Potayto versus potahto

I heard Trevor Holder on the news last night railing against the Liberals for suggesting the HST tax cut on electricity would be chopped. “They voted against every tax cut”, Holder said. “We’re a party that likes tax cuts and they don’t”, he intoned.

I like tax cuts. It would be hard to find anyone who doesn’t. But the majority of people (with the exception of the Tory caucus) understand that nothing happens in a vacuum. Tax cuts need to be tied to some objective – some broad goal that is worth the tradeoff.

So let’s recap the Tory tax cuts of the past seven years:

Tax cut: Cut small business taxes – bragged about the lowest rate in Canada
Result: The number of small businesses actually dropped – the second worst performance of small business startups (decline) in Canada

Tax cut: Marginally cut personal income tax
Result: More people than ever leaving the province

Tax cut: HST cut on electricity costs
Result: ?? Not implemented yet. But because this specific tax cut has not been implemented by any other province or state in all of North America you have to wonder why? At at time when politicians and environmentalists want more tax on energy, Lord wanted less. The reality is that the HST cut was not tied to economic, enviornmental or even social objectives. It was a classic CYA during an election cycle. Lord and his handlers figured that if people saw their power rates rise by 10% or so they might take it out on the politicians. Now I don’t dispute that some politicians make decisions based purely on politics (whew) but a $100 million tax cut mainly to middle and upper class New Brunswickers to cover over inept NB Power management is going way too far in my opinion. (And I am taking the moral high ground here. That tax cut would have saved me $500 or more).

The bottom line?

If you are cutting taxes and exposing your province to the need for more Equalization, you better have a good reason. Tax policy should be tied to economic or social policy. Lord’s tax policy was tied to neither (at least based on the results).

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0 Responses to Potayto versus potahto

  1. Anonymous says:

    With the feds ignoring the fiscal imbalance issue and the expectation of huge tax cuts in order to get re-elected, people better start being prepared to either start paying more provincial tax or property tax-or else cutting services even more to the bone.

    What’s CYA?

  2. David Campbell says:

    cover your ass