James tells business leaders she will lower, not raise, their taxes

Vaughn Palmer,
Vancouver Sun
March 27, 2009

But will leader's view prevail if NDP is elected?

Opposition leader Carole James spoke to business leaders in downtown Vancouver on Thursday and reminded them of something that not many of them expected from a New Democratic Party government.

She'll give them a tax cut. And not a small one either.

"Maintaining a competitive tax environment is extremely important," said the text of the speech James delivered to the crowd of about 100 who assembled for the breakfast meeting organized by the B.C. Business Council.

"It's why I am going to lower your taxes, not raise them."

Then the swipe at the B.C. Liberal government:

"British Columbia, I have to say, is one of the only places in the developed world that is increasing taxes during this recession."

She meant the carbon tax, of course.

Or "the gas tax," as the NDP prefers it.

"It's set to go up next year, the year after that, and the year after that. Marc Jaccard, the government's top adviser, says that it has to go up to 24 cents a litre before it will make any real dent in greenhouse gases."

James let the number sink in.

"Twenty-four cents," she said. "Economic recklessness of the worst kind."

Then the promise: "The government's gas tax must go. And should I have the opportunity, it will be eliminated."

Yes, she said that a year ago. But worth noting again, particularly given the dollars associated with the promise and the projected savings for the business community.

Based on the government's figures, the carbon tax will collect about $2 billion over three years. Moreover two thirds of the tax is paid by businesses of all kinds.

So James is promising to cut taxes on business by $1.3 billion over three years.

How can that be when the government claims the tax is revenue neutral?
Because revenue neutrality was achieved by returning the money raised from the carbon tax through cuts in other taxes.

James would get rid of the carbon tax, mostly paid by business, without cancelling the offsetting cuts in other taxes, which mostly benefited individuals. Hence her promise, taken in isolation, would disproportionately benefit business.

But if James repeals the carbon tax without reversing the reductions in other taxes, wouldn't that blow a hole in the provincial budget?

"Yes," James conceded, eliminating the carbon tax "will add to the deficit ... in the short term."

And in the long term? James made only a passing reference to her preferred substitute for the carbon tax as a means of inducing reductions in carbon dioxide and other greenhouse-gas emissions.

"I support cap-and-trade," she said, and that was all she said. Most analysis of cap-and-trade suggests it is a form of hidden taxation and one that may well be paid in larger proportion by business and industry.

James made a second reference to her intention to increase the deficit, when she spoke of the need for a more "aggressive" plan of economic stimulus and infrastructure construction than the one announced by the B.C. Liberals.

"Infrastructure, as you know, will cost money.

"It will increase B.C.'s relatively low public debt. And yes, in the short-term, it will increase British Columbia's deficit."

Considering just the $2-billion tax cut and the increased capital spending, it does sound as if James's short-term deficit will be larger than the one proposed by the B.C. Liberals, namely $500 million this year and $250 million next.

Still James defended her debt-and-deficit intentions. "It's necessary to keep people working. It's necessary to build the infrastructure a modern economy needs. And it's necessary to ensure that vital public services aren't slashed."

James promised the business community "will be fully consulted on the government's economic and fiscal policy." The text didn't mention "labour laws, regulations and policies," but business leaders are more worried about what she would do to make it easier for workers to organize and hold their employers to account.

For the rest, James was a study in moderation.

"I support the creation of wealth. I support a strong and vibrant business community. I support a competitive tax regime. And I support a competitive regulatory regime."

She even pledged "to fight the idea that protectionism is any sort of economic solution. Because it's not. ... Open trade creates wealth, it drives innovation, it improves productivity and it grows our economy."

I wonder if she's told the hard-liners in her own party.

But there's the problem for business leaders in dealing with James. Even if they credit her good intentions, they wonder if her moderate views would prevail, should the NDP take power.

vpalmer@shawlink.ca