Falcon Promises a Big Tax Cut to Win Voters

BC United Leader Kevin Falcon tried to transform the provincial election campaign today with a promise to deliver the “largest middle-class tax cut in B.C.’s history.”

The party’s pledge, which echoes the 2001 BC Liberal campaign, is to remove provincial income tax on the first $50,000 earned by every British Columbian, which they say will save individuals an average of $2,050.

“David Eby and the NDP have made B.C. unaffordable,” Falcon said. “The NDP promised to make life more affordable in 2017 and instead we’ve become the most unaffordable province in the country. Everything is more expensive, whether gas, groceries, rent or housing costs.”

BC United’s proposed cut to provincial income tax would cost the government $5.4 billion a year and put that money back in the pockets of people who are struggling financially, Falcon said.

“You’ll keep more of the money you earn,” he said. “I think British Columbians are looking for bold change delivered by people who can actually get the job done.”

The announcement comes after several bad months for BC United. Opinion surveys have consistently shown declining support for the party and it has been losing both donors and MLAs to the Conservative Party of BC.

The current basic personal exemption is $11,980. On annual income between that and $47,937, the tax rate is five per cent.

While anyone earning more than $50,000 a year would save about $2,000 under BC United’s proposal, anyone earning less would save a smaller amount or even nothing, though Falcon said the cut would make a bigger difference for lower income earners.

According to BC United, the change would mean about 60 per cent of British Columbians would pay no provincial income tax.

Falcon said a BC United government would balance the province’s budget by the end of a four-year term in government and the $5.4-billion shortfall could be made up through a combination of economic growth and careful spending.

“No, services do not have to be cut,” he said. “This is one of the great myths of the left.”

The province’s operating budget for the current year includes $81.5 billion in revenue, so the BC United proposal would cut that by about 6.6 per cent.

Several times Falcon compared the proposed tax cut to one the BC Liberal government he was part of made in 2001.

During that campaign his party promised a dramatic cut to personal income taxes — which they announced to be 25 per cent after they were elected, an amount so large even some BC Liberal insiders were surprised.

One of Falcon’s cabinet colleagues from that time, George Abbott, wrote a PhD thesis and book on how the 2001 tax cut created a massive hole in the budget, failed to spur economic growth and inevitably led to service cuts, often with damaging results.

“Although the tax cut was undoubtedly popular among many British Columbians, few fully understood the fiscal repercussions that would follow,” Abbott wrote. “Cautionary advice was dismissed and tax cuts quickly translated into a $4.4-billion deficit and deep expenditure reductions for ministries other than health, education and advanced education.”

Since the three protected ministries made up 70 per cent of the province’s budget, deep cuts had to be made in the resource and social ministries that make up the rest of provincial spending.

“I disagree completely with the greatest respect to my friend George,” Falcon said. “The evidence showed we had the fastest growing economy in the country.... We invested and built more infrastructure over that period of time than any other similar period of time in the history of British Columbia.”

Money from tax cuts gets recirculated in the economy and by the end of the first BC Liberal term in office revenue from personal income taxes had returned to where they had been in 2001, he said.

“We weren’t perfect, I want to be clear about that,” Falcon added. “Yes, there were areas we reduced spending to try and drive different results and we didn’t always get it right.” Governments need humility, he said, but also the courage to change direction when policies aren’t working.