How We Got Here - 2001 to 2012

[flamingfingers]

Will McMartin has an interesting article - long but worth the read:

The Era of Tax Cut Stupidity that Starved BC
By Will McMartin, 27 Feb 2012
Will McMartin details how the BC Liberals squandered a historic chance to strengthen this province.

Contrary to Christy Clark's pledge in 2001, tax receipts as percentage of GDP did not rise. A decade ago, neatly coinciding with British Columbia's 37th general election, began one of the world's greatest-ever commodity booms.

The province's newly-minted BC Liberal government, sworn into office in June 2001, was presented with an historic opportunity to reap windfall revenues from the development of British Columbia's abundant natural resources -- coal, copper, natural gas, forest products and the like -- and the economic activity associated with their extraction and export.
It did not happen.

Instead, the BC Liberals deliberately enacted massive tax cuts -- intended to benefit the province's wealthiest families and individuals, and most-profitable corporations -- and effectively knee-capped government revenues.

Today, the receipts generated by Victoria's Consolidated Revenue Fund (CRF) -- B.C.'s main financial account -- have sunk to a level not seen since the late 1960s/early 1970s.

And under the broader GAAP measurement, provincial revenues over the last decade have been in a near-constant decline, year after year.

Moreover, as a direct consequence of the BC Liberals' failed revenue policies, the province's most-vital public services -- protection for children, programs for seniors, the justice system, stewardship of our forests and other natural resources, health care and education -- have been slowly starved of funds.

Even worse, the much-touted economic objective of the BC Liberals' tax cuts -- a free-enterprise nirvana intended to attract newcomers and investment -- failed to materialize.

Government's duty
"The legitimate object of government," Abraham Lincoln once observed, "is to do for a community of people whatever they need to have done, but can not do at all, or can not so well do, for themselves -- in their separate, and individual capacities."

Over the following century, governments across the western, industrialized world slowly expanded their scope of activities, introducing rudimentary medicare, extending public education, regulating food production and workplace safety, and providing modest pensions and mothers' allowances.

By the Great Depression of the 1930s, economists led by John Maynard Keynes of Britain were arguing that governments could play a broader and positive economic role by promoting full employment and smoothing out aggregate demand.

Consequently, the scope of public activities in countries around the globe widened even further following the Second World War -- notably with post-secondary education, universal health care, unemployment insurance and improved pensions.

In British Columbia during the 1950s and 1960s, premier W.A.C. Bennett -- leader of the centre-right coalition called Social Credit -- oversaw a doubling of Victoria's CRF revenues to 15 per cent of the province's nominal GDP from approximately seven per cent.

CRF revenues continued to rise (albeit at a much-slower pace) after Bennett left office in 1972, and peaked at just over 19 per cent of nominal GDP in the early 1990s.

By 2001, when the BC Liberals won election to government, CRF receipts were down to an even 17 per cent of British Columbia's nominal GDP.

Ironically, concomitant with the dramatic, post-war growth in the size of B.C.'s government was a phenomenal boom in the province's economy.

Over the half-century between 1951 and 2001, British Columbia's population exploded to more than 3.9 million from less than 1.2 million -- the biggest increase in Canada during the period -- while nominal GDP skyrocketed to $133.5 billion annually from about $2 billion.

Far from impeding economic development, British Columbia's growing public sector seemed to provide an important impetus to growth.

After a decade of assault, cupboards bare

Yet, at the end of the 20th century the BC Liberals -- Gordon Campbell, Christy Clark and Kevin Falcon, along with their wealthy patrons and corporate donors -- were complaining loudly that government was not a force of good, but of evil. The province's public sector, they said, was bloated, unproductive, too-expensive and needed to be cut down to size.

And so within 24 hours of being sworn into power on June 5, 2001, the BC Liberals launched an unprecedented attack on British Columbia's public revenues.

Today, CRF receipts -- as outlined in Falcon's 2012/13 budget -- are down to slightly more than 15 per cent of nominal GDP, a level not seen since W.A.C. Bennett left politics 40 years ago.

