VICTORIA - British Columbia's Liberals turned their backs on more than a decade of devotion to tax cuts and hiked some significant ones Tuesday in a race to balance their books before heading into the May election.
Finance Minister Mike de Jong resorted to raising income taxes for corporations and high-income earners and boosting health-care premiums to help bridge the gap from deficit to surplus.
De Jong's budget tabled Tuesday forecasts a surplus of $197 million for the 2013-2014 fiscal year, while this year's budget posts a deficit of $1.2 billion
"We've fought our way back," he said.
De Jong's budget comes less than three months before the May 14 provincial election in which the Liberals are seeking their fourth consecutive mandate.
It borrows heavily from ideas already floated by the Opposition NDP, which has in the past mused about higher corporate taxes and higher personal levies on the most wealthy. The NDP have consistently led the Liberals in opinion polls.
Opposition New Democrat finance critic Bruce Ralston said he endorsed the Liberal moves toward income tax increases for corporations and the wealthy.
"I'm pleased that the B.C. Liberals, despite their strong attacks on those ideas when they were first mooted, have adopted them," he said.
The budget left members of the business community tersely unhappy. The business community has staunchly backed Liberal policies even as the economic downturn of 2009 forced the government to drastically recalibrate their budget into deep deficit territory despite winning an election on a deficit projected at $495 million.
Jock Finlayson, vice-president of the Business Council of B.C., said the corporate tax increases in the budget would not be a deep concern if taken by themselves. But added together with the province's return to the provincial sales tax, the ongoing carbon tax and the high Canadian dollar, the business community has deepening worries.
"We are quite concerned about the challenges we are facing in B.C. with respect to our competitiveness and unfortunately, this budget really doesn't say much about that," he said.
B.C. Conservative Leader John Cummins said the taxes in the budget do not provide incentives to businesses to create jobs.
"What do we see? About a half a billion dollars in tax increases to businesses over the next two years," he said. "That's a concern."
Since 2001, when the Liberals were first elected, cutting personal income taxes and business taxes have been their road map to prosperity, but economic adversity has forced the government to make difficult choices, de Jong said.
"Getting things right has meant a lot of tough decisions," the minister said. "But this is not the time to turn our backs on the discipline that has helped us through the worst of the economic downturn."
He said B.C. — unlike Ontario, which faces a multi-billion-dollar deficit budget — is one of the few political jurisdictions to balance its books.
"We do have the option of continuing to operate in a deficit position for many years to come, which is precisely what a lot of other governments are currently making their peace with," he said. "I'll tell you right now — we're not going to do that. Why? Because my parents used to tell me, with a measure of common sense derived from their agrarian roots: 'Son, we can't afford it right now.'"
De Jong announced a personal income tax increase of 2.1 percentage points to 16.8 per cent from 14.7 per cent for the next two years, when the hikes will expire. He also announced that corporate income taxes will rise to 11 per cent from 10 per cent on April 1.
"In pursuit of achieving our objective ... we are asking those who make a little more to contribute a little more," he said.
Last year, the Liberals said they would consider raising corporate income taxes to 11 per cent in 2014 from 10 per cent, but de Jong said the government is increasing the tax a year early due primarily to low price forecasts for natural gas which resulted in a revenue loss of $70 million.
The NDP has promised, if elected in May, to raise corporate income tax rates to 12 per cent and leader Adrian Dix has said he was also considering raising income tax rates for people earning above $150,000 if elected.
De Jong said other tax changes in the budget that will improve the government's bottom line include increasing medical services premiums by four per cent in January 2014 and raising taxes on tobacco by $2 per carton, effective October 1.
He said the government has plans to raise $625 million through sales of surplus properties and assets. De Jong said 16 properties, including vacant lots, former school sites and parking lots, are among properties that are estimated to provide a return of $260 million.
He said 65 properties are being prepared to hit the market.
"We expect the sale of surplus assets will deliver a net gain of approximately $625 million over the fiscal plan," de Jong said.
The budget's tax measures are expected to generate $1.2 billion over the government's three-year fiscal plan.
