Friday, December 14, 2012

BC Liberals' startling success

Many commentators claim BC Liberals are incompetent and ineffective. While true in ministries such as Justice and Children and Family Development, Liberals have been successful in the centerpiece of their strategic plan. Startlingly successful.

In 2001, Gordon Campbell's platform document promised a "business environment that is second to none" and BC Liberals have consistently delivered on that objective, most particularly for the large multi-nationals and outsourcers.

My last article discussed reduction of the public share of revenues from mining and petroleum industries. In fiscal 2001, the final year of NDP rule, the province earned $2.1 billion in forest and water revenues. Eleven years later, the Liberal government took in $900 million. This despite massively larger use of fresh water by private power producers and frackers in the energy business. In 2001, total revenue from natural resources was $4 billion; in 2012, it was $2.7 billion. This results not from reduced activity — production has grown substantially — but from reduced royalties and other indemnities.

In 1999, BC corporation income and capital tax amounted to $1.55 billion. Thirteen years later, corporation tax for 2012 amounted to $1.63 billion, a difference of 5%. Luckily, to ease that burden, businesses were saving $2 billion a year after Liberals relieved them of paying provincial sales tax.

Perhaps this strategy is the only possible one anyway. The world's big players see tax as something for compliant schmucks to worry about. Aljazeera offers: How can tax avoidance be stopped?
"It is estimated that offshore tax avoidance costs the US government $150bn annually, and at a time when Washington is fixated on the debate over the so-called fiscal cliff, there seems to be little political will to address the problem.

"This contrasts to attitudes in Europe.

"When it was revealed how little tax companies including Starbucks and Amazon have paid in the UK, there was a public outcry and parliamentary hearings were held.

"Tax evasion costs the EU about $1.3 trillion a year. It has drawn up an action plan to try and claw back at least some of the revenue being lost."
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2 comments:

  1. Every dollar that business does not pay or avoid, is a dollar the taxping public has to come up with.

    Real wages, if looked at over time have not increased a whole lot in the past 50 years, compared with inflation and profits, of corporations.

    The real problem for government arises when, you offload the tax burden onto the public, whose real wages, have been squeezed to the point, where there simply is no more to spend. What is the value of a real wage today vs a real wage say 35 years ago?

    I an ealier post, you describe a McDonalds worker in Chicaga, making $8.25 hr. Is this really the same value as it was 35 years ago? Of course not. The spending power of the dollar, has been eroded by inflation and taxation or hidden fee increases.

    This discussion of "net present worth", based upon the value of a dollar, has to be had. In Canada, valuation day in June 1971, was a pivotal point, in the governments tracking of inflation, cost of living and, a monetary valuation point. Analysis of the loss of "spending power" or actual net worth of the dollar, opens the door to what the taxpayer and worker is really "forced" to accept.

    Business and government, can offload their costs onto the end user, those that have no financial way, of passing these offloads on.

    The resulting "financial burden" on the end user increases to the point where it becomes politically volitile and ultimatly unworkable, as the HST debacle in BC has proven.

    Fair and just taxation policy is a fact of life. Those trying to avoid their "fiscal duty to society' are ultimatley destroying society as a whole...look at Greece for example...no formal taxaton policy, has created a finacial nightmare, for the country.

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  2. A very good post Norm. Seasons greetings to you and yours.

    This is becoming a major issue world wide. The decline of the "social contract" that we all are supposed to take part in, is "fraying", whats left of the middle class, and leaving governments without a means, of a progressive and balanced taxation system. With the demise of the middle class, revenue short falls are bound to increase. The HST, and mega projects, are pushed in all jurisdictions, where governments are scrambling to obtain, additional revenue. With the past 11 years in BC, the shift of taxation onto the middle class, is only creating a problem for the future. Our failing infrastructure, including some not so "old" bridges, is increasing and the shrinking revenues, cannot be replaced fast enough.

    "Creative accounting", and other types of smoke and mirror "fix its", simply don't work any more. The repeal of the HST by the electorate, in BC, is the beginning of what I believe to be a "tax revolt", by the middle class. Enough is enough. If governments want to "fix this", they have to lead, not knuckle under, to the business sector. That will mean hard choices.

    A balanced "social contract" in terms of taxation must be found, or our society will become unworkable.

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