BALANCING ACT TRICKY
“Abudget is more than revenue and expenses,” B.C. Finance Minister Carole James said in tabling the first New Democrat budget since 2001. “A budget is about people.”
With all due respect to the minister, a budget is by definition about revenue and expenses. The Merriam-Webster dictionary defines a budget as “a statement of the financial position of an administration (as of a nation) for a definite period of time based on estimates of expenditures during the period and proposals for financing them.”
Alas, we learned a lot about the expenses but not so much about the revenue.
The government has committed to $5.2 billion in new spending over three years, including $1 billion to subsidize the cost of child care and create 22,000 new child-care spaces and $1.6 billion for affordable housing for students, Indigenous peoples, women and children fleeing abuse. The promises of $10-a-day child care and a $400 renter’s rebate were absent, but media releases from activist groups were appreciative of the initiatives that were there.
On the other side of the ledger, new taxes totalling $5.5 billion over three years are intended to pay for the increase in handouts and social program spending, but the sources of revenue are anything but certain.
For instance, the government expects to earn $487 million from a speculation tax aimed at stemming the flow of foreign capital into B.C.’s real estate market. It estimates revenue of $87 million this year and $200 million in 2019-20 and 2020-21. But if the tax is effective, speculation should dry up, not increase, and revenue targets won’t be met. If speculation continues unabated, then the program will have been a failure.
The same holds true for the foreign buyers tax, the increase in the property transfer tax and school tax for residential properties valued at more than $3 million — if James’ objective of reducing the price of residential real estate is realized, her revenue projections won’t be.
One big surprise was a new $1.9-billion employer health payroll tax to partly replace eliminated premiums under the Medical Services Plan. The B.C. business community, caught off guard, has protested the imposition of the tax a year before MSP premiums are to be eliminated. We are still trying to sort out the winners from the losers, but the finance ministry doesn’t appear to have modelled that.
Perhaps the biggest surprise, however, was the NDP following the previous government’s lead in balancing the budget. Sure, it’s balanced on the backs of beleaguered taxpayers, but it’s the principle that matters.