Vaughn Palmer
Sun
VICTORIA – A significant cut in income taxes and a major boost in welfare rates. With those items in the mix, the B.C. budget could have sold itself.
Instead, Finance Minister Carole Taylor insisted Tuesday that it was all about “building a housing legacy” and pointed to a reputed $2-billion housing plan.
The claim was entirely misleading. Her budget provided not quite $400 million over four years for housing programs.
Most of the rest, some $1.5 billion, represented the estimated value of the cut in income taxes over the same four years.
Folks could use the savings on their tax bills to supplement their housing costs, as Taylor urged us to consider.
But the whole rationale for cutting taxes is to leave money in people’s pockets so they can choose what to do with it, undirected by the government.
Taylor could just as easily have packaged her tax cut as “building a legacy” for child care, education, retirement or buying a new car.
On the theme of putting more money into people’s pockets, the other newsworthy change was a boost in welfare payments (social assistance plus shelter allowance) of $100 a month.
The government indicated that the increase, 20 per cent, appeared to be the biggest in the history of those programs.
But Taylor didn’t make a big deal of it, distracted as she was by her insistence that the focus was housing.
The tax cut came as a surprise to many observers, though Premier Gordon Campbell did herald the prospect in a speech to the B.C. Liberal party convention in Penticton last November.
“Tax cuts work,” he told the cheering delegates.
“Within this mandate, we will provide even greater tax relief for B.C. families.”
At the time, the rumour mill touted the possibility of a 10 per-cent reduction in provincial income tax rates, which is how it turned out.
Some of the Liberals, noting the premier’s reference to “within this mandate,” suggested scheduling the relief closer to the next election.
But finance cautioned there might not be as much room to move in 2009, given fluctuations in resource revenues.
With the budget in surplus, the advice was “do it now” and the Liberals did.
“We are a government that has always run on a policy of lower taxes whenever we can,” Taylor told reporters during the budget press conference.
“No apologies for that.”
Still, some government supporters wondered about the absence of relief targeted at business and the resource industries.
Phil Hochstein, irrepressible head of the Independent Contractors and Businesses Association, even joked about this being “a left-wing government.”
The Liberals did consider a recommendation from the competition council to roll back municipal taxes on business and resource industry property.
But they rejected that advice, concluding that municipalities would only demand that Victoria make up the difference or, failing that, cut local services and blame the province.
Another thing observers looked for in the budget was an indication of how the government will be paying for the fight against climate change, promised in the speech from the throne.
Environmental groups, impressed by the throne speech, were understandably disappointed by the budget.
But Taylor disclosed that one of the first elements in the program won’t be funded by the budget.
The promised $25 million to promote the development of innovative clean energy will likely be raised by a levy on BC Hydro rates.
Details to be announced with the energy plan, scheduled for release next month.
Finance did provide $4 million to launch the climate action team, which will help set the targets for reduction in greenhouse gas in 2012 and 2016, then decide what it will take to reach the ultimate target of a 33-per-cent reduction by 2020.
Beyond that, Taylor chose not to shovel money into climate change until the specifics are at hand. She did say that when the programs are there, the funding will be provided as well.
Likewise, the budget included only a general promise to fund the recommendations arising out of the conversation on health, with money to be taken from the unallocated forecast allowances for 2008 and 2009.
The fine print contained a few hints of the looming fiscal problems in health care. The two biggest health regions are projecting a combined $119 million operating deficit in the year ahead.
And the wish list on capital projects exceeds the allocations.
Even with those concerns still to be addressed, health will consume 42 per cent of program spending in the year ahead, up from 41 per cent last year.
A reminder, here and there, that much of the future money in the budget is already spoken for, which is why they had to do the tax cuts now.
© The Vancouver Sun 2007