U.S. reforms mean NDP government must do more than balance budgets to keep B.C. competitive
British Columbia’s NDP government should be commended for tabling a balanced budget today, but it has failed to address significant economic headwinds looming on the province’s horizon—like too many other governments in Canada, according to the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“This budget ignores the elephant in the room—President Trump,” said Charles Lammam, Fraser Institute director of fiscal studies.
“With the future of NAFTA uncertain, softwood lumber still not settled and major tax reforms being enacted south of the border, the government must do more than just balance the budget to keep B.C. on track.”
Crucially, B.C.’s business tax regime is one of the most uncompetitive in the industrialized world and this budget does nothing to help. In fact, the government already made the situation worse back in September when it increased the general corporate income tax rate.
At the same time, the B.C. government also added a new top personal income tax rate. All told, the federal-provincial combined top rate on B.C.’s skilled workers is now almost 50 per cent. Compare that with top earners in Washington state, for example, who pay no state income tax and have just had their federal personal income tax rate lowered from 39.6 per cent to 37 per cent as a result of the recent U.S. tax changes.
In addition, where the U.S. federal government has eschewed carbon pricing in all forms, the B.C. government is moving ahead with marked increases to the provincial carbon tax reaching $50 a tonne by 2021.
“The U.S. agenda makes it more important than ever for the B.C. government to get the economic fundamentals right. Unfortunately it has ignored them completely in this budget,” Lammam said.
“Balanced budgets are important and the Horgan government deserves credit for recognizing this, but much more needs to be done to make B.C. competitive as a place to invest and do business.”