OP/ED: Wanna be premiers shouldn't try to play Santa Claus
B.C. taxpayers are in a grouchy mood these days – so grouchy, in fact, that Gordon Campbell is finished as premier after nine years and five months in office – what amounts to a century in B.C. politics. Now, as the competition kicks off to choose a new premier, grouchy taxpayers need to be watching their wallets closer than ever – making a list of costly campaign promises, and checking it twice, taking names of politicians planning to be naughty, while trying to look nice. Who can blame British Columbians for taking a cynical attitude these days? Let’s review the events of the past six weeks. In late October, the premier announced a 15 per cent cut to personal income taxes for those earning under $72,293. That early Christmas present would have meant nearly $1,000 of extra tax-home pay next year for a married couple of school teachers, each earning $60,000. Fast- forward a few weeks, Campbell is gone and his cabinet has replaced the money in the Christmas stocking with a big lump of coal, cancelling the tax cut to save Victoria $568 million – money that’s now going to be deducted from everybody’s paycheque as originally planned. Finance minister Colin Hansen was given the role of the Grinch, emerging from the cabinet meeting looking a little bit green as he shared the bad news. And no wonder Hansen’s colleagues were anxious to hang on to the money: last week Hansen released Victoria’s latest financial update – personal income tax revenue came in $105 million lower than the budget forecast.And natural gas royalties were $145 million less than expected – a shortfall of nearly 50 per cent. When you add up the revenue disappointments from personal tax, gas royalties and a projected $100 million shortfall in property purchase tax from a slower housing market, it’s an $825 million shortfall from the 2010 budget. But wait! Victoria now expects corporate tax revenue to double (double!), erasing the losses and leaving the province where it started, with a colossal $1.7 billion deficit for 2010, as predicted in the budget. Honest. Colin Hansen’s discomfort is evident every time he talks about the budget these days, making some taxpayers yearn for the days when Carole Taylor was supervising the elves in the finance ministry. She made it look easy. Carole Taylor made it look easy because it was easy – five years ago, Victoria was sitting on a windfall of natural gas revenue – $1.9 billion in a single year. Overall resource revenues reached nearly $4.6 billion. This year, Hansen will be lucky to finish the year with $377 million in natural gas revenue, and $2.7 billion in resource money. So here’s why we need to keep a close eye on those gift-giving would-be premiers this holiday season: back in 2001, long before he started talking about a golden decade for B.C., Premier Campbell appointed a blue-ribbon panel of experts to go through Victoria’s books. They warned of “a serious structural imbalance that represents a threat to the financial health of the province.” Under Campbell’s predecessor Glen Clark, the province’s total debt had grown from $29 billion in 1996 to nearly $34 billion, with annual interest costs rising to $2.6 billion in 2001. Ten years later, at the end of the golden decade, the province now projects its total debt to reach $47.8 billion by the end of the fiscal year. And with the lowest interest rates in a generation, our annual debt service costs will top $2.3 billion: that’s more than it costs to run the province’s entire system of colleges and universities; that’s more than double what we spend on Pharmacare.
B.C’s next premier certainly won’t be able to spend like Santa Claus. Or pretty soon, we’ll be forced to save like Scrooge.
Gregory Thomas, British Columbia Communications Director, Canadian Taxpayers Federation