New taxes coming, even with surplus

The NDP finance minister who comes back from Government House on Tuesday afternoon will find the B.C. Liberals’ farewell gift on the desk.

It’s the surprise surplus that not only bulked up the past fiscal year, but is showing signs of continuing right through this year, as well. When you factor it into the fiscal plan the NDP produced during the election campaign, it’s a big cushion that makes the margins they were working with a lot more comfortable.

New governments traditionally raise alarms about the state of the books left by the old government, as noted here recently. Subject to the auditor general’s seal of approval, that won’t be happening this time. Instead, there appears to be a glut of additional funding that has materialized just as a new government takes over, determined to both cut the fees and levies on most people, and spend hundreds of millions on an assortment of underfunded programs.

The NDP is also committed to some tax increases that will increase the revenue pool even more. The new government will likely produce a new budget later in September that will mesh the latest Liberal numbers with the new NDP priorities.

Here’s a rundown of what was promised on the fiscal front: • Balanced budgets, but with a lot more conditions attached than the Liberals imposed. They “should not come at the expense of vulnerable people and the services you rely on,” says the party’s fiscal outline. The outline plans for three balanced budgets, but doesn’t promise them. “We will aim to balance in every year … but not at the expense of children, seniors, families and the most vulnerable.” • Liberals dinged high-income earners with a temporary tax during the years they went into deficit to cope with the economic meltdown. It expired in 2015. The NDP objected to the cut and is promising to restore the tax.

So people earning more than $150,000 a year can count on paying more in provincial income tax, as the party is expecting to raise $250 million a year from the tax.

Also going up is the general corporate income-tax rate, to 12 per cent from 11. That’s expected to bring in another quarter-billion a year. • Plans for a brand-new tax are also in the works. It’s the “speculation tax” that would apply to people who buy real estate but don’t live or work in B.C. and leave their properties vacant. The NDP is banking on getting $200 million a year from it. The city of Vancouver is in the midst of implementing the first vacancy tax in Canada and that exercise will inform how the provincial version plays out. Owners will pay one per cent of assessed value on properties declared vacant. (Example: $10,000 a year on a $1-million home.)

It’s a labour-intensive tax that has been criticized for how much it costs to impose and police. Revenue estimates are all over the map. The city’s take won’t be known until the end of the current tax year. The Liberal government enabled the tax through a law giving Vancouver the authority. • The carbon tax, which has held steady for several years, will also be on the rise next year, up $5 per tonne of carbon dioxide equivalent, with similar hikes projected further out. The NDP is using Ottawa for cover on that increase, saying it’s in accordance with the federal carbon-pricing mandate. The hike would raise $140 million a year by 2019, with some of the money sent back to people in rebate cheques.

All that new money would be spent on more than two dozen promised program improvements, priced at $1.5 billion by 2019. The list includes removal of tolls, renters’ rebates, $10-a-day child care, more park rangers, etc. The NDP said it could make it balance using the old numbers. The newfound surplus gives the party more room.

The lurking danger is that today’s abundance will be spent on big-ticket promises without enough reckoning that each one includes hiking program spending year over year, regardless of whether the money keeps piling up. The Liberals preached that point for years, but the election results suggest people got tired of hearing about it.