Wednesday, February 1, 2012

Kevin Falcon speaks the Liberal truth - serve the rich

I was gob-smacked this morning to read a quote from Kevin Falcon, the Finance Minister, reacting to the recent BC Statistics  report on growing income inequality.

The report showed that BC has the biggest gap between the top and bottom twenty percent of workers of any province in Canada. Falcon responded:

But B.C. Finance Minister Kevin Falcon makes no apologies for the income gap in B.C., saying B.C.'s Liberal government has pursued a policy of encouraging high incomes through low taxes.

Falcon doesn't dispute the numbers in the study, but he takes issue with the analysis.

"I just have trouble with people saying, 'Oh, because there's a gap there that's must be a bad thing.' You know remember, as I mentioned earlier, and I'm not being flippant, but in Cuba they don't have any income inequality because they're all poor," he said.

The utter contempt for the everyday struggles of BC citizens is not surprising. That Falcon would say so publicly is. But his comments fit in line with just about every policy decision this government has made.

The BC Liberals have hurt just about every group in that lower 80%. Here is just a short list of changes that have worsened income inequality in BC:

* Keeping minimum wage low
* Imposing a 'net zero' wage cuts on public sector workers
* Reducing progressive taxes (income) while increasing regressive taxes (HST)
* Increasing user fees for government services, such as the Medical Services Plan (MSP)

Here are a few excerpts from the report, which you can read at: (

The Organization for Economic Cooperation and Development (OECD) released a study in
December 2011 that confirmed that the gap between the rich and poor is indeed growing. This was true in most of the member countries of the OECD and Canada was no exception. In fact, the OECD found that Canada had greater income inequality than most OECD nations. Canada ranked 26th out of 34 countries as measured by the Gini coefficient of income inequality. In addition, the report found that the income gap has been growing over time.

While tax cuts have benefitted people of all income levels to some extent, they have had less of a positive effect on the lowest income earners. This is because these lower-income individuals pay very few income taxes to begin with and are more reliant on the benefits and services that are paid for with tax revenue.

The disparity in incomes is readily apparent when one compares the top 20% of income earners with the bottom 20%. In British Columbia, in 2009, the lowest 20% earned just 7.7% of what the top 20% earned before transfers and taxes. After transfers and taxes, that figure improved to 16.5%. However, that is well down from the levels of around 22% seen in the early 1990s.

Given the level of discord over income inequality based on the number and size of protests in recent months, this issue is not likely to fade away any time soon. The OECD study offered some policy recommendations on how to tackle the problem. The top recommendation is to create more well-paying jobs that will give people a chance to escape poverty.

In addition, the study suggests that education and training are key areas for investment. Finally, it suggests that tax and benefit policies should be reformed to increase redistribution and public services such as education, health and family care should be freely accessible.

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