The BC Liberal government’s plans to boost income taxes on business and high-income earners takes a page out of the NDP opposition’s plans, and makes sense.
The NDP plan had called for the corporate tax rate to go to 12 per cent, where it stood in 2008. The BC Liberals are boosting the corporate tax rate to 11 per cent on April 1.
The provincial government also will impose a higher personal income tax rate on individuals with incomes of $150,000 or more. Their provincial income taxes will rise 2.1 per cent to a rate of 16.8 per cent, as of Jan. 1, 2014.
Both of these tax increases are necessary at this time, given the financial shackles the province is in. It has been running large deficits, at least partly because of much lower natural gas prices, which have affected government revenues.
The province is claiming it will balance the budget in 2013-14, largely because it plans to sell more than $600 million in surplus property. Given that the real estate market has softened somewhat, that is probably an optimistic figure. There is nothing wrong with selling surplus properties, but there are probably too many properties on this list.
The provincial government is also boosting MSP premiums again next year. This is completely unfair to moderate income earners, who do not get the exemption from paying the premiums that goes to low income people. This will be the fifth year in a row the premiums will increase, and they will have jumped by 28 per cent since 2008. There should be no additional boost in MSP premiums.
This budget is crafted with the May 14 election in mind, and while its revenue assumptions may be sound, as economist Tim O’Neill asserted on Monday, it is very much a political document.
It is designed to convince wavering voters that the BC Liberals are competent money managers. Over the course of the past 12 years, the Liberals have been sound money managers much of the time, but in recent years their record has been more mixed.
The Liberals were hoping for a big boost in revenue through the HST, but that was torpedoed by voters because of the bumbling way the government brought in the tax. That hurt their reputation as competent managers.
By adopting part of the NDP platform, the Liberals may have unintentionally telegraphed that the NDP too has good fiscal ideas.