May 15, 2002

Campbell: A Robin Hood in Reverse

Looking back a year is something usually reserved for the week before New Years, but this week we have the occasion of the first anniversary of Gordon Campbell's historic election sweep. Who would have thought that the mild mannered politician who promised to do a better job with social programs while slashing taxes would make Ontario's Mike Harris look like a leftie?

Campbell apologists are fond of saying people voted for change. The Premier's expression is "people elected us to do things differently." Both are true but both beg the question of what change and how differently. The answer is found by going back and looking at what Gordon Campbell said in opposition and during the campaign compared to what he is doing as Premier. His apologists are reluctant to do that as they prefer to say "you should have known what would be changed."

The much touted New Era Document, NED, was the Campbell election platform. It is still available on the BC Liberal website. The pdf version is complete with full colour graphics containing headlines such as "We don't have enough hospital beds" (page 19). That document promised (page 5) that a BC Liberal government would "Cut the base personal income tax rate to the lowest rate of any province in Canada for the bottom two tax brackets, on the first $60,000 of income, within our first term." When the NDP criticized the Campbell campaign for planning massive tax cuts for high income earners and corporations, the Campbell campaign pointed to NED and said the only promise was for the bottom two tax brackets.

On June 5th massive tax cuts were introduced for high income earners. BC has five tax brackets. Before the tax cuts, the brackets ranged from 8.4% on the first $30,000 of income to 19.7% on income over $85,000. It is important to recognize that a person making over $85,000 did not pay 19.7% on all income, but paid 8.4% on the first $30,000, 11.9% on the next $30,000 and so on as that person worked up through the brackets. Consequently, a cut in the bottom two tax brackets would have benefited the people on the top as much as the people on the bottom as everyone pays taxes on the first part of their income at the bottom rate.

What the Campbell government actually did was rather than cutting the bottom two brackets as promised, it cut all the tax brackets. The result was that a person making $30,000 per year got a tax cut of $500 while a person making $150,000 per year got a tax cut of $5,800 - with 5 times more income the tax cut was almost 12 times greater. The distortion in favor of the high income brackets was so bad that the top 8,000 tax payers in the province (one third of one percent) got $200 million per year in benefits (14% of the total benefits). All this was done more than a month before the fiscal review panel appointed by Campbell reported out on the state of the province's finances.

Having paid off the top income earners, the Campbell government then eliminated Medicare coverage for eyeglasses, physiotherapists, chiropractors and a host of other "auxiliary services". In February it increased MSP premiums by 50% and increased the sales tax from 7.0% to 7.5%. In other words, it weighted the income tax cuts to benefit the top and then it clawed back the savings with service cuts and tax increases that primarily hit the bottom. People making $30,000 are worse off as the result of the service cuts and tax shift. Over 63% of BC taxpayers have income of less than $30,000 per year - that is more than the 58% who voted for Premier Campbell. That 63% are worse off before even talking about recent cuts to health, education, welfare, WCB or dozens of other services.

The story of the first year of the Campbell government is one of dramatic shifts in income from the bottom to the top. The theory is that those shifts were necessary in order to encourage entrepreneurs to invest in BC. In fact, many of the high income earners are actually paid by the public sector - doctors, deputy ministers, senior municipal administrators, school superintendents and the like. Those who have the most, get even more. Can you picture Gordon Campbell as the Sheriff of 'Nothing'ham?