Looking at the empirical evidence

Last year, provincial New Democrat leader Carole James announced she was supportive of Premier Gordon Campbell's plan to accelerate middle class tax cuts. But one of her election candidates might not be supportive of such cuts. The reason: in a letter published in The Times Colonist on August 16, 1999, Gary Holman - who is now running for the party in Saanich North and the Islands - wrote, "Empirical evidence that drastic tax cuts will spur economic growth to the extent it offsets tax revenue losses is shaky."

Asked about that letter on Public Eye Radio, Mr. Holman said, "I am generally of the view that the touted trickle down benefits of tax cuts are arguable...I understand the argument in theory that it puts money in people's pockets. But government spending has a similar stimulative effect."

"I think targeted tax cuts could (have an effect) - like, for example, the tourism incentive and possibly even incentives around gas exploration," Mr. Holman continued. "When they're targeted I think they can have more of an effect. Broad tax cuts - no, I'm not necessarily convinced."

So does that mean he isn't in favor of the tax cuts supported by Ms. James? "Well, I'm a relatively new candidate here," Mr. Holman responded. "I was nominated Saturday as you know. So I'm going to have to take some time to familiarize myself with the NDP platform."

That being said though, Mr. Holman stated, "I have any influence over these matters, I would be counseling our leadership to be thinking very carefully in implementing tax cuts to make sure we have the revenues to support the services that people need."

The following is a complete copy of the aforementioned letter.

***

Gary Holman lives on Saltspring Island.

Your Aug. 11 editorial on the rationale for tax cuts ("Tax cut is path to true prosperity") was at best confused, and at worst ignorant.

Since Canada is regarded as the best country in the world in which to live, it would seem that we are already quite prosperous in the true sense of the term, despite our supposedly intolerable tax levels.

The argument that most Canadians support drastic tax cuts is questionable. Even if you believe that tax cuts are the only issue deciding elections, why did the Liberals, NDP and Bloc Quebecois, all fiscal moderates, receive more than 50 per cent of the votes in the last federal election?

It is ignorant to suggest that government debt represents nothing but wasted interest payments and that "it is money unavailable for health, education and other social programs." What about the hospitals, schools, highways, parks and other social infrastructure, not to mention the health and education levels of our citizens, that this debt has purchased?

If you are analysing the financial viability of government, don't you consider both assets and liabilities, as with any business? Research by Statistics Canada indicates that our national net worth, both public and private, is at unprecedented levels.

If you are really concerned about reducing the debt, why are you advocating tax cuts at all? Empirical evidence that drastic tax cuts will spur economic growth to the extent it offsets tax revenue losses is shaky.

Ontario's boom is driven by external factors, not tax cuts, and it still has a $3-billion deficit, a growing debt, and a majority of citizens who are dubious that social and environmental conditions there are improving.

Indeed, how could Canada possibly be growing so strongly and generating surpluses of $10 billion if current tax levels were so intolerable?

As Glen Clark indicated at the recent premiers' conference, if a rationale for tax cuts exists, it is for the poor not the rich. In fact, the federal initiative to reduce child poverty that you trashed in your editorial could take the form of tax cuts or credits for lower-income families.

While there are examples of government waste (as in the private sector), there are at least as many valid government functions and social needs that are underfunded.

Do we not have a responsibility to the tens of thousands of homeless people, and hundreds of thousands of children living in poverty in Canada? Is it right that access to higher education is once again becoming unaffordable to lower income families? What is the environmental legacy we are leaving our children?

If you making a case for tax and expenditure cuts, then make them rationally, on a case-by-case basis, not simplistic "trickle down" rhetoric. Any other approach is worse than short-sighted, it is irresponsible.

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