Will Clark deliver a big tax cut?
All will be revealed Tuesday in Liberals’ crucially important pre-election budget
Clark hyped it up even more in a news conference.
“When we have a surplus, it means that we are taking too much money from people in their taxes,” Clark said.
“Finding ways to give money back to citizens through lower taxes and lower fees — I’ve always thought that was the wise thing for any government to do.”
All of which means a Tuesday tax cut is now the worst-kept secret this side of a Donald Trump intelligence briefing. It’s just a question which tax the government is going to cut.
Clark has criticized the Medical Services Plan as an “old and unfair” tax on British Columbians, one that she is “determined” to reform.
But the “old” MSP is also “old faithful” when it comes to gushing revenue for government — more than $2 billion a year.
For many British Columbians, the tax is also a hidden one because many employers pay the tax for their employees. Significantly reducing it might not provide a big enough political bang for the Liberals heading into an election on May 9.
What other taxes could the government cut? Reducing personal income taxes would certainly grab the headlines. Clark has also talked about reducing “fees” that people pay, perhaps signalling cuts in B.C. Hydro or ICBC rates.
But the most exciting pre-election move Clark could make would be to cut the seven per cent provincial sales tax.
Reducing the PST by one point to six per cent would cost the government about $1 billion in annual revenue. Chopping the sales tax by half-a-point to 6.5 per cent would cost about $500,000 a year.
With the government currently sitting on a $2.2-billion surplus, a PST reduction must be an attractive pre-election option for politicians looking to razzle-dazzle the voters.
A major tax cut would also deal a blow to the opposition NDP, which is planning to roll out a big-spending election platform that includes a $10-a-day child-care program.
It will be impossible for NDP Leader John Horgan to deliver his $1.5-billion child-care promise and still keep the books balanced (Tuesday will be the fifth balanced budget in a row) if the Liberals kiss off a lot of revenue.
And tax cuts are always crowd-pleasers, so it will be difficult for Horgan to promise to cancel any tax cuts the government introduces (though the Liberals would love it if he did).
All will be revealed this Tuesday afternoon. In the meantime, consider the budget advice the government received from the legislature’s all-party finance committee.
Every year, the committee spends a lot of time and taxpayers’ money travelling around the province collecting budget advice from various groups and individuals. The committee then produces a report with recommendations for the finance minister.
The 2017 committee did not recommend major tax cuts. Quite the opposite, in fact. The Liberal-majority committee called for increased spending on health and education and paying down the province’s debt instead.
The No. 1 priority of British Columbians, according to a committee survey, was “more schools and funding for K-12 education.”
No. 2 on the priority list was “more hospitals, health-care facilities and health-care programs, including mental health.”
No. 3 was “increase programming and funding for environmental protection and climate change.”
“Reduce the PST” was well down the list, with less than three per cent support in the survey. Reducing MSP premiums, ICBC premiums, B.C. Hydro rates and ferry fares scored somewhat higher.
Tax cuts in general scored very low as a priority for the committee, chaired by Liberal MLA Scott Hamilton.
In its final recommendations, the committee called on the government to “review” MSP premiums, the property transfer tax and the small-business tax rate. It recommended the government “maintain a competitive corporate income-tax rate.”
There was no mention of cutting personal incomes taxes. And on the sales tax, the committee recommended the government eliminate the PST on electronic-assisted bicycles. And that was it. There was nothing in the report about dramatically cutting taxes, though it appears that’s the direction Clark and de Jong are heading.
The Liberals’ plan: Slash taxes and hope grateful voters return the party to power for the fifth election in a row.
But after hyping it up so big last week, Tuesday’s tax cut better be juicy indeed. The government has raised expectations. Now it’s time to stand and deliver.