Tax cut good news, and timely for Liberals' byelection hopes

VICTORIA - Call me cynical, but it seems like a heck of a coincidence that the Liberals decided to offer up a sales tax cut days before a hotly contested Surrey byelection.
But leave that aside for now.
The first thing to note is that this is good news.
Knocking the sales tax from 7.5 per cent to seven per cent will cost the government about $280 million a year, which means that the average British Columbian will be about $70 ahead of the game. Not a huge amount, but a good deal for families, especially ones that are spending most of their income on life's basics.
And the second thing - leaving aside lingering concerns about the Liberals' reckless first day tax cuts and the resulting huge deficits - is that the government can afford to roll back the sales tax increase it imposed in 2002. The economy is doing well enough to generate more revenue for governments.
After that, it's time to start ticking off some concerns.
Premier Gordon Campbell denied the sales tax cut had anything to do with next Thursday's byelection in Surrey-Panorama Ridge. The latest poll suggests that the Liberals and NDP are effectively tied, given the Liberals a shot at being the first governing party to win a byelection in B.C. since 1981.
Finance Minister Gary Collins said the government wasn't sure it could afford to reduce the tax until last week, so couldn't have given you a break any earlier.
And he wanted to make the cut through legislation introduced in the House, and feared that the fall sitting might end within days. That made it risky to wait any longer, he said. (That was a surprise; the schedule calls for the sitting to last until the end of November.)
It's an argument that's impossible to refute. But the government tabled its latest financial update five weeks ago, and it projected a surplus this year of more than $1 billion. The tax cut will cost the government about $130 million for the rest of this fiscal year. If the aim was to get money in your pocket as quickly as possible, there was room to do the cut earlier. And never in B.C. history has this kind of change been made outside of the normal budget process.
Then there's the matter of the legislative committee that has been touring the province, gathering information on what should be done with the coming surpluses. They've heard a range of suggestions. Some people want to use all the money to pay down the province's debt, others want to see tax cuts of various types. And some would like the surpluses spent to restore services, or reduce surgical wait lists.
The committee is scheduled to report in a few weeks. It would have been useful to see what they learned about the wishes of British Columbians before the decision to cut the tax was made.
Collins disagrees, and says there is wide agreement that rolling back the sales tax increase should be a priority.
What's ahead, one of the media pack asked Campbell in a rare press conference. If you'll cut the sales tax by one-half a percentage point in the middle of a byelection campaign, how big will the tax cuts be in the actual election budget next February?
The premier said the budget would be based on the Liberals' existing plans.
But the plans don't contemplate the kind of surpluses that are now on the horizon. The government has room to provide adequate funding to the ministry of children and families, or effectively wipe out health care waiting lists.
Or to cut the sales tax rate in half over the next three years.
Your reaction to this cut will help decide where the money goes.
Footnote: Tax changes are supposed to be secret until they are presented to the legislature, to make sure that no one profits from advance notice. Collins announced the cut at 2:12 p.m. By 2:14 p.m. Retail BC had a press release out praising the move. The association denied any advance notice, and said they had the release ready to go in case of an announcement.