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BC Budget: Average Families Left Out?

Gov't proud of surplus, but critics ask if 'tax cuts for the richest' reflect the right priorities.

By Andrew MacLeod 17 Feb 2015 | TheTyee.ca

Andrew MacLeod is The Tyee's Legislative Bureau Chief in Victoria. Find him on Twitter or reach him here.

British Columbia Finance Minister Mike de Jong presented a stay-the-course surplus budget that spends a small amount to end the clawback of child support payments for parents receiving disability or income assistance payments. But observers said it does little else for low or middle-income earners.

"The government has decided to fully exempt child support payments from income and disability assistance calculations," de Jong said while presenting a budget overview to reporters and stakeholders gathered at the Victoria Conference Centre.

"Candidly, the concerns being expressed by people receiving these payments, or advocating for them, had an impact," he said, noting the government also looked at data on the support payments and research from the United Kingdom.

In the last year, single parents, anti-poverty advocacy groups and the New Democratic Party Official Opposition have pushed the government to stop the practice that saw child support payments subtracted from the cheques for parents receiving income or disability assistance.

The measure will cost the government only $9 million a year, a figure that includes $4 million it expects to save from reduced Family Maintenance Program costs. An earlier estimate of a $17-million cost to end the clawback included spousal support payments as well, which saw no change with today's budget.

Officials said the change will affect some 5,400 children living in 3,200 families that on average will have an extra $300 a month. For comparison, the budget also ends a temporary two-year tax on incomes over $150,000, a measure that costs the government in the order of $250 million. The total budget for the province is about $45 billion.

No help for working poor

"It's a salary increase for the richest two per cent of British Columbians and nothing for the working poor," said Irene Lanzinger, president of the B.C. Federation of Labour, which has been pushing to raise the minimum wage to $15 an hour.

"There's hundreds of thousands of people working full time and living in poverty and there's really nothing in this budget for them," Lanzinger said. "Poverty has a long term cost too."

She said ending the child support clawback was the right thing to do and congratulated the people who fought hard for that, but said the government should also turn its attention to welfare rates and social housing.

"The government had a surplus, they could afford to have a poverty reduction plan," she said. "Childcare, poverty reduction plan, increases for education and health care, we could be doing a lot with that money that would help British Columbians."

The budget predicts an operating surplus for 2015-16 of $284 million. Last year's budget included a similar surplus, characterized a year ago at the time as "razor thin," but updates have pushed the amount to almost a $1-billion surplus for the 2014-15 fiscal year.

Mary Ellen Turpel-Lafond, the commissioner for children and youth, said B.C. continues to have high levels of child poverty and the middle class is challenged to afford what they need. "Middle class families are going to continue to struggle and the lowest income families will have a rough future," she said. "We're not seeing the families share in any big way from what we see today as being a balanced budget."

Turpel-Lafond pointed out that ending the clawback is not the same as the government spending money. "Ending the clawback is a really important issue for the 3,200 recipients, but I think it's important to understand that the clawback means British Columbian children will be able to keep the money that their parents pay for them," she said. "We're not having the government pay them more money."

There has been no progress on support for children with special needs, for mental health care or for housing, she said. There's a small increase to the budget for the Ministry of Children and Family Development, but it covers the hiring of 500 workers that are needed for the ministry to fulfill the mandate it already has, she said.

Good books, bad priorities: CCPA

Iglika Ivanova, an economist with the B.C. office of the Canadian Centre for Policy Alternatives, said the government has a short-term focus on making its books look good but is failing to invest in people.

"Budgets are always about choices and priorities," she said. "I think the kind of priorities we're seeing are not in the best interests of British Columbians... We have money and we're not just doing it."

Welfare rates, the rental assistance program and the childcare subsidy have stayed at the same rates since 2007, she said. "We're freezing these benefits while giving tax cuts to the richest. I just don't think that these are the priorities that British Columbians need."

Paul Kershaw, a University of B.C. professor who founded the Generation Squeeze advocacy group, said the spending increases in the budget include $361 per person over 65 years old, and less than $60 per person under 45 years old.

He asked, "At a time when we have a billion-dollar surplus, why is it that governments are judging that younger Canadians in this province are worth so much less than an older Canadian?"

Besides the clawback, the budget also adds $20 million to cover a growing disability assistance caseload and increase supplementary assistance and a $250 per child tax credit to help families pay for sports equipment.

Medical Service Plan premiums will go up by $2.75 a month for individuals and by $6.50 for a family of three or more. The total amount the government collects through MSP will rise from $2.3 billion to $2.4 billion, an increase of 5.35 per cent.

De Jong defended the increase saying revenue from MSP premiums represent about 13 per cent of the province's budget, that 800,000 low-income British Columbians pay no MSP premiums at all, and that many people would rather pay taxes for something specific like health care that they support than see their dollars go into general revenues.

The budget adds $106 million over the next three years for Community Living BC, which provides support to people with developmental disabilities and their families.

De Jong stressed that B.C. is the only province in Canada running a surplus, with the possible exception of Saskatchewan. Growth has been positive, thanks to B.C.'s diversified economy, but not large, he said. "For the moment I think it is still appropriate to describe what's taking place as steady, modest."

He also pointed out that B.C. has the lowest provincial personal income taxes in the country for people earning up to $122,000. He particularly highlighted the difference between B.C., where the tax would be $10,037, and Quebec, where it would be $18,290.

John Horgan, the leader of the official opposition New Democratic party, said the budget does little for ordinary families. "It strikes me that the middle class was left behind today," Horgan said.

"Today's budget does nothing to help middle income families. It continues to nickel and dime, whether it be MSP increases, hydro rate increases, other fees going up, to give the top two per cent a $230-million tax break."

Asked about how the 2014-15 surplus had grown to $1 billion, he said, "Clearly there's money available to try and address some of the challenges that middle income families are facing.

A chart on page 106 of the Budget and Fiscal Plan 2015/16 - 2017/18 tells a different story. It compares the provinces once child benefits, sales taxes, property taxes, fuel taxes, carbon taxes, and health care premiums are considered.

Using that broader perspective, a family of four in B.C. with an income of $30,000 pays a total tax of $3,834. The same family in Ontario would pay $3,229, in Alberta $2,296, and in Quebec $1,774.

That same family earning $60,000 would pay less total tax in Alberta or Saskatchewan than it does in B.C.

The figures do not include other fees that government policy determines, including those for BC Hydro, ICBC auto insurance and fares on BC Ferries.

"If you only look at income taxes, you're missing a piece of the puzzle," said UBC's Kershaw. You have to consider what the government spends as well, he said.

"In Quebec they do have higher taxes, there's no doubt about it, but when you're at one of the most expensive moments in your life, with young kids at home, you're not forking out the equivalent of more than university tuition for childcare, so you can better afford more time at home when your child is young."  [Tyee]

Read more: BC Politics

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