Liberal cabinet meets in St. John's as anger continues over proposed tax changes

The federal cabinet will use a two-day retreat in St. John's to trumpet the government's handling of the booming national economy, even though the Liberals may struggle to be heard over the outcry sparked by unpopular tax reform proposals.

Cabinet expected to focus on the booming economy, address concerns over tax reforms

Prime Minister Justin Trudeau, along with members of his security detail, heads to the morning session as the Liberal cabinet meets in St. John's on Tuesday for two days to plot strategy for the return to Parliament. (Andrew Vaughan/Canadian Press)

The federal cabinet will use a two-day retreat in St. John's to trumpet the government's handling of the booming national economy, even though the Liberals may struggle to be heard over the outcry sparked by unpopular tax reform proposals.

The message of good economic times is likely to clash with the reality of what is happening on the ground in Newfoundland and Labrador. As the prime minister and his team arrived in the province they found an ailing economy and businesses and doctors angry at looming tax changes.

Premier Dwight Ball will bring those concerns to the cabinet table when he gets his chance to brief the prime minister and his ministers at the start of Tuesday's meetings. Federal Finance Minister Bill Morneau is expected to hear similar messages when he meets with local business leaders.

Morneau's plan to close tax loopholes have incensed doctors and small business across the country, and the Liberals are on the defensive.

Ball will argue that the fallout associated with these changes could be especially severe in rural Newfoundland and Labrador, not to mention the rest of rural Atlantic Canada.

Governments across the region struggle to attract medical professionals to small towns, which have the added challenge of higher costs and thinner margins for small businesses.

Ball, according to a provincial source, planned to point out this isn't just a hike of a few points in the tax rate, but a wholesale structural change to the tax system that could derail rural businesses — many of which are family owned.

Newfoundland and Labrador Premier Dwight Ball says he is seeking information on potential impacts from the federal government's proposed tax changes before implementation. 1:14

Ball told reporters Tuesday morning that he met one entrepreneur who mistakenly thinks her tax rate would jump 73 per cent under the changes.

Morneau, in his own scrum with reporters, said he's battling misinformation and fear over who will be targeted, and that he hoped to speak personally to the woman who spoke to the premier.

Finance Minister Bill Morneau responds to questions raised by Newfoundland and Labrador Premier Dwight Ball about unintended consequences his proposed tax changes may have on businesses. 1:00

Staying on the economy

With the Liberals holding every seat in the region, Ball hopes the cabinet finds that message hard to ignore.

A senior federal official speaking on background said efforts will be made to reassure the premier that the Liberal government is not going to forget any part of the country.

But the official also said the government won't flinch from putting the blistering national economic growth rates front and centre as the Trudeau government nears the midway point of its mandate.

"The main thing is to keep the main thing, the main thing," said the senior government official.

The "main thing" for the Liberals is that the economy is roaring nationally, with much higher than expected growth and eight straight months of job gains. Even though many Liberals privately concede they lost the initial PR war over the tax proposals, they feel their message of tax fairness is starting to resonate and insist that internal polling backs that up.

'Government attacks'

Speaking to the Regina and District Chamber of Commerce Tuesday, Conservative leader Andrew Scheer said the Liberal's small business tax changes, the increased cost of boosting the CPP for employers, the carbon tax and increased taxes on beer and wine are hurting Canadians. 

"The greatest threat to the ability of the next generation of Canadians to have that better quality of life than the current one, and the generations that went before us, is not coming from international financiers, protectionist measures or market crashes," Scheer said.   

"The latest attacks on our ability as a nation to create prosperity and ensure that the largest possible number of Canadians are able to share in it are coming from the very people that are charged to protect us," he added. "They're coming from the government."

Conservative Leader Andrew Scheer tells the Regina & District Chamber of Commerce that Prime Minister Justin Trudeau is waging war on middle class farmers and small businesses. 0:31

Preparing for the future

A focus of the retreat will be to plan the legislative agenda for the reopening of Parliament.

The cabinet will also be briefed on Canada-U.S. relations and NAFTA talks by Ambassador David MacNaughton. Chief statistician Anil Arora will walk the ministers through the latest demographic data from the census.

In general, this will be a more forward-looking cabinet retreat, as the government prepares for the second half of its mandate.

The government has started to make changes in its senior staff, moving around some chiefs of staff and bringing others into the Prime Minister's Office. Many government insiders see that as an attempt to improve operations in the run-up to the next election, when delivery and results will matter more than promises and rhetoric.

About the Author

David Cochrane

CBC News

David Cochrane is a senior reporter in CBC's Parliamentary bureau. He previously wrote for CBC Newfoundland and Labrador.

With files from Chris Hall and The Canadian Press

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