British Columbia was once the economic powerhouse of the West.
But after years of deficit budgets, we have seen one credit rating downgrade after another. And the provincial debt is deepening while taxes are leaping higher every year.
The next provincial budget is a chance for the Eby government to get the fiscal train back on track. That’s why the Canadian Taxpayers Federation is presenting a pre-budget report offering a road map back to fiscal sanity.
Reducing the Employer Health Tax and eliminating the provincial fuel tax would save British Columbians almost $4 billion in Budget 2024-25. To find these savings while also presenting a balanced budget, the provincial government must reduce spending by almost $6.3 billion.
To do this, the government should return ministry spending to the levels we saw in 2022-23, while also eliminating the corporate welfare doled out by the InBC Investment Corp. Combined, those two measures will reduce government spending by almost $6.5 billion.
These steps will leave B.C. with a surplus of nearly $200 million.
The government needs to bring back balanced budgets. We finished 2022-23 with a surplus of more than $700 million, so it’s within the realm of possibility for the government to present a balanced budget for 2023-24.
Balancing the budget would help stop the debt spiral that B.C. has snared itself in.
As it stands, 2024-25 will see B.C. taxpayers on the hook for $3.8 billion in interest charges on the provincial debt. That’s enough money to pay the salaries of 5,650 new teachers for 10 years, or build 116 new schools with space for more than 76,200 students. Most British Columbians would agree that investing in things at home, like education, is better than money going out the door to bond fund managers on Bay Street and Wall Street.
Corporate welfare should be first on the chopping block. When governments play investment banker and give corporations money from taxpayers’ pockets, it’s bad for businesses and for taxpayers. For British Columbians who filed taxes from 2007 to 2019, total corporate welfare cost for each tax-filer is $11,573. Axing the InBC Invest Corporation would give $500 million in savings.
A second step in restoring our budget to balance is to review spending to find savings. The government needs to distinguish between wants and needs.
For example, the premier’s office should not be padding its office budget with an extra $1 million, as we saw in the 2023-24 budget. MLAs should lead by example and forgo their annual pay raises in 2024-25, as they did in 2022-23.
Political staffers making six-figure salaries should not receive raises. In August 2023, it was revealed that political staffers, who already made more than $100,000, received pay raises up to $17,000. When citizens are struggling to make ends meet, the political class needs to lead by example.
The next budget should reduce provincial fuel taxes.
By 2030, drivers will be paying $1.02 per litre for gas taxes in Vancouver, 95 cents in Victoria and 88 cents across the rest of the province.
Higher taxes on fuels aren’t the answer for the issue of climate change. As the parliamentary budget officer pointed out, “Canada’s own emissions are not large enough to materially impact climate change.”
While they’re at it, the government should reduce the Employer Health Tax. Cutting the EHT in half would allow businesses to create more jobs without being punished with higher taxes.
The EHT hits job creators as soon as their payroll hits $500,000 creating an incentive for businesses to stop creating new jobs. Out of the four provinces that have a similar EHT with thresholds before it kicks in, B.C. is the quickest to punish and apply the tax.
Manitoba’s EHT doesn’t kick in until payroll hits $2 million. In Ontario, the province with the next lowest EHT threshold, businesses start paying the EHT once their payroll hits $1 million.
B.C. should not be leading the pack in punishing businesses for creating jobs.
If the government achieves these goals, it will help make B.C. an economic powerhouse once again.
Carson Binda is the B.C. Director for the Canadian Taxpayers Federation.
Editor's note: An earlier version of this column stated that cutting the InBC Invest Corporation would deliver $500 billion in savings. In fact, it has been mandated to invest $500 million in the private sector.