction to drop the Small Business Tax to nine per cent from 11 per cent in 2019 is not a progressive move.

The country's main corporate tax rate, now 15 per cent, is just about half of what it was a few years ago. Neo-liberals would abolish corporate taxes entirely. Hopefully, this is not where the Liberals are headed. Further reductions in corporate taxes would mean a larger burden for Trudeau's fabled middle class, as well as fewer funds to provide the services Canadians expect.

Canadian corporations and individuals hold billions of dollars offshore under somewhat shady circumstances. There has been a lot of talk from government that it will go after taxes owed to the country. Let's see the proof, and let's name names.

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