It’s the first jointly created, bipartisan budget in ages. B.C. Liberals delivered it, but the New Democrat Opposition helped write it.
Two key measures in Finance Minister Mike de Jong’s fiscal plan have NDP leader Adrian Dix’s fingerprints on them.
The tax hike on high-income earners over $150,000 a year is something Dix was vaguely musing about earlier.
B.C. Liberals don’t normally put a lot of stock in tax increases. It’s a point of pride that they’ve kept them comparatively low.
But Dix opened the door to the concept last year, and the cash-starved Liberals decided to walk through it.
Dix last year was questioned about his tax plans and said he was reluctant to do anything to earners under $150,000, but left the possibility of hikes for those over that figure wide open.
De Jong’s budget executed Dix’s implied plans.
The finance minister announced a two-point increase that will kick in in January 2014. It will produce $50 million in revenue for the fiscal year covered in Tuesday’s budget and $200 million over a full year. All told, it will bring in $412 million over its two-year lifespan before — poof! — we are assured it will vanish.
Dix’s notion didn’t include the word “temporary.” But that phrase has a tendency to fall off the table when tax hikes are concerned, even if it is certified as such in four different places in the budget document. So it may be here to stay, no matter who wins the election.
Similarly, the government had been contemplating a one-point hike in corporate income tax, starting in 2014. Dix started eyeing the corporate income tax rate earlier, suggesting it should go up by two points.
Lo and behold, de Jong moved the increase up a year and it will come into effect in April. That will produce another $200 million a year in revenue.
The merging of NDP and B.C. Liberal tax concepts isn’t something you see every day. But it’s not a case of harmonious joint collaboration. It’s more like a cat-and-mouse game where a revenue-hungry government waits to see what the Opposition comes up with and then goes part way to matching them.
Politicians talk about “tax room.” In this case, it’s the Opposition that’s creating some of that room.
Dix said in an interview last year that if he wound up as premier hiking taxes on high income earners, it would be the Liberals’ fault because of the mess they left him.
It turns out the Liberals did it, and he’s the one who first started talking about the idea.
Asked about the political manoeuvring, de Jong said: “I’m not sure who’s the cat and who’s the mouse. But I hope the other party comes out of their hole and shows us the cheese.”
It’s a mutually beneficial arrangement. The Opposition can take credit for the few politically popular moves in the budget, taxing “rich” people and corporations.
And the government can tell the targets of those hikes, “Sorry, but you got off easy, compared to what the other guys would do.”
They didn’t play the game all the way down the line. The NDP has visions of using carbon-tax revenue for specific purposes like transit. The budget didn’t introduce any new specifications for that money.
And the NDP wants to tax banks, but de Jong left financial institutions alone.
The game-playing intensified this year for obvious reasons.
Since the election date was fixed in May almost 12 years ago, every fourth budget becomes a bit of a farce. For all the hopes, dreams and hard work that went into the effort, Tuesday’s budget has a shelf life of six weeks. It will never get passed, because the legislature won’t sit long enough to accomplish that work. If the B.C. Liberals win — which looks unlikely at this point — they will have to re-introduce it later this year.
And if the NDP win, the whole document will get junked, in favour of their vision.
Taking it at face value for as long as it’s current, the Liberals deserve credit for balancing a budget.
But it leaves two questions: Does it matter to voters as much as it does to them?
And would the NDP hold to the balanced-budget imperative if they have to rewrite it in a few months?
