No More People's Republic in British Columbia!Wednesday June 6 7:57 PM EST
British Columbians to Get 25 Percent Tax Cut
By Paul Willcocks
VICTORIA, British Columbia (Reuters) - British Columbia's new Liberal government cut provincial income taxes by 25 per cent on Wednesday in its first full day in office having promised a "dramatic" tax reduction during last month's provincial campaign.
Premier Gordon Campbell, whose right-of-center Liberals crushed the left-leaning New Democratic Party, said the cuts were needed to generate increased economic activity. The NDP has opposed tax cuts during the campaign.
"In our first day on the job we provided every British Columbian with a dramatic personal income tax cut," said Campbell.
The cuts, phased in over two years, will save a taxpayer earning C$50,000 a year C$440 this year and C$900 in 2002. The cost in lost government revenue will be up to C$1.3 billion this year, officials estimated.
Helmut Pastrick, chief economist with the B.C. Credit Union Central, said the cuts should help the provincial economy, and he may revise his GDP growth projection up by as much as 0.5 percent after he reviews details.
He had forecast 1.5 percent real GDP growth for 2001 and 2.9 percent for 2002.
Campbell said he said he does not know how the lost revenue will affect the deficit for this year. The former NDP government introduced a balanced budget in March, but Campbell has maintained he believed it actually has a hidden deficit of as much as C$500 million.
The Liberals will bring in a new mini-budget this summer, based on revised projections.
Pastrick said that even if the full C$1 billion in lost revenue is added to a deficit the province's credit rating won't likely be affected. "Reducing taxes clearly is a priority with rating agencies," he said.
The Liberals have committed to balancing the budget by the end of their four-year term.
The tax cuts will be phased in in two roughly equal installments, with the first retroactive to January 1, 2001 and the second effective in January 1, 2002.
The Liberals said it would give British Columbia the second lowest combined federal-provincial tax rate in Canada at 43.7 percent, trailing only neighboring Alberta. It had one of the country's highest tax rates at 48.7 percent.
Campbell said the cuts were needed immediately to allow payroll deductions to be adjusted for the second half of the year. He defended cutting taxes across the board after having campaigned on a promise of tax cuts for low-income earners. |
