There was never any debate about the outcome of the B.C. election: the result was known a year ago. Debate has focussed instead on whether or not Gordon Campbell’s Liberals would be ideological soul mates of Mike Harris. Given that the provincial Liberals are really a broad coalition involving federal Liberals, former Socreds, Tories and federal Alliance members, the prevailing wisdom is that the Liberals will be slightly more practical and less driven by ideology.
But almost the first act by the new government suggests that it has locked itself into policies virtually identical to the Ontario Tories. The Liberals’ huge tax cuts, implemented July 1, are amongst the largest in Canadian history. They not only savage the province’s revenue but also were given so disproportionately to the wealthy that they resemble more the revenge of the rich than any discernable fiscal policy.
According to the Canadian Centre for Policy Alternatives (CCPA), by 2002, fully 20 per cent of the cut in personal income taxes will go to the wealthiest 1 per cent of B.C. residents. These cuts are actually far more regressive than even the Harris cuts in Ontario. The Liberal election platform promised tax cuts for low and middle-income earners. But if those earning $40,000 voted for get a tax cut, the $640 they will receive will be a big disappointment – compared, at least, to the $7,800 Gordon Campbell’s friends earning $200,000 will get.
All of this was accomplished at breakneck speed; most notably well before Mr. Campbell’s so-called blue ribbon Fiscal Review Panel had a chance to examine “the books.” The province’s Treasury Board says the cut won’t come even close to “paying for itself,” as promised. It will generate just a 10 per cent return via economic stimulus, leaving the cupboard depleted by about $1.2-billion for several years to come.
Campbell admits he will have to borrow the money to pay for the tax cuts. There is breathtaking hypocrisy in this, given the nearly permanent state of hysteria the Liberals and their media cronies created over the NDP’s repeated deficits. In fact, just as the NDP balanced the books – a kind of deathbed repentance – the Liberals blithely create a new one. The difference, of course, is that the NDP’s deficit arose from paying decent wages, freezing tuition fees, and refusing to cut health care and education.
The notion that tax cuts pay for themselves has never been supported. Now the Liberals will have to reply on other, equally dubious justifications. They talk a lot about the brain drain and about being competitive with Alberta and Washington State. But, if they rely on the available evidence, they will go zero for three on these arguments as well.
The brain-drain myth dies hard despite overwhelming evidence that high-tech employees and other professionals do not leave Canada because of taxes. A study done by PricewaterhouseCoopers and ComputerWorld Canada in 1999 asked high-tech workers to rank the factors they used to judge their jobs. They listed take-home pay eighteenth. The top five factors involved how management treated them and whether or not they had access to the latest technology. By far the largest exodus of professionals to the U.S. is actually from the public health-care sector. Why? Because governments laid off thousands of nurses and now won’t pay the market price to get them back.
What about the so-called “Alberta Advantage” that the Liberals whined about for years? It doesn’t exist either. According to the CCPA, a two-income B.C. family of four earning $90,000 paid $830 more a year in taxes than their counterpart in Alberta last year. But if that Alberta family sent just one child to university, the advantage would all but disappear in higher tuition fees. Add in higher private health-care expenses and other user fees and you have the Alberta disadvantage. If all of B.C.’s direct taxes were considered, they were the second lowest in the country, after Alberta, except for the top 4 per cent of income earners.
As for being tax-competitive with Washington State, the average family in B.C. does pay almost $1,700 more a year in provincial taxes than their Washington counterpart. But a recent CCPA study comparing B.C. and Washington, “In Search of the Good Life,” revealed that university students in Washington pay almost $1,700 a year more in tuition fees. Families spend $763 a year more for health care and $540 more for the water, electricity, and home heating fuel. They spend $2,300 more per year for life insurance, public pensions and unemployment insurance.
But all of this is just so much factual chaff in the ideological grain as far as the Campbell Liberals are concerned. They are committed to govern for the rich and powerful, not for the province and certainly not for the vast majority of its citizens. No matter how you cut it, ordinary British Columbians will be sacrificing – through higher debt or slashed services – so the wealthy can get even wealthier.