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B.C. Liberal leadership rivals square off on tax cuts

Minister of Health Kevin Falcon speaks to the media after he announces his bid for the leadership of the BC Liberals in Surrey, BC on November 30th, 2010.

Simon Hayter for The Globe and Mail/simon hayter The Globe and Mail

Kevin Falcon says Christy Clark, one of his rivals for the leadership of the B.C. Liberals, has fallen prey to NDP thinking on tax cuts.

Mr. Falcon, who stepped down as health minister to seek the leadership, made the comments Monday as Ms. Clark issued a video on economic policy that said promised tax cuts must be accompanied by an explanation of how revenue would be replaced.

Although she did not name him in the video, Ms. Clark, a former deputy premier returning to politics after a five-year absence, recently criticized proposals by Mr. Falcon to consider reductions to the HST, as well as a possible freeze of the carbon tax.

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On Monday, the two candidates took different stands on tax cuts - one bullish, the other cautious.

Mr. Falcon described himself, as a "big supporter" of cuts, though he noted that any such measures have to be carefully considered.

"Where I would take issue with Christy is that she has fallen into that unfortunate line of believing that reducing income tax somehow equates into a reduction in services," Mr. Falcon said in an interview.

"That's what I had to listen to the NDP say for six years. That's the reason they don't say it anymore is that they were proven dead wrong," he said, suggesting revenue from personal income taxes is at an historic high despite three cuts to those taxes.

Mr. Falcon said a competitive tax system is the best way to grow an economy. "Going forward, I will make sure we continue to ensure we have a low tax, competitive economy that generates the kinds of revenues we need to fund heath care and education."

Last month, cabinet rescinded a 15-per-cent income tax previously announced by Premier Gordon Campbell in a move described as an effort to provide Mr. Campbell's successor with flexibility in economic policy.

Mr. Falcon said the move allows for debate on options such as further tax cuts or spending on additional services.

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"Every decision has to be carefully thought out and that's what I would do."

He called on Ms. Clark to remember Liberal history.

"All I would do is remind Christy when we did a 25-per-cent income tax cut in our first day that we all got elected in 2001, we heard all the cries and calls from the NDP, saying it was going to result in reduced services, we would never be able to afford our health care and education system."

In fact, he said, the cut was key to a resurgence in business and investment community confidence and drove investment that generated additional personal income-tax revenue back to the province beyond 2001.

But in an interview subsequent to the release of her video, Ms. Clark ruled out big tax cuts any time soon if she becomes the next premier.

"Promising tax cuts at this stage could end up putting British Columbians into a very big hole, something this government avoided for the most part for the last decade, and I think we should be vigilant about that," she said.

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"We're going to have to make sure we manage people's money well so that means big spending promises, big taxation cuts - I just think those promises might end up being irresponsible at this stage."

But she said she would need to see the provincial budget so she could make decisions in context.

Also in her video, Ms. Clark dismissed economic policy planning "on the back of an envelope" and said debt reduction cannot be neglected for short-term political gain. She also said she would strike an economic advisory panel to offer advice on moving the economy forward.

She did not offer specifics on debt reduction. Total provincial debt in the March budget was forecast at $47.8-billion in 2010-2011, rising to $55.9-billion by 2012-2013.

Ms. Clark said her video comments were not a specific attack on Mr. Falcon, but rather a declaration of what she would do as leader.

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