When in power, politicians often find they have a plethora of friends they never knew existed and the Liberal government in Victoria is likely no exception to that rule. But if the new government wishes to make life easier for itself now and in the future, new ministers and backbenchers should make the tough choices that favour most of the public and most taxpayers and say "no" to narrow interests.

One test will show up in how the Liberals handle requests from some in the business community to water down their commitment to eliminate business subsidies, or to go slow because some Liberal ridings will be negatively affected in the short-term. (Given the almost complete Liberal dominance of the B.C. legislative map, this will be a recurring problem.) Taxpayers should thus carefully watch the legislative details and the timing on this promise.

On timing, Skeena Cellulose is still sucking in taxpayer dollars, and if that is still the case by the end of the summer, the Liberals can justifiably be accused of dragging their heels on this one.When, in the early 1990s, the Alberta Tories kept on to the Gainers' meatpacking plant after Peter Pocklington defaulted on a government loan, the Alberta government ended up pouring another $200 million into plant operations while hoping for a buyer that never materialized. The Liberals should not repeat the same mistake in this province with Skeena Cellulose.

As for legislative details, if the Liberals get cute and exempt loans, say, under a couple of million dollars, or dump outright subsidies but not taxpayer-financed loan guarantees, they will be cheating on their election promise.

Another detail to look for is whether the new government replaces business-specific favourites via direct subsidies with sector-specific favourites via tax credits. While tax credits are higher on the evolutionary policy scale than business subsidies, such credits are often used by governments to funnel favours to specific industries at the expense of lower tax rates for all. Such credits are rarely as helpful as their proponents claim, proponents that, not coincidentally, just happen to be the recipients of such special deals.
Back in 1998, some of the country's top economists prepared a stellar report for federal finance minister Paul Martin, and the Report of the Technical Committee on Business Taxation found for example, that research and development tax credits are already quite generous in Canada vis-à-vis other countries.

Instead of piling more business tax credits into the tax code, the authors of that federal study recommended that some of Canada's more generous business tax credits be traded for lower business rates overall. The B.C. Finance Minister should dip into that report if he is at all tempted to play the game of exchanging outright subsidies for indirect tax credits.

Other details to watch for: Unlike Alberta, which used to have a machinery and equipment tax in place before its elimination several years ago, British Columbia has no such equivalent. Businesses in this province suffer under the disadvantage that all British Columbians suffer under: higher overall taxes due in part to our sales tax, which also taxes equipment purchases.

The government should resist the temptation to specifically exclude one cost of doing business and should instead institute a schedule for overall rate reduction, preferably with fewer loopholes and tax credits, not more. It is not the job of government to pick winners and losers, either individually with subsidies, or even sector by sector with unnecessary tax credits.