A new report released by the Centre for Policy Alternatives, B.C. Office, questions plans for tax cuts. 

Alex Hemingway, senior economist and public finance policy analyst, said cuts would erode the capacity of government to make public investments in the issues that concern British Columbians, including housing, healthcare, childcare, poverty, toxic drugs and the climate crisis.

"Tax cuts would ultimately deepen the affordability challenges they purport to help," he said. 

Both the B.C. NDP and the Conservative Party of B.C. proposed tax cuts during the campaign. The NDP proposed giving 90 per cent of households a tax break of $1,000 starting next year, first as a $1,000-grant, then as a permanent cut. Conservatives, meanwhile, proposed an escalating deduction for mortgage and rental payments that would eventually reach $3,000 by 2029. Conservatives also proposed to cut the carbon tax as well as corporate and income taxes. 

The B.C. Chamber of Commerce, meanwhile, has called for tax cuts as part of a focus on the economy to pull it out of its "downward spiral." Hemingway warned against this approach.

"We have been down this road before," he said. "Two decades ago, of course, we saw very large tax and spending cuts and that's part of what led to some of the big challenges we see today, whether that's in areas like health care, housing or childcare infrastructure." 

Despite "some important reinvestments in social programs since the B.C. NDP formed government in 2017," operational government spending as share of GDP "still remains lower today than it was 25 years ago" after having dropped sharply in the early 2000s, Hemingway said. 

Given the "big societal challenges" facing B.C., it would be a mistake to "permanently remove" $1.3 billion in annual revenues from the provincial budget, he said in commenting on the NDP plan. 

"We may see both tax cuts and increased social investments for now, but it's really down the road that that loss of revenue will become more and more of a constraint," he said. 

Looming behind these debate is the size of the provincial deficit, pegged at an estimated $9 billion.

"I think running deficits is reasonable in the coming years and in particular right now, given we are in a weakening economy," Hemingway said. "There's a macro-economic case for bigger public spending and deficits. (If) we shortchange public investment now, we are going to pay for it in the long run," he said. 

Hemingway makes an appeal for higher taxes.

"We have to be able to have these conversations as a society," Hemingway said. "When you look at public opinion polling, there is a very strong appetite in Canada for higher taxes on the wealthy. For whatever reason, that wasn't on the table in the election between the two dominant parties. It speaks to the fact that there are real limitations in our system to the ability of regular people to participate in a serious conversation about the trade-off between things like public investment and tax cuts."

He said the proposed tax cuts by both the B.C. NDP and the Conservative Party of B.C. "won't actually help the lowest income households" in calling for more targeted, income-tested programs. 

"People both are feeling that cost-of-living pressure and recognize that we need to deal with the structural issues and there is an appetite for those taxing at the top," he said, adding that B.C. has the flexibility to raise taxes while still remaining competitive with other jurisdictions.

"I don't know how the politics shake out, but we will see."