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Tuesday September 13, 2011

Unflappable finance minister rewrote Canada's tax rules

Controversial White Paper proposed a payment shift from the poor to the rich

Special to The Globe and Mail

Edgar (Ben) Benson was Pierre Trudeau's unflappable finance minister, the pipe-smoking financial wizard who raised the ire of corporate Canada in the 1970s by bringing in a capital gains tax. Few remember that Benson was also the whip-cracking President of the Treasury Board in Lester Pearson's government who drove medicare through a divided cabinet. It is also because of Benson that the portraits of prime ministers appear on Canadian currency; before he came along, the Queen appeared on all denominations. Benson was 88 when he died in Ottawa on Sept. 2.

"He was a remarkable man, calm, cool and collected, the ideal man for the job," said Marc Lalonde, who was also one of Trudeau's finance ministers. "He was in finance at a critical time, he revolutionized the system. He launched a revolution. It was a revolution, a necessary step and a demanding task.

"What he did was economically justified. The basic tax structure that he put in place is still alive. No one has really touched it since."

Tom Axworthy, who was an economic policy researcher, described Benson as "a great liberal Liberal ... that rarest of animals, a reform finance minister. He publicly opposed the attempt by finance to prevent the introduction of medicare. 'Either we will have medicare, or we will have one less minister,' " he said.

Edgar John Benson was born in Cobourg, Ont., May 28, 1923 into an impoverished family. His father had epilepsy, and the family lived under strained circumstances paying his medical bills. Ben was the youngest of three children in the family and, for the most part, was raised by his older sister. As a youngster he was an outstanding athlete and became a track and field star.

At 17 he lied about his age to join the army and during the Second World War served in Britain, France, Holland and Germany as a flash spotter with the first Canadian Survey Regiment. When the war ended he obtained his commerce degree from Queen's University in 1949. He became a partner in a firm of chartered accountants, bought a radio station, and started teaching economics at Queen's. He was first elected to Parliament in 1962 as the Liberal MP for Kingston and the Islands. Few thought he could take the traditionally Conservative seat for the Liberals.

"He had a great financial background, but he'd never been involved in municipal politics. He wasn't a dynamic speaker. He had the expertise, but not the image," said Ken Keyes, the former Ontario cabinet minister and one time mayor of Kingston who supported Benson. "He was a very clever man, he was a visionary."

In Ottawa, Benson went straight to finance, becoming parliamentary secretary to finance minister Walter Gordon. Gordon was an economic nationalist, who described Benson as "intelligent, sound in judgment, a very hard worker who never seems to lose his cool." Within a year, Benson was promoted to revenue minister, and then in 1964 became the first president of the Treasury Board, responsible for the Canada Mortgage and Housing Corporation.

When Pearson retired, Benson was the co-chairman, along with Jean Marchand, of Pierre Trudeau's bid for the leadership. Right after winning the leadership, Trudeau left the country and, according to his close friend Nancy Southam, checked into a hotel under the name of Peter Benson, the name of one of Benson's sons. Trudeau named Benson as his first finance minister.

"My father was liberal. He was all about caring, but he was fiscally responsible," his son Paul said. "He understood the value of a dollar. He was among the few finance ministers in Canada who had a background as a chartered accountant."

Benson's first budget in 1969 was a restrictive, inflation fighting package that cut federal spending. He then released a long awaited tax reform package in a so-called White Paper, which proposed the tax burden be shifted from the poor to the rich.

Benson's discussion paper included a capital gains tax and tax deductions for child care.

The proposal drew the ire of Canada's corporate community and big business, notably Israel (Izzy) Asper, then Manitoba's Liberal leader. Asper's critique, The Benson Iceberg, raised fears that Benson and Trudeau were bent on turning Canada into a socialist state.

In 1970, according to Trudeau biographer Richard Gwyn, the morning after Trudeau declared the War Measures Act he arrived at his office, only to find Benson "was in a state of shock," because the soldier who had been assigned to guard him had accidentally killed himself when his rifle accidentally discharged.

Benson's tax reform bill was debated for more than a year, some of its more radical proposals eviscerated in parliamentary committee. In the end, closure had to be invoked to get it passed. By then an election was around the corner. Benson had become a political liability in finance, and Trudeau shifted him to Defence, replacing him with John Turner. Miffed by the snub, Benson chose not to run in the 1972 election.

"His intentions were the best," said Herb Gray, who was Benson's parliamentary secretary. "He was a competent minister, a warm serious, caring type of person, a very accessible kind of guy."

Benson spent the next 10 years with Transport Canada until he was named Canada's ambassador to Ireland in 1982.

His marriage to Marie Louise van Laer, the mother of his children, ended in divorce after 28 years. A second marriage was very brief. He leaves his children Robert, Paul, Peter, and Nancy, and his third wife of 24 years, Ottawa lawyer Mary Jane Binks.

With a report from Ron Csillag

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