Falcon’s Promised Tax Cut Would Sink Services in BC

Kevin Falcon’s desperate promise of a big income tax cut flopped politically and would be a policy disaster.

BC United is on the brink of an epic defeat that could wipe out the remnants of the BC Liberals for several elections.

Falcon’s last-ditch effort to avoid being swept into the dustbin by John Rustad’s BC Conservatives was a promise to deliver the “largest tax cut in British Columbia’s history.”

A BC United government — now a fantasy — would remove tax on the first $50,000 of income, he promised. Only the first $11,980 is now tax-free.

The party’s news release said that would mean an average $2,050 saving for British Columbians. Its accompanying background document said “up to $2,050” — a big difference and an indication this is not well thought through.

Really low-income people will get no help. Those with incomes under $50,000 will pay less in taxes. Everyone earning more will get the full benefit.

Lindsay Tedds and Gillian Petit took a more rigorous look in Policy Options and found the maximum savings would be $1,924.

Tedds and Petit also noted “that low-income B.C. residents would get no benefit, while middle-income and high-income individuals would have their taxes reduced by varying amounts. Those with incomes above the median income would see the largest absolute and relative benefit.”

I imagine the demoralized BC United campaign team was expecting game-changing enthusiasm. Who doesn’t want to pay less?

Alas, the promise was a dud. Either no one noticed, or no one cared about a fringe party’s platform.

One made even fringier by the tax cut promise.

The income tax cut would mean a $5.4-billion loss in the government revenues that pay for teachers, nurses and doctors’ visits. (If you can find a doctor.)

No problem, says Falcon. The idea that cutting budgets means service reductions is one of the “great myths of the left,” he said.

Seriously?

Falcon’s income tax cut would slash government revenues by about seven per cent. The party has also promised to eliminate the gas tax and some carbon taxes — another $1.3 billion in lost revenue.

That would leave a $6.7-billion hole in the provincial budget. About 11.8 per cent of government spending on services. And more than the budgets of the agriculture, finance, forests, housing and post-secondary education ministries combined.

Managers can always trim expenses. But reducing revenues by almost 12 per cent means deep cuts to already stressed services.

We have seen an earlier version of this movie.

In 2001, newly elected BC Liberal Premier Gordon Campbell cut income taxes by an average of 25 per cent on his first day in office. The Liberals had campaigned on lower taxes, but no one expected such a radical experiment.

It served the Liberals’ purpose. Cutting $1.8 billion of revenue through tax changes created a crisis that could be solved only by reducing services and — illegally — slashing wages and gutting job protections for about 5,000 government employees.

Those cuts were just eight per cent of revenues in 2001.

Falcon’s desperate gamble would set the stage for much deeper across-the-board cuts, and much worse services for British Columbians.

And it has confirmed this is a now an election based on a simple choice between the BC Conservatives and the NDP.