But Ralston said the asset sales force him to question the credibility of de Jong's ability to guarantee the budget is balanced.
Ralston said the one-time sale of provincial assets to beef up a weak bottom line does not erase future financial issues facing the government.
"It's not a sustainable way to balance the budget," he said. "You sell it once and you still have the same fiscal hole."
The budget forecasts economic growth in B.C. of 1.6 per cent in 2013, 2.2 per cent in 2014 and 2.5 per cent in 2015.
"We expect gradual improvements in commodity prices and markets for some of our key exports over the next few years, including lumber and electricity," de Jong said.
He was almost apologetic for what he described as the slim spending initiatives in the budget.
"Now, I'm going to come to the shortest of the presentations, which is new spending initiatives," de Jong said.
He announced an early childhood tax benefit program of up to $660 for the majority of British Columbians, but on a sliding scale for high-income earners.
De Jong said the government will place $1,200 into a Registered Education Savings Plan account for every B.C. child at six years old The money will be provided to children who are born after Jan. 1, 2007.
The program is called the B.C. Training and Education Savings Grant.
De Jong said the government is cutting carbon tax payments for greenhouse growers, who are forced to create carbon dioxide to grow their products. Farmers will also get a carbon tax break on the coloured fuels they use to power their machinery, he said.
Health spending is forecast to increase 2.6 per cent, with the Health Ministry receiving $2.4 billion over the three-year fiscal plan.
Health spending grew on average seven per cent per year between 2005-2006 and 2008-2009. It was reduced to an average of 4.4 per cent in the next four years and the Liberals say they will constrict it to 2.6 per cent.
The Hospital Employees Union said projected health spending announced last year in the budget for 2013-2014 is down by $234 million in today's budget.
De Jong said revenues are expected to grow an average of three per cent a year over the next three years, while the government attempts to keep annual average spending growth at 1.5 per cent over the same period.
Total provincial debt continues to rise with an expected debt for 2013/2014 to hit $62.7 billion and then grow to $69.4 billion by the end of 2016.
Note to readers: This is a corrected story. An earlier version stated the surplus at $127 million.
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|@ rvollo : Another basket case budget from the BC Libs. Tight spending talk doesn't apply to their 16.4M taxpayer funded partisan ad campaign.|
|@ cfibBC : 30% of #CFIB members affected by 1% corp tax increase. Good that #smallbiz corp tax rate frozen though. http://t.co/p0LyBfCx|
|@ todmaffin : FACT: The BC Liberals' so-called "balanced budget" will bring the province to a projected DEBT of $62.7 billion.|
"The environment was largely notable by its absence in the 2013 BC Budget,” said Gwen Barlee, policy director with the Wilderness Committee.
“Here we have a government wanting to dramatically ramp up the liquefied natural gas (LNG) industry as well as the natural gas sector, but the numbers today show they want to do it on a shoestring budget. They promised us world-class environmental oversight but the reality is that we have lax, inadequate and weak environmental standards in BC, and today’s budget won’t change a thing.”
The BC Liberal government's final budget is nothing more than political posturing in advance of the May provincial election, said Mark Hancock, secretary-treasurer of the Canadian Union of Public Employees, B.C.
"The CCPA praises corporate tax and personal income tax hikes for wealthy British Columbians, but feels the childhood tax benefit is too small to make real difference for families ($55/month when childcare fees range from $800-$1,400/month. Also called rising health care premiums a 'regressive tax.'"
From the budget:
MSP premiums will increase by about four per cent effective January 1, 2014.
|@ CharlesLammam : Govt does an about-face in #bcbudget and sends resoundingly negative signals to investors, entrepreneurs, and skilled workers #bcpoli|
|@ garymasonglobe : Say what you will about BC budget - and there's lots of ??? To be asked - but taxpayer-funded debt is envy of many provinces. #bcpoli|
|@ marcellam : Spent the day in #bcpoli Budget 2013 lock-up. My take? Does nothing to restore credibility. Bring on the elxn! #timeforchange|
|@ RobertCFO : Can't believe BC is tabling a balanced budget and in Alberta we continue to be fiscally irresponsible. Need solutions, not excuses. #calgary|
Ralston: Investment in justice is being reduced when courts and legal services are facing major pressures.
