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October 27, 2010

Campbell's 15% Cut Gives 50% of Benefits to Just 20% with High Income

The 15% tax reduction announced by Premier Campbell in his TV address is NOT a cut restricted to those making less than $72,000 per year; it is a tax cut for everyone on the first $72,000 of their income. That means that the 20% of taxpayers who make over $72,000 a year will get 50% of the total benefits. The total lost revenue is estimated by the Campbell government to be $568 million; those making over $72,000 a year will collectively reap $284 million per year in tax cuts. Once again Campbell has tried to make it look like he is helping the middle class, when the truth is he is helping higher income earners.

Those making less than $72,000 per year are 80% of all taxpayers, but 40% of all taxpayers have incomes so low that they don't pay any provincial income taxes, hence they won't benefit from Campbell's announcement. Another 40% of taxpayers pay some provincial tax, but not enough to get the full benefit that will be enjoyed by those in higher tax brackets.

Campbell's brief comments on education would be laughable if the problems facing children who are not ready for school weren't so severe. He acknowledged that after 10 years in power, 1 out of every 5 grade 4 students are not achieving basic skills expected for their grade level. He wants British Columbians to believe that like magic, that problem will be solved in the next 5 years, but he isn't saying how much it might cost or how it would be accomplished.

A quarter billion dollars that his tax cut will give to higher income families would go a long way towards addressing child poverty and children who are not ready for school. That is why announcing major tax policy four months before the next budget and without consultation has a very high opportunity cost. There are better and more equitable ways of spending that money than using it to try to buy a little popularity for Campbell. He's shown that he can't consult and isn't responsible enough to set the course for British Columbia.

He began his TV address with a rehash of why he imposed the HST, starting by saying that businesses wanted it. He failed to mention that it is a $2 billion per year (forever) tax shift from some businesses to all BC families. He failed to mention that there are winners and losers, let alone give examples from each group. Losers include the restaurant industry where data from Statistics Canada are already showing a drop in food sales. Losers also include any service business that is labour intensive, like hair stylists or gardeners. He can't prove his claims about benefits from the HST, yet most people can see the negative consequences of the hated tax.