Oct 6, 2009

James at the UBCM: A welcome move off revenue-neutrality


In her  speech last Thursday to the annual meeting of the Union of BC Municipalities, NDP leader Carole James declared:

“I am calling on the provincial government to cancel the corporate tax cuts that are scheduled to come in over the next two years related to the carbon tax. And let’s put that money into a Provincial Green Fund for transit improvements and green initiatives across the province. By 2012 that would mean approximately $150 million in annual contributions in a Green Fund. That would go a long way toward hitting the emissions reduction targets as set out in law by the government.”

Predictably, James’s call drew the ire of business groups and some pundits. The Sun’s Vaughn Palmer took James to task, saying that, given the economic downturn and woes in the forest industry, now was not the time to deny corporations a forthcoming tax cut (BC’s corporate income tax rate is scheduled to drop over the next two years from 11% to 10%).

In my view, however, James has got it right. Structuring the carbon tax as “revenue-neutral” has always been a bad idea (as the CCPA’s Marc Lee noted in this report). Rather than returning all the carbon tax income in the form of widely dispersed tax cuts to individuals and corporations, it makes much more sense to use some of that money to help meet our climate goals, and some to offset the impact for low-income households.

The task at hand is too great to be wasting precious dollars with revenue-neutral gimmicks.

As for the corporate and forestry sectors, dollars are too scarce to be offering money for nothing. As the CCPA has long argued, across-the-board corporate tax cuts represent a foolish leap of faith –– we hope the corporate sector will reciprocate with new investment in the real BC economy, but maybe they will and maybe they won’t. It is much more advisable to direct our dollars in focused and targeted ways that reward actual investment, ideally in new technologies that see us meeting our greenhouse gas reduction goals.

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