B.C. businesses need to ask whether the BC Liberal government’s 2017 budget released February 21 is the right game plan for the province and its business community now or merely the right game plan for the BC Liberals’ re-election aspirations.
Finance Minister Mike de Jong’s fifth budget for the incumbent Liberal government makes an argument for scoring base hits on both counts.
Atop the right-game-plan-for-B.C.-business file, especially in the power-intensive resource sector, is the Liberals’ promise to start phasing out the provincial sales tax (PST) on electricity in October.
For industrial power users and major employers like pulp mills, which paid an estimated $49 million in electricity PST in 2015-16 and are currently on the ropes in a highly competitive global marketplace, the reduction and eventual elimination of the PST on electricity will remove millions annually from their operating costs.
PST relief alone could forestall the shutdown of struggling B.C. mills and the loss of the high-paying jobs they support in rural communities, where the economic divide between have and have-not areas of B.C. is most pronounced.
The government also plans to reduce the small-business tax rate to 2% from 2.5% and continue funding such initiatives as the Vancouver International Maritime Centre to help raise Vancouver’s profile as a major global shipping hub, which is key to building on the West Coast’s success in competing for transpacific containerized cargo.
But de Jong’s pre-election budget, while touting spending restraint, does little to reverse B.C.’s steady accumulation of provincial debt.
That overall debt, which was $33.8 billion in 2001 when the Liberals came into power, is on track to increase by $11 billion over the three-year fiscal plan to hit $77.7 billion by 2019-20. That’s $4.4 billion higher than the Liberals’ forecast in the 2016 budget; that’s also an increasingly heavy fiscal albatross around the necks of B.C.’s business and residential taxpayers.
