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BC Budget Update Signals Modest Tax Changes and Additional Spending Measures
After more than 16 years in opposition, the NDP government introduced its first budget earlier this week. More accurately, Finance Minister Carole James unveiled a Budget Update, with the more comprehensive budget and fleshed out fiscal plan to come next February.
Nevertheless, the Update provided an opportunity for the new government to act on some of its campaign promises and set the tone for its approach to managing the province’s finances. The Finance Minister announced some moderate tax increases, a couple of tax reductions, and higher spending in a few priority areas — notably education, housing, and social services. Unlike its predecessor, the NDP government is less attracted to fiscal austerity and likely won’t use future operating surpluses to reduce the stock of accumulated debt.
The Budget Update outlines three more years of operating surpluses of roughly $250 million each year. There is also a reasonable fiscal cushion built into the Update to help ensure budget targets are met.
The Update contains a mix of tax relief and tax increases. Larger companies, especially those with energy-intensive production processes, face a higher tax burden. The small business tax rate is trimmed.
Many households will enjoy some tax relief, but this varies depending on existing MSP premium payments. Eliminating tolls means frequent users of the Port Mann and Golden Ears bridges will see significant annual savings.
Social assistance payments are increased by $100 per month.
Over the three-year fiscal plan, overall capital spending falls slightly, mostly reflecting the shelving of the Massey Tunnel replacement project.
Overall the Budget Update can be viewed as a balanced document which reflects steps to meet some of the NDP’s campaign promises.
- Looking ahead, however, fulfilling more costly promises such as subsidized universal day care and a very large increase in rental and low income housing units will be more challenging within the current fiscal framework.