Premier Campbell's Tax Cut Surprise

British Columbia Premier Gordon Campbell appeared in a pre-recorded televised speech Wednesday evening to promise an income tax cut and a greater emphasis on education. He also continued to defend the harmonized sales tax.

"Our government has always felt that the best thing we could do is leave more money in your pocket so you can make your own decision about what's best for you and your family," Campbell said, adding that he understands many B.C. families are struggling from paycheque to paycheque trying to keep up with the rising cost of living.

New Democratic Party leader Carole James dismissed the tax cut as a desperate move by a premier trying to save his career.

Campbell announced the 15 per cent tax cut on income under $72,000, saying it was the second largest such cut in B.C. history, after a 25 per cent cut his government made in 2001 immediately after taking office.

The tax cut, which will begin Jan. 1, 2011, will take $568 million out of B.C.'s budget, which is already in deficit. That amount will rise to $638 million by 2013-14. A backgrounder provided to reporters said the government remains on track to balance the budget by 2013-14.

In his last quarterly report, released in September, Finance Minister Colin Hansen identified $2.1 billion that's available over the next three years thanks to higher than expected revenue from corporate taxes.

Higher savings for bigger paycheques

For someone earning $50,000, the cut Campbell announced today will reduce income taxes by $354. For someone earning roughly $72,000 or above, the difference will be $616. A person earning $20,000 will keep an extra $68 a year.

The cut will affect 1.9 million taxpayers in B.C., Campbell said.

"I believe in a competitive tax environment but this is a ridiculous way to set tax policy," said NDP leader James. "Fiscal irresponsibility and a government trying to buy back public support is the only thing I saw with this tax cut."

It's unclear where the money will come from, she said. "I want to see the budget. I'm not going to guess on where the money is or where the money might come from. And I certainly don't trust the premier and the BC Liberals to give me a straight answer on that. I want to see the numbers."

She said finding the money may require more cuts to government programs and services.

University of Victoria political science professor Dennis Pilon said the tax cut is good politics but bad policy. "Strategically it's another brilliant move by the premier," he said. "Policy wise it's really irresponsible."

People who earn $72,000 a year don't need the money as much as other people need the services those taxes would pay for. "Any of these income tax cuts benefit people who pay more taxes," he said. "You're giving money to people who in my view don't need the cut."

Zombie arguments

Nor is there any evidence that tax cuts help the economy, Pilon said. "It's what we call in academe garbage arguments or zombie arguments. They've been disproven so many times, but they keep popping up."

It is a move that will, however, likely play well with the BC Liberals base, people who are "mad as hell at him" over the introduction of the HST, he said.

These kind of cuts hurt the working class but you're unlikely to hear that from the NDP, he said. "The New Democrats will find this very hard to criticize or roll back," he said. "Both parties are chasing the professional middle class."

Such positions contribute to working class voters staying home on election day, he said, pointing out that some 50 per cent of eligible voters failed to cast a ballot in the 2009 election.

B.C. Federation of Labour president Jim Sinclair, who has argued in favour of raising taxes, said Campbell is in a rut and "all he can scream is 'tax cut, tax cut, tax cut.'"

The speech was "the same old, same old, and kind of pathetic," said Sinclair. "I think his career's over. It's sort of desperation again and I think everyone in the province knows he's done."

If the premier wanted to help young people he could have raised the minimum wage and cut tuition fees for postsecondary education, he said. Nor was there any mention of how B.C. has Canada's highest rate of child poverty, or any plan to reduce it. "The big lie of the decade was they were going to lower taxes and you'll have a better life," said Sinclair.

It's strange that after 10 years in government Campbell is admitting people are working longer and harder for less money, he said. "Wages have stagnated under you, Gordon Campbell."

Early education focus

Campbell also promised to build 100 more StrongStart BC centres to provide free early learning services for adults and their children who are under five years old and to introduce testing of five-year-old children entering school "to tailor educational programs to meet their learning needs." There are already some 300 such centres in the province.

The StrongStart centres will cost $3 million a year, the early childhood learning assessment will cost $1.6 million the first year and raising the standards for grade four students will cost $8.9 million a year once it is fully running.

"We commit to every parent in the province that within the next five years, every child that leaves grade four will be reading at grade four level, will be writing at grade four level and will be doing math at grade four level," Campbell promised.

"That will take millions of dollars of investment, but it's something that's worth doing because it opens up all kinds of opportunities for our young people in the province of British Columbia."

Campbell spent the first part of his address defending the HST, saying the cost of 80 per cent of goods and services were unchanged by the move that combined the seven per cent provincial sales tax with the five per cent federal GST.

"So should we have consulted you more?" he asked. "I sure would have liked to." He repeated his promise to respect the results of the referendum on the HST set for Sept. 24, 2011.

Campbell's focus on education shows how miserably his government has failed in that area, said James.

She also criticized Campbell for missing the opportunity to talk about improvements to health care, creating green jobs or diversifying the economy. Nor did he likely convince anyone the HST is a good idea, she said. "I think he failed miserably. He talked down to the public. He didn't look comfortable."

The speech was a waste of $100,000 that could have been better spent, she said.

A government official declined to say how much taxpayers paid for Campbell's 23-minute address -- filmed in the Vancouver cabinet offices -- and the television time, saying the premier will provide those details tomorrow.*

A recent Angus Reid poll put Campbell's personal approval rating at nine per cent.

*Update, 11:20 a.m., Oct. 28: Gordon Campbell's televised address cost $240,000, CKNW radio is reporting the premier told the Bill Good Show this morning.