Fiscal plan for recovery falling short
More financial aid needed
VICTORIA — B.C.’s business sector says the provincial government has done a good job on the public health fight against COVID-19, but its financial policies to help businesses recover from the pandemic are falling short.
Provincial health officials deserve credit for curtailing the growth of the pandemic, leaving B.C. in one of the best positions in North America to reopen its economy with minimal outbreaks of new cases, say business leaders.
That comprehensive response helped allow B.C. to keep construction and natural resource sectors open during the pandemic — key sectors that were closed in other provinces.
Yet the government’s $5 billion pandemic fiscal plan has for businesses so far amounted to temporary tax deferrals that will come due this fall, and a heavy reliance on Ottawa’s more than $200 billion in pandemic aid.
“B.C., in relative terms, is really throwing toonies and loonies at the sort of support for the economy piece here, and they’re essentially relying on the federal government’s balance sheet and federal institutions,” said Jock Finlayson, executive vice-president of the B.C. Business Council.
“They really have done very little. But I think this is a national crisis. We happen to have a national government that has a strong balance sheet and has a lot more tools in its tool kit for something like this, so I think it’s quite appropriate.”
In late March, B.C. announced a $5-billion COVID-19 aid package. More than 537,478 people have received the province’s $1,000 tax-free emergency benefit, and 82,000 people have applied for the $500 monthly rental supplement. That’s in addition to federal income and housing support.
The provincial unemployment rate was 13.4 per cent in May. Youth unemployment was almost 29 per cent, as retail jobs were lost due to business closures. B.C.’s economy will likely contract at least seven per cent this year, representing one of the largest drops in its history, according to business council estimates.
For businesses, government cut the school tax for commercial properties by half in a move to reduce the property tax bill for an average business by 25 per cent.
The province also allowed businesses to defer paying their employer health tax, provincial sales tax, carbon tax, motor fuel tax and tobacco tax from late March to Sept. 30. The idea was to let businesses draw upon that cash to survive the closures and steep drop in revenues caused by the pandemic.
“The problem with deferrals is the bill will come due with these taxes,” said Val Litwin, CEO of the B.C. Chamber of Commerce. “It’s offering short-term cash relief — which is significant, I’m not dismissing that. But business isn’t booming right now. So a deferral right now, you still have to pay the piper. But you’re not really making a lot of money in the interim.”
Almost 43 per cent of B.C. businesses surveyed by the chamber in late May said they’ll require more financial help to stay open than what’s available from governments.
“Our members are asking for cash support,” said Litwin. “Our members were saying please reduce tax rates facing B.C. businesses and households. That was our No. 1 request.”
B.C. has shared the costs of some other programs with Ottawa, such as a commercial rent relief program that landlords and small businesses have slammed for its many shortcomings.
The province still has $1.5 billion earmarked for economic recovery that has not been spent.
B.C. Finance Minister Carole James is aware businesses are anxious about repaying all their deferred taxes in September. She’s floated the idea of repayment plans.
“B.C. and the federal government have brought in temporary measures to help keep businesses intact to the best of our ability, and prepare them to participate in B.C.’s restart plan,” James said in a statement.
“A key part of the plan and the careful approach we are taking is designed to support businesses by building up British Columbians’ confidence that they can safely participate in the economy again, like going out for dinner or shopping.”
Business organizations say the province should also halt any new regulatory or permitting requirements that add costs when businesses are barely surviving.
B.C. did delay a planned increase to the carbon tax. But it refused to back off a June 1 hike to the minimum wage, which is now $14.60 an hour.
Opposition Liberal leader Andrew Wilkinson criticized the government for failing to take up his idea of a threemonth suspension of the PST, hotel and carbon taxes to spur consumer spending, as part of 30 ideas on economic recovery written in nine letters to the premier.
“It’s difficult to find any business in B.C. that can say they have benefited from provincial government investment,” said Wilkinson.
An NDP government that’s centred on the Lower Mainland has also excluded rural businesses from its economic recovery task force and plans, he added.
Economists are struggling to gauge the recovery because traditional statistics often lag, said Kevin Milligan, a professor at the University of B.C.’s Vancouver School of Economics.
But labour force figures, along with job postings and even traffic reports, show positive signs, he said.
“Its clear B.C. is up off the bottom and things are rebounding,” said Milligan. “That’s all we can see right now.”