Big Promises, Small Government

Book excerpt: When Gordon Campbell’s Liberal party won a massive majority on the strength of their New Era electoral platform in 2001, the premier’s first act was to fulfill his campaign pledge to reduce personal income taxes. Big Promises, Small Government reveals the consequences of dramatic tax policy changes on social programs, arguing for more sustainable taxation. Despite sharply declining economic indices, the new premier expected that lower taxes would spur investment and growth, essentially paying for themselves. Instead, the precipitous and ideological decision to cut taxes and exempt health and education – some 70 percent of the provincial budget – from any decrease in expenditures, left smaller ministries scrambling to absorb the cuts to maintain a balanced budget. The damage was significant. This insider recounting of the real-world genesis, implementation, and consequences of a tax policy offers vital lessons to future governments and considerable insight into the role of taxes in society.