BC 2015 Budget
While I appreciate those of you East of the Rockies might not care, the BC government tabled its Budget today and the budget plan is available here for you to read for yourself.
I’ll point out a few things. First, the government is posting a surplus, yes you read that correctly, of nearly $1 billion in 2014/2015 and further surpluses around $543M-$749M in each of the next three years. That is based on real GDP growing around 2.5% a year, and personal income tax revenue growing at around 4% a year.
You always have to be careful reading these things as Budget documents contain a lot of stuff that has already been announced, like the BC Early Childhood Tax Benefit and the BC Training and Education Savings Grant. I talked about the BC Early Childhood Tax Benefit last year.
What did the budget announce? I won’t go through everything, instead provide some interesting tax highlights. First, BC has eliminated the temporary personal income tax rate of 16.8% on individuals with incomes over $150,000 effective the 2016 tax year. This surtax was announced in the 2013 budget with a shelf life of 2 years. So no renewal of it, for a loss of about $227M a year in tax revenues. This means that those with incomes over $105,592 all pay the same rate of 14.70%
Second, as expected, BC will stop the claw back for people on income and disability assistance when they receive child support payments. This has been discussed for some time now and nice to see some action on it.
Third, BC continues is subsidization of high income earners through its extension of the mining flow through share tax credit. I talked about that here and here. More people should be talking out against this tax credit since there is no evidence it supports any economic development.
Fourth, BC will once again raise MSP premiums and rely on premium assistance for low income residents, something that I said was a bad idea (the premium assistance model).
Fifth, the BC government has gained an appetite for boutique tax credits, similar to the Harper government. There are two new non-refundable tax credits (non-refundable means you can claim it, but you don’t get the benefit from it if your tax owing is already $0).
- Children’s Fitness Equipment Credit worth a grand total of a maximum $12.65 per child. In order to get it you must claim the BC children’s fitness tax credit and it is worth 50% of that claim. I have written a lot about the federal version of this (here, here, and here), and my critiques apply here: this is a tax credit that predominantly benefits high income earners. I especially don’t know why we bother with such nonsense when there is a better vehicle that targets low income residents: the Sales Tax Credit.
- The BC Education Coaching Tax Credit worth $23.50 per eligible tax payer. The tax credit is only available to teachers/assistants (and we don’t have a definition of a teacher or assistant yet) who do at least 10 hrs of extra-curricular coaching a year. I don’t understand why all these restrictions are placed on the tax credit because there is no way the benefit of the credit would outweigh any administrative costs, suggesting there will be no real audit of it and easily open to fraud. Why not provide funding for having these extra-curricular coaching or compensate coaches directly?
Though as Kevin Milligan notes, we are not talking a lot of money for these boutique tax credits. According to the budget document, about $3 million. But again there is always an opportunity cost.
So while there is some good news in the BC budget about surpluses, there is a lot of wasted money put towards useless tax credits that are really of no benefit for most families.