Debate #1 in the #BCLibs18 Leadership Race

Today the BC Liberals had their first so called debate in their leadership race. I say so called since there was no actual debate. It was two hours of vague answers to questions, with most speakers, most notably Dianne Watts, being cut off half way through their answers as they were unable to manage their alloted time.

Overall, there were not many details provided by the candidates about their policies, possible because none of the six current candidates have a detailed platform, or so it seems by reviewing their leadership websites. The main themes that did come up were: 1. they are a free enterprise party (I’ll remember this the next time I critique a platform because I could rip past platforms to shreds on this principle); 2. they need to strike a better balance between fiscal stewardship and investments in program spending; and, 3. they are scared as hell about the province moving to proportional representation.

With so much vague detail there is little to critique, though I could mention the irony of our former Minister of Transportation mentioning that the province needs a transportation plan and a better relationship with Metro Mayors. There were, however, three gems that came up that are worthy of this blog.

First, Andrew Wilkinson is committed to providing a tax deduction for tutors. We can talk about how tutors are a luxury afforded by households with the income available to pay for them. We can talk about how tutors are not a cost incurred to earn an income and therefore not an item we would consider worthy of a tax deduction. Instead, I will note that this is once again an example of the BC Liberals showing their lack of understanding with basic tax nomenclature. Under the tax collection agreements with the federal government, the provinces can’t enact tax deductions. They are wed to the federal definition of taxable income. They can enact tax credits. Tax credits are not tax deductions. Stop calling tax credits tax deductions! The BC Liberals did this in the election. Get the nomenclature correct because it is really hard for me, a tax economist, to think you are truly a fiscal steward when you can’t get basic tax and spending nomenclature correct. Oh and by the way, a tax credit for tutors is just as terrible an idea as a tax deduction. Stop with tax credits. All you are doing is taxing people throughout the year, creating all those distortions, and giving it back to a chosen few at tax time who do things they would have done otherwise, all while paying for the administrative costs of the tax credit.

Second, Sam Sullivan answers my call to arms that we, as a province, put our big girl pants on and have an adult conversation about doing away with the PST in favour of a VAT. Sam wants a modified value added tax in BC, a VAT that sounds a lot like the VAT proposed by Bev Dahlby’s tax competitiveness commission last year. This is great as doing so would help address a terrible tax burden in BC, but without having any details I don’t know his plan to deal with the regressivness which is easily done through a low income transfer that we can piggy back onto the GST refundable tax credit or low income carbon fund payment.

Third, Mike De Jong outlined a plan to ensure that students are not saddled with post secondary debt by, wait for it, a BC version of the RESP grant. He firmly believes that people should pay for their education so low income families be damned. Instead, he wants to give the equivalent of a $500 RESP grant. Now no details, of course, are provided, like what contribution rate is needed to get that grant. If we assume that the program would piggy back off the federal one then $2500 would be needed to get the $500 provincial grant. There is recent data available to help us understand RESP participation and contribution rate. It seems that the overall RESP participation is just under 50% and the average holdings are just under $7k. The data shows that we have a lot to do to improve participation in RESPs, notably among low income households. Without a plan from Mike De Jong to improve participation rates and contribution amounts than all this plan does is subsidize even more of those individuals who are already saving for kids who will already go to post secondary education. I also note that he has not costed the proposal or indicated how it will be paid for (the opportunity cost). I sent him this tweet:

These are fairly basic questions that someone proposing this policy should be able to answer right now, especially one promoting themselves as a fiscal steward.

So that is round one, five more to go. I hope more detailed platforms come out, the debates, become debates, and the candidates learn to deal with the time the limits before the next one.