One might have hoped the B.C. budget, revealed Feb. 21, would have had more small-business initiatives.
According to the provincial government’s own reports, there were more than 391,700 small businesses in British Columbia in 2010, accounting for 98 per cent of all companies and employing approximately a million people. That would represent 57 per cent of all private sector jobs in the province.
Just to make the point even stronger, in 2010, approximately 30 per cent of B.C.’s GDP was generated by small business, above the national average of 27 per cent. And small business was the source of 33 per cent of all wages paid to workers, which was the highest share of any province.
So what were the highlights? Not much for small business, I’m afraid.
A promised small-business tax cut was cancelled and remains at 2.5 per cent – rather than the “zero” cited in earlier budgets – and the corporate tax rate will rise to 11 per cent in two years if the financial situation in B.C. does not improve. It would appear the policy of attracting investment to the province by striving to be one of the lowest tax jurisdictions in Canada has been shelved, in light of the fiscal realities of a forecasted $968 million deficit. The government’s plan is to balance the budget by 2013, which will be just before the provincial election.
“Fiscal discipline” is a noble goal for all governments these days. One need only look to Greece as an example of state-sponsored profligacy with catastrophic consequences – a nation guardedly watched by Italy, Portugal Spain and Ireland (the PIIGS) – and of course by France and Germany, which are still bailing out Greece and are terrified about the others.
B.C.’s Ministry of Finance has no doubt read the report by economist Don Drummond with respect to Ontario living beyond its means and the steps that may have to be taken to avoid further downgrading of the province’s debt, and the consequences that flow from spending too much on public services without the tax base to support it.
In B.C., the government is holding the line on public spending – effectively continuing the freeze on public sector pay increases at zero and keeping funding to school districts at $4.7 billion a year. While the business community is publically behind the government’s austerity measures, it’s not something that go over well with a number of groups, especially the British Columbia Teachers Federation. It is demanding a whopping 15-per-cent wage increase and benefits, including 10 days of bereavement leave for the death of a friend, which has led some media commentators to ponder whether that would include Facebook friends.
Other commentators have speculated that the teachers may be “reaping what they sowed:” they might well have had a pay raise if the HST had passed in a referendum in 2011. The BCTF was against the HST and it encouraged its members, and the public, to vote against it.
The government is planning to impose a legislated settlement on the teachers, and on Feb. 28 and 29, the teachers will vote on whether to escalate the limited “teach only” job action to a full-scale walkout. Any walkout by B.C. teachers will have an effect on businesses in the province, which will have to deal with complicated staffing issues that will arise from employees having to deal with school closures and child-care arrangements.