The results of the BC Liberals' decade-long assault on provincial revenues are illustrated even more clearly under GAAP (generally accepted accounting principles).

In fiscal 2000/01, the year prior to the BC Liberals' taking power, GAAP receipts stood at 22.6 per cent of B.C.'s nominal GDP.
Now, in the coming fiscal year -- as shown in the Budget and Fiscal Plan, 2012/13 - 2014/15, released by Falcon on Tuesday -- the comparable figure is expected to fall to just 19.6 per cent of GDP.

The revenue lost to the provincial treasury -- three per cent of nominal gross domestic product (22.6 per cent, minus 19.6 per cent) -- in 2012/13 alone is $6.6 billion.

By 2014/15, when Falcon expects GAAP receipts to drop to 19.2 per cent of GDP, the annual loss will be $8.1 billion.

Dearth of reinvestment in BC
Of course, the loss of that revenue would be acceptable -- even laudable -- if the foregone receipts were re-invested in British Columbia's economy. They have not, and are not.

Consider that the province's corporate-income tax rate, which stood at 16.5 per cent before the BC Liberals took power in 2001, today is just 10.0 per cent. Profitable corporations, however, pay even less than that.

Falcon's budget shows that corporate profits will surpass $24.7 billion in 2012, yet Victoria's corporate-income tax receipts will come in at less than $2.3 billion -- or a mere 9.1 per cent of profits.

Next year, in 2013, profits are expected to rise to $25.8 billion, but the province's take will drop to 7.9 per cent. (And, of course, the corporation capital tax -- the means by which enormously profitable financial institutions paid modest sums to the provincial treasury -- was abolished by the BC Liberals in 2009.)

Have businesses re-invested their tax-savings in British Columbia?
No. In fact, capital investment in machinery and equipment -- a key indicator of business confidence -- has plunged over the last decade, dropping to just 5.3 per cent of nominal GDP in 2010 from almost seven per cent in 2001.

Christy Clark's false promise in 2001
A decade ago, no one was more enthusiastic about the B.C. Liberals' tax-cutting plans than Christy Clark. "In every jurisdiction where personal income tax cuts have been tried, they've worked," she burbled in the legislature on Aug. 2, 2001.
"It's meant more revenue to government from personal income taxes. That's what we are going to create in British Columbia."

Well, so much for theory. In 2000/01, before the BC Liberals took power, the province's personal-income tax receipts represented 4.5 per cent of nominal GDP; Falcon's latest budget shows that the comparable number in 2012/12 is down to a mere 3.0 per cent.

Put another way, B.C.'s economy today generates just two-thirds of the personal-income tax revenues as compared to before the BC Liberals won election to government.

Today, as leader of the BC Liberals and premier of British Columbia, Clark seems bewildered by the province's weakened finances.

"It just doesn't add up," she blurted during question period in the legislature on Feb. 14, after being asked about lengthy court delays in the province's justice system.

(Clark falsely told the house that "More money has gone into the (justice) system." Provincial spending on the protection of persons and property in 2000/01 was 0.8 per cent of nominal GDP. In Falcon's latest budget for 2012/13, the comparable figure is a mere 0.6 per cent of GDP -- which represents a yearly loss in funding for justice services of a half-billion dollars.)

Is British Columbia today a better place because the BC Liberals have dramatically slashed government revenues?

Well, not only has capital investment in machinery and equipment been in decline since 2001 (and well below historic levels), but consider that our province's population growth has weakened dramatically over the last decade.

Data released last week from the 2011 Canadian census show that British Columbia's population between 2001 and 2011 rose by just 492,000. That's a lower absolute number than growth recorded in the 1960s (556,000), 1970s (560,000), 1980s (538,000), and 1990s (626,000).

Worse, when examined in percentage terms, it is evident that the decade under the BC Liberals saw the province's lowest population growth since we joined Confederation in 1871.

The Great Squandering
The global commodity boom that began a decade ago gave the BC Liberal government a golden opportunity to build and strengthen British Columbia.

That's what W.A.C. Bennett did a half-century earlier, with policies that encouraged the development of both our public and private sectors.

