Burnaby Board of Trade 2020 BC Budget Review – Laudable Goals But Lacks Economic Vision for Business Community
BC Budget 2020 Lacks Vision for Economic Competitiveness; Continues Focus on Affordability For Families But Not For Local Businesses
On February 18, Minister of Finance Carole James released the 2020/2021 provincial budget, outlining the plans for government taxes and revenue over the next year. The $60.5 billion provincial budget is balanced, forecasting a $227 million surplus of 2020/21, and has a laudable focus on general affordability. but lacks a compelling vision for economic growth and pays little attention to growing concerns about the costs of doing business in BC.
Economic Vision and Competitiveness
Budget 2020 continues with the government’s focus on affordability for families, but does little to address the affordability of operating a business in BC. Economic growth of 2.0% is projected for 2020/21, but this level of growth will not sustain itself without paying attention to the competitiveness of our economy and the strength of our business community.
The Burnaby Board of Trade is concerned with how of the government’s financial plan is balanced on the backs of local businesses – from the imposition of the $1.9 billion Employer Health Tax, to the increasing carbon tax and the removal of revenue neutrality, to the previous increase to the corporate tax rate, and to the continued mandated increases to the minimum wage.
The government’s focus on housing, childcare, and the environment is important, and is supported by the Burnaby Board of Trade and our business community, but a strategy to maintain and support the economic growth that pays for these efforts is clearly missing.
Employer Health Tax, Property Taxes and the PST
Budget 2020 noted the recent elimination of Medical Services Plan premiums as a significant tax cut for British Columbians. While this is a savings for individuals, there was no acknowledgement that this is being accomplished wholly through the new Employer Health Tax placed on BC businesses. The Burnaby Board of Trade maintains that the Employer Health Tax brings in more revenue than is needed to pay for replacing the MSP, and is a net new tax of $1.9 billion on employers. The Burnaby Board of Trade is disappointed that there was no mention of mitigating the impacts of the Employer Health Tax through an increase in the payroll exemption rates.
Similarly, given the continued focus on high property tax bills across BC by the Burnaby Board of Trade, business groups across the province, the media, and countless local businesses, the BBOT was also disappointed that addressing high property taxes through changes to the “highest and best use” method of valuing properties was not included in Budget 2020.
Finally, Budget 2020 makes some small changes to the provincial sales tax to increase it in some areas (sugary drinks) while eliminating it in others (pollution control equipment and electric airplanes.) Instead of these type of piecemeal tax changes, the BBOT would rather the provincial government commit to a full review of our tax system to see how we can develop a made-in-BC value-added tax that will replace the PST with one that is more fair, easier to understand, and more competitive for businesses.
Budget 2020 expects to raise over $60.5 billion in provincial revenue, with a surplus after all government spending of $227 million. Further surpluses of $179 million and $374 million are forecast for the next two fiscal years as well. The Burnaby Board of Trade has long advocated for balancing budgets, especially during periods of economic growth, and therefore is pleased that the provincial government has again shown fiscal responsibility with Budget 2020. However, it is important to note that much of the increase in revenue that has led to this balanced budget has been because of increased contributions and taxes made by and borne by businesses.
Childcare, Education and Environment Sustainability
Budget 2020 continues the implementation of the Child Opportunity Benefit, which will provide a tax-free payment for low and middle income families with children under 18 years of age, as well as previously-announced investments in childcare and housing affordability that have so far created 10,400 new childcare spaces and 23,000 affordable housing units according to the provincial government. The BBOT strongly supports initiatives to address childcare, housing and affordability as a way of supporting a stronger community in which our members can operate.
As part of our triple bottom line perspective, the Burnaby Board of Trade focuses on environmental results, as well as economic and social outcomes, and as such was pleased to see significant new funding of $419 million allocated to CleanBC. This funding includes capital funding for schools, universities and hospitals to improve energy efficiency, enhanced tax credits for low and middle-income families to offset the impact of the carbon tax, and CleanBC programs specifically for industry. As we have done over the past year, the BBOT will continue to engage with the provincial government to find ways of including small and medium sized businesses, who are often excluded from environmental programs and funding, in these CleanBC plans.
For more information on Budget 2020