Province needs to know more about the tax breaks it hands out: auditor general

British Columbia’s auditor general said politicians need to pay more attention to the billions of dollars they provide every year in tax breaks to support government programs and policies.

Carol Bellringer said Tuesday in a report that the breaks in the form of tax expenditures can continue on for decades without oversight on either their effectiveness or if they’re still required. She said the government’s reporting of tax expenditures and how they relate to spending has been largely unchanged for the past 25 years.

B.C. government tax breaks were estimated at $7 billion in the 2016-2017 budget year, the report said. The government’s direct spending total in the budget for programs such as health care and education was $48.7 billion.

“Tax expenditures are a significant component of government fiscal plans, but legislators may not have all the information they need to determine whether tax expenditures continue to achieve government’s policy objectives,” Bellringer said.

She said the tax breaks give support to government social, economic and environmental policy objectives, but providing those benefits comes at a cost of lost revenues.

“Essentially, a tax expenditure is forgone revenue,” Bellringer said. “It’s money government doesn’t collect from taxpayers, but could if it didn’t offer the tax breaks. Tax exemptions, allowances, rate reductions, deferrals and credits are all types of tax expenditures.”

She said the province decided not to charge provincial sales tax on the purchase of new bicycles to help meet its environmental goals, but that means it gives up $23 million in taxes every year.

Bellringer said B.C.’s homeowner grant — introduced in 1957 to relieve the pressure of rising property taxes and encourage home construction — is a decadesold tax expenditure that has undergone few changes or reviews since its introduction. “It may no longer be effective in supporting government’s policy objectives,” she said.