If we cut taxes, they will come

Filed in archive Taxes on August 17, 2006

B.C. Premier Gordon Campbell and his B.C. Liberals said that if they cut taxes - the head offices will come. Well, The Tyee published a lengthy post titled "BC's Runaway Head Offices" that has got a fair amount of attention (28 comments as I write this).

An analysis of the latest Financial Post 500 rankings of Canada's largest corporations in 2001 and 2005 shows that the number of corporate head offices in B.C. actually has declined since the Campbell Liberals gained power. (That analysis is provided in detail, company by company, later in this story.)

The point I want to make is not about rubbing the Liberals nose in the dirt. But to remind us all that reducing taxes gets governments elected but basic economics state that when you have less income you have less money to use to do things - unless you can increase the volume of taxpayers which raises the total overall tax dollars collected.

Sounds a lot like Regan'omics - just that a lot of things have changed since the 1980's. Government leaders are in a tough spot but cutting income without cutting expenditures means you will have to borrow if your income does not increase.

Which leaves it to another government and other tax payers to deal with. Fiscal restraint all around that is what every government in every country needs. It is what small business owners need from politicians - tighten your belts.