Campbell fast-tracks tax relief, recalls legislature

The B.C. government will accelerate income tax cuts, provide further tax relief to small businesses and enact other measures to help British Columbians deal with the global economic crisis.

Premier Gordon Campbell announced 10 key actions Wednesday night in a televised broadcast from the legislature in Victoria.

The three per cent personal income tax reduction that was to take effect on Jan. 1, 2009, will be fast-tracked. The government reduced income tax by two per cent in July.

"We will accelerate that income tax retroactive to last January. This will mean the full five per cent personal income tax cut will be in place for this year, retroactive to Jan. 1, 2008," Campbell said.

'The biggest disappointment was the premier's failure to remove the gas tax.' — Carole James, Opposition leader

"This will put an additional $144 million back into taxpayers' pockets. That's good news for your home economy, and it's good news for our provincial economy."

For small businesses, which make up 98 per cent of the province's businesses and employ more than one million people, a one percentage-point cut in income tax previously planned for 2011 will now take effect on Dec. 1 of this year, dropping the tax rate to 2.5 per cent from 3.5 per cent.

Corporate income tax rates will also be further reduced to 10 per cent in 2011.

It's not clear how much taxpayers will save from these new initiatives.

Campbell also announced he will recall the legislature for an unplanned sitting on Nov. 20, to implement the measures. In September, the government cancelled the fall sitting of the legislature, which was to begin Oct. 6.

New private pension option, ferry fare reduction

The province will create a new private-sector pension option for British Columbians who currently have no access to a group pension plan.

More than 75 per cent of private-sector workers in B.C. currently aren't covered by a group pension plan, Campbell said.

"We will spearhead the creation of a privately financed, defined contribution plan that creates a viable option to those who want to participate," the premier said. "It will be available to employers, employees and self-employed people on a voluntary basis."

The province will fund a 33 per cent reduction of ferry fares on all routes for December and January and will restore ferry service levels for all routes, including those on the Sunshine Coast.

"It will require $20 million in one-time funding. This will reduce cost for passengers and will act as a bridge until lower fuel prices work their way through to lower ferry fares," Campbell said.

Other measures outlined in the premier's 10-point plan include:

• Unlimited deposit insurance for deposits to credit unions in B.C.
• Rebate of 50 per cent on all school property taxes to light and heavy industry.
• Doubling the commission paid to business for collecting the provincial sales tax and hotel room tax.
• Speeding up public investments in capital infrastructure projects.
• Re-evaluating spending priorities and scaling back unbudgeted increases.

NDP disappointed gas tax not removed

New Democrat Leader Carole James said Campbell's response to the economic crisis will do nothing to address the real challenges British Columbians are facing.

"British Columbians deserve a substantial economic plan. But all they got was 10 points scribbled on the back of a napkin," James said.

"The biggest disappointment was the premier's failure to remove the gas tax."

"The premier’s address tonight was more about his political fortunes in the two up coming byelections and in the provincial election next May than it was about helping working families facing tough times," she said.

Campbell’s decision to wait until Nov. 20 to recall the legislature isn't good enough, she said.

"If he were serious, we would be tackling these issues in the legislature right now."

Tax savings still unclear

Ken Peacock, the director of economic research with the Business Council of British Columbia said the government hasn't laid out all of the figures yet, but it looks as if somebody making $60,000 a year will save about $80 annually from the tax cuts.

The government couldn't give out major tax cuts or rebates, because it's committed to avoiding a deficit, Peacock said, adding the new measures are more about boosting confidence.

"A lot of this is perception, the fact that the government is focusing on the economy and recognizing that there are some serious issues out there, particularly in the United States, so taking some steps to shore up confidence to maybe postpone any slowdown or mitigate any slowdown that may be forthcoming," said Peacock.

The Canadian Federation of Independent Business said the tax cut for small businesses will have a major impact on the economy.

Small businesses owners will likely gain confidence in their business expansion plans, said Brian Bonney, the federation's director of provincial affairs in B.C.

"If you can restore their confidence, you convince them to go out and buy that equipment that they need or to continue with the expansion plans that they have put on hold a couple of months ago," he said.

Jim Sinclair, president of the B.C. Federation of Labour, said he's not impressed with lowering taxes for businesses.

"[Campbell] is using the economic situation to do his classic trick, which is cut taxes in the middle of a downturn in the economy," Sinclair said.

"You really have to ask yourself why [you] would give businesses tax cuts now when you are looking at your primary responsibility [which is] to take care of schools, hospitals, old folks and people who are suffering as a result of this crisis."