The B.C. Liberals’ throne speech didn’t do much more than set up a week-long guessing game as to what they have in mind for the main event — next Tuesday’s budget.
The one shred of news in the 15-page speech is that they’re going to do something nice for taxpayers in the budget.
The answer to most of the obvious followup questions is: “Stay tuned.”
In the four years the Liberals have been delivering balanced budgets, the operative themes have been that the surplus is virtually a miracle no one else is pulling off, the economy is still fragile and uncertain, and the money has to be re-invested.
The theme hinted at in the throne speech has been adjusted slightly. Fifty-six days before the election campaign starts, the surplus revenue is going to have a different destination — your pocket.
“After years of sacrifice by all of us in B.C. through challenging times, working together with a plan, your government is now in a position to pay you back, to relieve some financial burdens, and to invest in your household and in your families.”
Under the heading “Relief from fiscal burdens,” the speech said: “Government is now in a position to take a further step to ease the financial burdens on citizens … The money belongs to you … In the coming budget, your government will provide financial relief to taxpayers while continuing to make investments in the services people rely on.”
The key part of that sentence is the word “step,” as in singular.
It suggests one high-profile, crowd-pleasing revenue-returning move that has broad impact for nearly every single taxpayer. Or in this context, voter.
This time last year, the budget anticipated a $287-million surplus over the year.
By last November that estimate had grown to $2.2 billion, which is standard practice most years for the government. It will likely be even higher when the year-end estimate is released in the budget.
Some of the money is already allocated for debt reduction and the Prosperity Fund, but there is still a sizable chunk left to play with.
The goal is to have people saying “wow” after Finance Minister Mike de Jong finishes his budget speech next Tuesday.
There are four obvious ways to do that.
The first is simply to cut cheques to every adult in the province. But that option is too crass and obvious. Plus, the previous NDP government tried something similar once and it didn’t work. Clark explicitly ruled that idea out later in a media scrum.
The second would be to cut the provincial sales tax. It’s a seven per cent add-on to most purchases and it’s the single most visible tax. Every point is worth about $125 million, so there is enough theoretical tax room to drop it substantially without doing major damage to the province’s bottom line.
The third option is the provincial income tax. That’s the measure former premier Gordon Campbell seized on in his first day in office in 2001, when he cut the provincial income tax a stunning 25 per cent. It was done solely with the goal of kick-starting the economy. It’s not as visible, but it would still get lots of attention.
B.C. taxpayers already pay the lowest personal income taxes up to the $122,000 bracket. Another reduction would have a real impact on most household budgets and draw national attention to B.C.’s outstanding fiscal situation.
The fourth option would be to cut or drastically modify the Medical Services Plan premium, which has emerged as a huge irritant that the government recognizes needs fixing. The levy raises about $2.6 billion a year, so eliminating it is too expensive a proposition. At least some would have to be made up elsewhere.
In last year’s budget speech, de Jong took issue with the idea of eliminating premiums.
“Burying MSP into … general taxation doesn’t make them go away. It merely hides them and may create the illusion that health care is free, which it certainly isn’t.”
Let the guessing begin. We’re going to be getting a break of some sort. The only thing that’s clear is the motivation for the reward.
