Premier Christy Clark unveiled her pre-election budget plan – a campaign blueprint that would redistribute the provincial tax burden at the expense of big business for the first time since her B.C. Liberal Party took power a dozen years ago.
“It is balanced, in every sense of the word,” the Premier told reporters Tuesday as she emerged from the House after the budget was introduced.
The surplus budget tabled by Finance Minister Mike de Jong captures some of the political territory that has long been occupied by the New Democratic Party opposition, by turning to corporations – which have long bankrolled his party – to help put the budget back into black. Businesses will pay an additional $290-million in the coming year, with measures that include a 1-per-cent hike in corporate income taxes on April 1.
The Liberals are trailing in the polls just 12 weeks from election day, and that circumstance provided the political will to reverse the party’s long-standing commitment to seeking economic growth through tax cuts to business and high-income earners.
On the one hand, Mr. de Jong hopes to put a fresh coat on his party’s tarnished fiscal credibility. He wanted to bring in a balanced budget after a string of missed targets, including the last pre-election budget in 2009, where the deficit was $1.5-billion larger than promised.
On the other hand, the Liberals hope to capture some political middle ground by “asking people with a little more to give a little more” to maintain the province’s fiscal discipline.
To move to a $197-million surplus from what is now expected to be a $1.2-billion deficit in the fiscal year just ending, the government is relying on tax hikes, roughly $800-million worth of asset sales, and stringent – perhaps optimistic – containment of spending growth.
In his budget speech Tuesday, Mr. de Jong said it is voters who will decide if the credibility gap has been closed. “British Columbians will have a direct opportunity to express their views in that great democratic shareholders’ meeting scheduled for May,” he told the legislature.
But there is some tough medicine for individual taxpayers as well. Most taxpayers will see their personal income-tax credits reduced as a result of the return to the provincial sales tax on April 1. High-income earners – those earning $150,000 or more – will be taxed at a higher rate, tobacco taxes will rise and medical-service premiums will climb next January.
The Liberals have presided over four consecutive deficit budgets, and now promise three surplus budgets to come. “We are more determined than ever to hold the line on government spending,” Mr. de Jong told the legislature. The $43.9-billion budget for the coming fiscal year is banking on economic growth of 1.5 per cent, while spending is set to rise by just 0.8 per cent over last year.
Because of the timing of the election, the budget is more of a political platform than a fiscal document. The MLAs are expected to abandon the legislature without passing the budget in mid-March to prepare for the May 14 election. Because of the small majority held by Ms. Clark’s government, it is possible the election could come sooner if her Liberals lose a confidence vote.
The budget plan presents a challenge for the NDP opposition, which planned to base its election platform on the budget figures. But finance critic Bruce Ralston suggested he would discount some of the numbers, such as the asset sales. He applauded the tax increases for business and high-income earners – not surprisingly, as those measures had been proposed by the NDP. But still he said there would be “a major difference in emphasis” between the two parties.
The restraint measures allow Ms. Clark’s government to present a plan that includes some modest spending increases for daycare and early childhood education programs. The biggest pre-election goody is a revised postsecondary funding initiative. The plan retools an existing $286-million education fund that was designed to hand out postsecondary funds to students beginning in 2024. Now the provincial government can, before election day, offer $1,200 contributions to registered education savings plans to tens of thousands of eligible families.