The Canadian Centre for Policy Alternatives released a report this week that says if the province returned to 2000 tax levels it could wipe out the deficit, estimated at $1.47 billion, in one year.
That’s something to think about.
B.C.’s finances are tight because of several cuts to both personal and business taxes that have thinned the budget steadily over the last decade. If the province collected the same amount in tax revenues as it did in 2000, it would have $3.5 billion more in public funds, no deficit, and the ability to invest in enhanced and even new public services.
While raising taxes doesn’t sound like a great idea on the surface, there is no evidence that lower taxes have stimulated our economy. In fact, the opposite appears to be true.
When the Liberals came in they gutted the public service and got the province out of the red. But the economy was in a different place then. At the time our resources were selling well globally, the U.S. housing market was booming and the economy was generally in good shape.
Where our taxes come from has altered, too. We are taking less from corporations and more from families, less from higher income earners and more from the middle class.
British Columbians now have to decide what they value more: services or disposable income – or find a balance between the two.
Experience says cut taxes to create jobs, but in poor economic times governments are not anxious to take those kind of risks.
Whether we have a Liberal, NDP or other government, tough decisions on taxation are going to have to be made.
A huge deficit is a job killer. It leads to consumer pessimism and an economic slow down.
Raising taxes will not be an easy sell for any government, but we may have no other choice if we want to see services maintained.