Budget 2020: New Taxes on Pop and the Rich, Plus a Boost for Health Care

Finance Minister Carole James presented a stay-the-course budget today that she said makes life more affordable, improves services and creates good jobs while raising taxes on the top one per cent of earners.

“Our plan is working, and we’re sticking to it,” James said while presenting the budget to reporters and stakeholders at the Victoria Conference Centre. “This really is a budget that builds a stronger British Columbia, not for the few at the top, but for all British Columbians.”

Under the plan, the province will collect and spend about $60 billion on health, education, childcare and other services in the coming fiscal year. The government also plans to spend $10.5 billion on building hospitals, schools, roads and other capital projects.

There is also significant wiggle room, with $900 million in contingency funding in case the economy is weaker than expected or the government faces unexpected expenses.

The budget, delivered on a day when the group Extinction Rebellion was threatening to arrest the finance minister, adds $419 million over three years to the CleanBC climate plan, including money to make schools, universities and hospitals more energy efficient and to provide incentives for people buying electric vehicles.

Torrance Coste, the national campaign director for the Wilderness Committee, said that while CleanBC does a few good things, the government has yet to identify how it will cut carbon emissions enough to meet its targets. “We’re not going to solve the climate crisis with incomplete emission reduction targets and electric car incentives. We’re just not.”

Already the largest part of the budget, spending on health care is set to rise by 6.4 per cent in 2020-2021, on top of a five-per-cent increase in the current year. Altogether, the government will spend an added $1 billion on health care over the three years of the plan.

Spending is budgeted to rise 1.8 per cent for education and 3.2 per cent for social development and poverty reduction.

In her speech, James stressed that budgets are about choices. Since the NDP formed government in 2017, she said, there’s been progress in fixing problems left by the former BC Liberal government. “We’re repairing the damage that their choices created, and we’re fixing the problems facing families today.”

Policies introduced in past budgets have achieved the government’s goal of moderating housing prices, James said.

Over the past two years the government has added 10,400 new licensed childcare spaces. Some 28,000 children receive childcare at a cost of less than $10 a day, she said.

Adrienne Montani, provincial coordinator for First Call: BC Child and Youth Advocacy Coalition, said it’s good that the government is staying the course on childcare, but it needs to do more. “I was disappointed not to see projected further increases. They need to build a system, and it’s big.”

More focus is also needed on improving the service provided by the Ministry of Children and Family Development and in supporting youth aging out of government care, she said. She also said moves to tax sugary drinks and to provide more grants to postsecondary students were positive.

Paul Kershaw, the founder of the Generation Squeeze advocacy group and a professor in UBC’s school of population and public health, said the government has made improvements to childcare and to affordable housing since it was elected, but today’s budget stalls on that progress.

“We’re continuing to privilege treating illness rather than preventing people from becoming sick in the first place,” he said. “While that medical care investment may seem like it’s good for our health, actually the science is clear the more that medical care spending leaves social spending behind, the more we are going to see deaths happen that we could have prevented and life expectancy will be compromised.”

Jennifer Whiteside, secretary-business manager for the Hospital Employees’ Union, said the investments in the health care system are positive, as is the government’s decision to spend money on building new health facilities with public ownership.

The government has lots of priorities that need to be balanced, she said. “A narrative that creates intergenerational division is not helpful. The fact of the matter is we’re all going to age, we’re all going to need the health care system, we all need access to primary care. That is a reality.”

Taxation revenue is forecast to grow 4.2 per cent on average over the three years of the plan, while revenue from natural resources is dropping, including a 7.6-per-cent decline forecast for 2020-21.

The budget includes a new top tax rate of 20.5 per cent on taxable income above $220,000, an increase from the current top rate of 16.8 per cent that applies to income above about $155,000.

James said that it makes sense to tax the top one per cent of earners more to help fund the services people need. “We believe they’ve benefited from a strong economy, and we believe they can contribute a little bit more.” The new rate matches levels in Ontario and Quebec.

Iglika Ivanova, a senior economist with the B.C. office of the Canadian Centre for Policy Alternatives, said raising the top income bracket is something her organization had long recommended. “It continues to improve tax fairness, and it will generate revenues to pay for important services we need, so I support that.”

Stephanie Cadieux, one of the BC Liberal Party’s critics for finance, said people need to ask themselves whether they’re better off under the current government.

“What we got today was a budget of broken promises,” she said. “The NDP promised you, British Columbia taxpayers, a whole lot of things and what we’re seeing today is another.”

Average rents and condo insurance have gone up and ICBC rates are unaffordable, she said. The promise of $10-a-day childcare has flatlined at a point where the government is spending one-third of what’s necessary to fund the program fully, she said. “This budget is a fairly stand-pat budget proving the NDP has basically run out of money.”

The other Liberal finance critic, Shirley Bond, said the budget has 23 new or increased taxes, including applying the PST to streaming services like Netflix. “We’ve got to see a robust, strategic growth plan in British Columbia. That’s completely non-existent in the budget we saw today.”

Interim Green Leader Adam Olsen said in a prepared statement that the budget builds on CleanBC, early childhood education and other areas the Green party has worked on with the government, but falls short on making life more affordable.

“Now is the time to go all-in on transitioning to a clean economy that has equity and sustainability at its core,” the statement said. “What is missing from this budget is a coherent economic strategy to create prosperity and position us for success in an era of unprecedented change.”

The government is trying to “have it both ways” by trying to be seen as a climate leader and at the same time expanding the fossil fuel industry, Olsen said. “This province’s economic opportunity is not to be the cleanest polluter, but to lean into building a low carbon economy driven by clean technologies and innovation.”

The budget document includes a table that sets out half a dozen different types of families and compares what they would pay in taxes in each province. British Columbians pay the third lowest provincial tax for most family types presented, behind Alberta and Saskatchewan.

Unattached individuals earning more than $80,000 pay less tax only in Alberta, while unattached individuals with income under $30,000 would pay less tax in three other provinces.

Another table tracks how different families’ total taxation will have changed since 2016 by the time the government’s policies are fully implemented, including the child benefit that will start providing payments in October.

A family with $30,000 in income will have gone from paying $177 to receiving $1,475, while a family with $60,000 income will be $2,600 ahead, and one with $100,000 income will have an extra $1,600.

Another change will see the provincial sales tax applied to soft drinks, something James said will help pay for the associated health care costs.

The budget adds about $6 billion to the provincial debt, and the debt-to-GDP ratio is forecast to rise from around 14.5 per cent to 17.1 per cent in a few years, though it will remain relatively low compared to other provinces and the federal government.

Ivanova said the budget was overly cautious in its fiscal assumptions and missed opportunities to ramp up important social programs and climate action. In particular the government needs a stronger focus on reducing poverty, she said.

Rather than have surprises like last year’s $1.5-billion surplus, which the government seems to want for political reasons, it would be better to spend the money on needed services, she said. “We could be doing more. We can afford to do more.”

Major risks to the plan include weaker-than-expected financial results at ICBC, changes to federal government allocations and tax policy and increased demand for services.