Opinion

Paradise Papers, Morneau mess weighing heavily on the government

At the end of the day, Prime Minister Justin Trudeau needs to stop this Conservative storyline in its tracks. And he may have to sacrifice a few friends along the way.

The timing of the global investigative journalistic exposé, on the heels of Finance Minister Bill Morneau’s painful tax troubles and personal financial revelations, made a bad story worse.
The Hill Times photograph by Andrew Meade

PUBLISHED :Monday, Nov. 13, 2017 12:00 AM

OTTAWA—The Paradise Papers may just mean Paradise Lost in Canada and around the world.

They are generating tax reverberations in capitals around the world about the extent to which the superrich legally avoid taxes while we ordinary schmucks just can’t.

The names bedazzle, from queens, to prime ministers to rock stars to senior presidential advisers. The latest information shows how even tax officials assist in mapping out the complex rules that permit companies like Apple to park billions in profits by way of offshore tax-free accounts.

Most Canadians don’t follow the details of tax reform, and the complexity of financial peregrinations outlined in the Paradise document dump, would normally leave most of us with a mathematical hangover.

  

But the timing of the global investigative journalistic exposé, on the heels of Finance Minister Bill Morneau’s painful tax troubles and personal financial revelations, made a bad story worse.

Prime Minister Justin Trudeau has never claimed to be ordinary folk. But his political messaging has been sharply focussed on support for the middle class, and a commitment to improve their financial situation.

But the mid-term summer tax messaging, characterizing farmers and doctors as cheats parking dead money in fake corporations, cut deeply into the viability of that message.

When Morneau neglected to include a villa in France in required financial declarations, the opposition rightfully pounced. Was he advised not to declare the villa, as it was an offshore asset, or did he simply have so much money that he had forgotten about it?

  

Either way, Morneau tried his best to extricate himself from the whole mess by selling everything and promising to forego five million dollars in personal revenue from sale of all shares that post-dated his time in office. That generous gesture reinforced the almost universal view that Morneau is a decent, honest person who got into politics for the right reasons.

But is also focussed attention on the fact that he could give away five million dollars and probably not miss it. Hence, the middle-class narrative that Team Trudeau was trying to promote suffered a second hit. The image of two trust fund babies managing the public purse created a huge opening for new Conservative leader Andrew Scheer, and he pounced.

Within days, the Conservative Party was on television through paid advertising, reinforcing Scheer’s message that he is the only leader who truly represents the middle class. The ads contrasted him to a Liberal leadership that has no idea what is it like to struggle with making ends meet. Finance critic Pierre Poilievre piled in behind to reinforce the contrast between the aw-shucks Tories and the high-flying Grits.

Then came the Paradise Papers.

  

They widened the net by pointing an accusatory finger at the legal tax avoidance strategies used by the chief Liberal fundraiser. Stephen Bronfman became the media target because of a leaked data dump revealing a labyrinth of international accounts.

The CBC was extremely careful to say that no laws had been broken, but experts were trotted out who repeatedly implied anything but.

The story of the chief Liberal fundraiser and close Trudeau friend, dominated the airwaves, and ensnared Morneau as collateral damage.

Had the Liberals not fumbled the ball on tax reform, the Bronfman story would have been a one-week wonder. It comes as no surprise that most people with money hire other people with money to figure out how to keep their money out of government hands.

This whole mess is weighing heavily on the government. It becomes increasingly difficult to make the case that the Liberals are the party of the middle class when three key members of the team are clearly anything but.

Is this fair? No. But in politics, what matters is not fairness. What matters is public perception.

If Trudeau wants to dampen down this perception, he needs to move on the tax front.

An aggressive decision to plug all international loopholes available to billionaires would be a good place to start.

And, some Liberals are saying privately that a lateral move for the finance minister in a future cabinet shuffle would be an effective way to put the whole issue behind the government.

It is admirable to see the leader support friends and colleagues in their hour of need. He did a great job in his defence of both Morneau and Bronfman.

But at the end of the day, Trudeau needs to stop this Conservative storyline in its tracks.

And he may have to sacrifice a few friends along the way.

Sheila Copps is a former Jean Chrétien-era cabinet minister and a former deputy prime minister. 

The Hill Times