Funding for the ministry of mines is being reduced. No funding for timely permitting in the resource sector.
Ralston: Government is selling properties, and province will have to consult with First Nations on the sales of those properties.
Quotes economist Don Drummond's report about the province of Ontario: "If assets are to be sold, do not enter any revenue projections from said sales into the budget before the fact."
Finance critic Bruce Ralston says the budget offers little right now that is needed. Says the 2009 budget committed numbers that had "little to do with reality," brings up the Harmonized Sales Tax as an example.
Mike de Jong closes by saying he has a "modest" sense of pride that he has presented a balanced budget. Colleagues applaud.
Mike De Jong calls this a "responsible, achievable" plan as he closes.
"It may not be your classic pre-election budget. Would it just be easier to run a deficit? Absolutely. When it comes to exercising spending discipline, it's not saying yes that's difficult, it's saying no."
The Canadian Press summarizes the child and family benefits that Mike de Jong has introduced in the B.C. budget.
|@ keithbaldrey : Children and Families get tiny ($7 million) increase in budget. Turpel-Lafond not happy. #bcpoli|
|@ cfibBC : #CFIB rates #BCBudget a "B". Overall good news for #smallbiz, esp PRPP announcement. Balanced budget welcomed, corp tax increase bad signal.|
|@ HamishTelford : BC budget too much reliance on temporary measures & unrealistic spending estimates, especially heath care. #bcpoli|
In 2007, when times were a little better, government started saving. Since January 1, 2007, invested $1,000 for every child born in the province. Today, that amount has grown to about $1,200. It's time to unleash the full force of that savings potential.
Effective immediately, every family with a child under seven who meets residency will qualify for an Education and Savings Grant. Government will transfer $1,200 to every family for skills and training after high school. All you need is an RESP in place before your child's 7th birthday.
Will continue to provide tax credits to seniors and children. $27 million for the children's fitness and arts tax credits.
"Even with these new investments, debt will remain affordable. Debt's growth will slow as we return to a balanced budget."
From the budget:Budget 2013 forecasts British Columbia’s taxpayer-supported debt-to-GDP ratio will peak at
18.3 per cent in 2014 -15, and decline to 18.1 per cent in 2015-16.
“These taxes hurt families by making it more expensive to live here and for businesses to set up shop and employ people. Coming on the heels of a return to the PST, the creation of good jobs will slow," says Jordan Bateman, B.C. director of the Cdn Taxpayers Federation
$10.4 billion in capital investments over the next three years. Includes $3 billion into transportation, $800 million for public transportation. $30 million for the Gateway program. $9 million for cycling infrastructure.
"Today, the tools we require to support this growth are skils and training. We are adding significantly to our skills and training infrastructure."- $29 million for two new trades training buildings at Camosun College in Victoria - $28 million to improve training facilities at Okanagan College
- $17 million to new skills training at colleges and institutes around B.C.
"Because it is revenue neutral, the carbon helps keep other taxes low. Since its inception, it has raised $3.7 billion, all of which has been reinvested into tax reductions." - Mike de Jong
Minister of Finance and House Leader
Mike de Jong
Deputy Premier, Minister of Energy, Mines and Natural Gas, Minister Responsible for Housing
Minister of Health
Minister of Education
Minister of Aboriginal Relations and Reconciliation
Minister of Transportation and Infrastructure
Minister of Forests, Lands and Natural Resource Operations
Minister of Agriculture
Minister of Justice and Attorney General
Minister of State for Small Business
Minister of Jobs, Tourism and Skills Training and Minister Responsible for Labour
Minister of Advanced Education, Innovation and Technology and Minister Responsible for Multiculturalism
Minister of Social Development
Minister of Environment
Minister of State for Seniors
Minister of Citizens' Services and Open Government
Minister of Community, Sport and Cultural Development
Minister of Children and Family Development