Tax hat trick helps create balanced budget
Opinion varies on the effects of increased tax rates at the heart of a balanced budget unveiled by the provincial Liberal government Tuesday.
"I think the budget was a little surprising, but not shocking,'' said Dan Little of Duncan's Hayes Stewart Little and Co.
"They made a promise to break the cycle of deficits. They seem to be living up to that.''
Medical Services Premiums were hiked for the sixth time in five years. The Liberals also implemented an income tax increase on people making more than $150,000 per year and the corporate income tax rate is rising one point from 10 to 11 %, effective April 1.
The tax increase on businesses was a bit of a surprise to Little.
"I honestly don't know what impact that will have,'' he said. "I don't think there's anything in the budget that shows the economy is booming again. Most of their growth targets seem fairly conservative to me.''
Projections by Finance Minister Mike de Jong call for a spending increase of 1.5 % overall in the next three years, with health care spending increases of 2.3, 2.7 and 2.2 % per year during that time.
"This is not enough even to maintain existing health care services, given the cost of population growth and inflation, not to mention what's needed to make needed improvements,'' said Debra McPherson, president of the B.C. Nurses' Union.
The budget adds a 4 % increase in MSP premiums starting next January, the latest in a series of increases paid by individuals or their employers for basic medical care.
"It's an expensive part of what the province has to deliver,'' said Little. "I'm sure they're trying to rationalize it any way they can.
"As our population grows older, it's not going to get better,'' he added.
A new tax bracket has been added for people with an income of $150,000 a year or higher, essentially raising provincial income taxes for those individuals by more than two percentage points to 16.8 %.
The so-called hat trick of tax hikes brought a strong reaction from the Nanaimo, Duncan and District Labour Council and the Canadian Taxpayers Federation about the effect on families. With all the tax increases, the projected surplus is expected to be what the CTF terms as "a razor-thin $197 million.''
"These taxes hurt families by making it more expensive to live here and for businesses to set up shop and employ people,'' said Jordan Bateman, the CTF's B.C. director. "The hike will cost British Columbians an extra $95 million in taxes, less than half of what the cabinet has squirreled away in a contingency fund for 'priority initiatives.'''
"Working and middle class families will continue to bear the brunt of stagnant wages and higher charges for medical services, tuition fees and hydro,'' said NDDLC president Ellen Oxman.
"Instead of real poverty reduction, we get pilot projects. Instead of tuition reduction, we get 'improved' RESPs that poor and middle class families can't afford. MSP premiums will increase four per cent and the government will conduct a fire sale of B.C. assets for one-time revenue.''
Finance officials say 16 Crown properties to be marketed this year are expected to produce a net return of $260 million.
With a provincial election set for May 14, this budget will not be passed by the time the brief legislature session ends in late March. Its measures are part of a campaign platform for Christy Clark's government, and the winner of the election must pass a budget in the fall.
— with a file from Tom Fletcher