Campbell, Clark and Falcon, however, deliberately chose to starve the government of much-needed revenues, thereby crippling public services. And despite billions upon billions of dollars in tax cuts -- as well as record-high corporate profits -- the private sector refused to respond with increased investment or job creation.

Sadly for the vast majority of British Columbians, the last decade under the BC Liberals represents a squandered opportunity of historic proportions.

[Al Czervic]

Blah, blah, blah. The usual lefty cherry picked nonsense thrown at the wall from the Tyee. What partisan hacks like McMartin overlook is that The BC Liberals back in 2001 ran on a platform of major tax cuts….it is what people overwhelming voted in favor of. No different than a majority of people voted to go back to the PST. Rightly or wrongly democracy played a huge roll in these public policy taxation decisions. If McMartin is concerned with government being deprived of taxation revenue why does he rather conveniently overlook that voting down of the HST that deprives the Government of much needed revenue ? He won’t mention that because the leftist loons and public sector Unions that fund the Tyee all campaigned against it. Now the fiscal cupboard is bare and his big public sector union friends cannot raid the treasury so point the fingers of blame at the politician when in reality in both cases paying less taxes was what the people voted for. I can’t believe that Tyee still regurgitates this crap. Small wonder people like McMartin cannot get real jobs and spew leftist rhetoric on partisan BC Fed funded blogs. This article was a joke.

[The Green Barbarian]

Blah, blah, blah. The usual lefty cherry picked nonsense thrown at the wall from the Tyee. .

FF didn't include a link - but now that I know it's from the Tyee, of course that's why it's a giant steaming pile of left-wing junk. Surprise!

[flamingfingers]

So, now you can post something from the Fraser Institute to show how wrong McMartin is!! Equal opportunity here guys.

[The Green Barbarian]

So, now you can post something from the Fraser Institute to show how wrong McMartin is!! Equal opportunity here guys.

So the Tyee posts a garbage article, and now everyone else is supposed to do jump to refute it? Al was bang on - this McMartin bozo just cherry-picked a few stats, spun them into a negative story and is trying to sell people on the idea that we need to have higher taxes, paving the way for Adrian Dix-head and his crap regime to take over next year, on a platform of higher taxes. Why would the Fraser Institute need to respond to this dreck? It's completely obvious that it's a biased propaganda puff piece for the NDP, like everything else that comes from the TYee and the CCPA - utter garbage.

[Nebula]

One good thing about The Tyee: They're so far left that if the NDP does get elected, count on a great place to go for four years to read nothing but glowing, wonderful, all-is-perfect articles. We'll all feel so warm and fuzzy.

[Al Czervic]

So, now you can post something from the Fraser Institute to show how wrong McMartin is!! Equal opportunity here guys.

What would be the point ? I could post a dozen articles on why the HST was a superior tax in every possible way, however the people through a democratic process voted for the PST. The BC Liberals in 2001 ran on a platform of massive personal and business tax cuts and likewise people voted for that in a democratic process. McMartin seems to want to conveniently forget that paying less in taxes is something that taxpayers actually vote for. It is also how many politicians get elected. Blame democracy if you feel the need to point fingers. McMartin is a partisan flake.

[Smurf]

Everthing my side says is right and everything your side says is wrong.

nana nana na na !!!!!!!!!!!!!!!!!!!!!!

[Al Czervic]

Everthing my side says is right and everything your side says is wrong.

nana nana na na !!!!!!!!!!!!!!!!!!!!!!

Except in this case reduced taxes is what people voted for. It's a fact that cannot be left out of this discussion.

[The Green Barbarian]

asking the Fraser Institute to refute a pinhead's left-leaning propaganda article in the Tyee is like asking Steven Hawking to mark a 7th grade Physics exam.

[NAB]

Except in this case reduced taxes is what people voted for. It's a fact that cannot be left out of this discussion.

Seems OK to reduce taxes, just so long as it is for big business and can be covered off by passing the resulting shortfalls in government revenues on to the everyday consumer in order to cover the governments hyperspending largess to the primary benefit of the big business sectors. I don't think for a moment that is what people voted for.

