Taxes and tax cuts

Subscribe to Taxes and tax cuts
The BC government released a discussion paper a few months ago on a relatively new policy tool: environmental tax shifting. The paper was intended to educate British Columbians on tax shifting and invited responses from interested parties.
The response from the automobile industry to the provincial government's discussion paper on vehicle feebates was expectedly swift and critical. Indeed, vehicle feebates--taxing the purchase of vehicles with poor fuel efficiency and giving a rebate to those buying more fuel-efficient cars--and every other policy measure to address transportation's contribution to poor air quality and climate change has been vehemently opposed by this powerful lobby. However, I would urge people to take a good look at their objections and evaluate their validity.
The oft-repeated message that tax cuts will not decrease government revenues has a definite appeal. It says that not only can you have tax cuts, and therefore more disposable income, but there need not be any cost in terms of reduced public services. The mysterious math behind these ideas should be treated with a great deal of skepticism. Even in the new millennium, there is no such thing as a free lunch.
According to recent polls, approximately half of British Columbians agree with the theory that tax cuts will increase government revenues. It's an appealing notion. After all, it's hard to say no when someone says you can have it all--tax cuts, increased revenues, and thus more money to fund health care and other public programs. Problem is, the proposition is just plain wrong.
Dans une étude publiée aujourd’hui, le Budget alternatif de l’Ontario affirme que les réductions d’impôt du gouvernement Harris sont la seule cause de la crise fiscale qui menace l’Ontario. Chiffres à l’appui, l’étude démontre que les Perspectives économiques publiées par le ministère des Finances ´ sont une fausse représentation de l’état actuel de l’économie de l’Ontario, de ses perspectives à court terme, de la situation fiscale et des causes de l’aggravation de celle-ci ª.
British Columbians frequently hear Washington State (WA) held up as an example to follow. We are told we must lower taxes if we hope to remain "competitive" with WA, particularly with respect to the burgeoning high tech sector. But is BC really at a disadvantage in comparison with WA?
As the hefty increases in monthly Medical Services Plan premiums officially take effect today (May 1) for most British Columbians, we should pause and reflect on how dumb a tax medicare premiums really are.
It is hard to argue against freedom. After all, no one wants to be constrained from doing what they want to do. Free marketeers are particularly adamant about their freedom to choose in the marketplace, and about how to spend their incomes. Every year, the ultra-conservative Fraser Institute pronounces Tax Freedom Day--the day when Canadians (finally) stop "working for the government" and start "working for themselves".
When the Liberals took power in BC, the first order of business was a massive tax cut. Promising to revitalize the economy by putting more money in consumers' pockets, the government slashed corporate and personal income taxes by over $2 billion. With the promise that they would pay for themselves--making spending cuts unnecessary--the tax cuts sounded like a good deal.
The recent Ontario provincial budget probably doesn't sound like exciting summer reading to most people, but British Columbians might want to pay close attention. The political message from the budget is clear: Mike Harris' so-called "Common Sense Revolution" is nearing the end of the road-just as BC's "New Era" is getting going.