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High time for another tax cut |
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Written by BRUCE STRACHAN
Citizen columnist
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Wednesday, 23 July 2008 |
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BRUCE STRACHAN
Dirksen’s comment referred to government spending habits, but it’s equally applicable to rising revenues, particularly in B.C.
Closer to home, and just last week, two good-news income items made the news.
One, public accounts for the last fiscal year showed B.C. with a $2.9 billion surplus and two, the B.C. oilpatch produced $1.3 billion in the sale of oil and gas rights.
No kidding, now we’re talking real money, $4.3 billion to be exact.
And it’s our money. Right down to the last billion.
So, how about an income cut?
Share the wealth; stimulate the economy.
Tax cuts were a big part of Gordon Campbell’s economic policy in 2001. How about an encore?
By way of a quick rewind, in the runup to the 2001 election campaign, then opposition leader Gordon Campbell campaigned on the promise of a 25-per-cent personal income tax cut.
He won - and true to his word - the tax cuts came, 25 per cent on all categories.
In 2001, this was a brave move; the NDP scorched-earth policy had left the province in economic decline. Times were tough and government revenues had slowed.
But Campbell stuck to his 25-per-cent income tax cut, he even had to bump sales tax a half a point, but the personal income tax cut stayed.
Within a few years the B.C. economy improved, the temporary sales tax hike was rescinded and the Liberals' gutsy income tax cut began to pay its way.
The left wing will never understand this, but lowered income taxes improve the private-sector economy and at the end of the day produce more income.
By way of illustration, in spite of the lower tax rates, B.C. government personal-tax revenues rose from $6.4 billion to $6.7 billion in the last fiscal year.
Plus, we’re now sitting on the aforementioned $4.3-billion surplus.
In announcing the budget surplus, newly minted B.C. finance minister Colin Hansen took the cautious road, saying, “Another surplus indicates that the prudent planning and well-managed spending is proving successful even as we face difficult challenges (are there any other kind?) in our natural resource sector.”
As an aside, it’s clear Hansen’s speech writers hadn’t talked to energy minister Richard Neufeld’s speech writers, who on the same day were gushing over the $1.3-billion increase in oil and gas leases.
Meanwhile back at the treasury, and if we are facing challenges - difficult or otherwise - wouldn’t it be time for a repeat of the 2001 economic stimulus package?
Let’s take the personal income tax revenues of $6.7 billion, knock them back another 25 per cent - a $1.67 billion cut, but well covered by the $.4.3 billion surplus - and see what happens.
It’s a given, tax cuts in all categories benefit all taxpayers. If you’re rich or poor, a tax break is a plus.
Tax cuts stimulate spending and increased spending stimulates the economy.
There’s one more big benefit to income tax increases and that’s the provincial attractiveness factor.
Former finance minister Carole Taylor took pride in her last budget, saying B.C. had the lowest income tax rates in Canada for those making up to $111,000 a year.
That’s nice, but it’s no home run if you want to attract the heavy hitters.
As B.C. grows we need more doctors, more research scientists, more entrepreneurs, more innovative thinkers and more high-tech investment.
Every enterprise and service we need in B.C. has to attract high-income earners and as nice as $111,000 a year may sound to some, it just doesn’t cut it in today’s labour market.
As my many friends in the trade-union movement used to tell me, if you pay peanuts, you get monkeys.
A tax break is a pay raise, and the first to figure that out are the bright minds we need in British Columbia.
In his surplus budget press release, Finance Minister Hansen said, “British Columbia’s economic outlook remains positive. However, other jurisdictions are experiencing economic hardships which will impact our province.”
Right on Minister, so let’s knock down our tax rates, attract those hardship cases and truly make B.C. the greatest place to live, work and invest.
If income tax breaks worked in 2001 when times were tough, they’re bound to succeed in 2008 when times are good.
Bruce Strachan is a former B.C. cabinet minister and Prince George city councillor. His column appears Thursdays.
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Last Updated ( Sunday, 07 September 2008 )
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Methinks you'd better take off the orange-colored blinders, big guy, and take a good long look at the real world we live in up here. Your freebie campaign for the Liberals is beginning to wear thin, I'm afraid.