Nab
'

[logicalview]

Blah, blah, blah. The usual lefty cherry picked nonsense thrown at the wall from the Tyee. .

didn't include a link - but now that I know it's from the Tyee, of course that's why it's a giant steaming pile of left-wing junk. Surprise!

One really neat thing that the Tyee does is ignore the policy costs of the NDP. Just like The Dix does.

The Tyee is a NDP manifesto menu without the prices.

Today's socialist fare includes....

Should We Subsidize Work?

Government wage top-ups could spell the end of the working poor.

and this classic menu item....

What About Just Guaranteeing Everyone a Basic Income?

Doing so for all Canadians could almost erase poverty, or dry up labour sources, depending on whom you ask.

Or how about a course of....

Is the 'Living Wage' Enough?

Fair wages bring equality to workers. But what is fair? And what about people who can't work? First in a Tyee Solutions Society series on tackling poverty.

If those Tyee articles aren't deep enough for ya read...

Politicians with Hair on Their Faces

Beards once conveyed wisdom, then became dirty, but now Tom Mulcair tops polls. Combing the political history of facial hair.

:dyinglaughing: :dyinglaughing: :dyinglaughing: :dyinglaughing:

Oh, ya, almost forgot to mention that The Dix is on the payroll.

[steven lloyd]

Except in this case reduced taxes is what people voted for.

That's right Al. In 2001 - and what a disaster that has turned out to be. Indeed, what a wasted opportunity for this province.

[zoo]

great info.
But, it doesn't matter who is in power we are going down. No country in the world can run with our ideas and ways and ever make it. No politician has the ability to get us out of this. Look at every country in the world right now going through the similar. Our ways and everyone's personnel requests and wants cannot be met in any system.
NDP, liberals, doesn't matter. Not one of them will have the experience, education or guts to get our province, country out of where we are heading.

[The Green Barbarian]

great info.
But, it doesn't matter who is in power we are going down. No country in the world can run with our ideas and ways and ever make it. No politician has the ability to get us out of this. Look at every country in the world right now going through the similar. Our ways and everyone's personnel requests and wants cannot be met in any system.
NDP, liberals, doesn't matter. Not one of them will have the experience, education or guts to get our province, country out of where we are heading.

That's a sad commentary but you make some good points. As we travel further down the road of democracy, we definitely are seeing the "solution" to our debt woes become more polarized. On one hand we have the radical lefties, who claim that the solution is simple, we just need to "tax the rich more fairly", and some, like the French, have had the guts to quantify what they mean by "fair", which of course ends up being grossly unfair, like 75% tax rates etc. This policy doesn't work, as capital migrates. Billions of Euros have already fled France, and will never be taxed, and so no matter what the tax rate that the socialists want to put in, it won't matter as there will be no money to tax anyway. The same thing is happening in Greece right now, as 700 million Euros left Greek banks in one day last week, and more continues to flee. Capital is migratory, and so are people, and so putting in hefty tax rates as the "solution" to gross over-spending and entitlement isn't the answer, as palatable as this "solution" may sound to the daft, the ignorant, the jealous and the lazy, or what's known as the core voting contingent of the Left.

So on the other side of the spectrum, you have the far right, who want to keep taxes low, at the cost of services. This isn't right either. We have to deal with the sins of the past, and this will require an increase in taxes. Not an increase like the radical lefties want, as that is unfair, unsustainable, and immoral. But taxes should increase. But NO tax increase should be implemented without a complete over-haul of every social program we have currently running, from our national pension plan, our policy on Natives and Indian Affairs, our policy on EI, our policy on health care, our policy on welfare. Everything needs to be re-examined in the harsh reality and light of day. All the professional grievance mongers, whiners and blatherers need to shut their giant yaps, and actually look at what it is we are trying to accomplish with our programs, who we are really trying to help, what the real costs are, and how things can be done differently, and perhaps better. We can't just raise taxes, and expect that to solve all problems. Our systems are broken, they aren't working, and they need to be fixed. We have to fix what is broken, find the resources to pay for it, and move forward with new ideas. What we have now isn't working, and can't be fixed, just by throwing more money at it.