February 17 was Budget Day in British Columbia, and the corporate media dutifully lauded Finance Minister Mike de Jong for bringing in a surplus, plus “a few small tax breaks for families” and so-called “modest increases” for health care and education.
The reality is that working class and low-income British Columbians were hit hard again by Premier Christy Clark’s Liberals, while the wealthy get a major financial boost.
Virtually the only good news is that people on income or disability assistance will finally be able to keep child support payments which until now have been seized by the government. Thanks to a powerful campaign by anti-poverty groups, this vicious clawback is finally gone, resulting in a net benefit to several thousand poor families adding up to $13 million per year.
This amount is dwarfed by the elimination of the temporary personal income tax rate of 16.8 per cent on individuals earning over $150,000, as of next January. That slightly higher tax bracket for the wealthy elite was introduced by Premier Clark two years ago, in an effort to create some political distance from the elitist image of her predecessor, Gordon Campbell. Apparently the rich have now endured sufficient pain; the move to phase out this tax bracket will put an estimated $200 million per year into the bank accounts of the wealthiest 2 percent of the population – more than 17 times the clawback “gift” to the lowest income British Columbians.
Similarly, the budget contains no help for those who need it most – minimum wage earners and those on social or disability assistance, whose rates have been frozen for eight years while the cost of living keeps climbing. The Finance Minister ignored the bi-partisan committee of MLAs who held pre-budget consultations, and unanimously recommended a comprehensive poverty reduction plan, and a review of income assistance rates and the minimum wage.
The Liberals will spend $516 million on tax credits to corporations this fiscal year, compared to just $460 million for the combined total of tax transfers to low-income individuals (the sales tax credit, the early childhood tax benefit, the low income climate action benefit, and the seniors home renovation tax credit).
Following the strategy of the Harper Tories, the BC Liberals are using targetted tax breaks to troll for votes: a one-time training and education savings grant of $1,200 for children born since 2007, an “early childhood” tax benefit of $660 per year for children under six, and a new tax credit for spending on sports equipment, worth just $12.65 per child.
Most of these “breaks” will be eaten up by higher Medical Services Plan premiums. This highly regressive flat tax has now doubled over the past 15 years, and the new increase is much higher than the 2.8% increase in health care spending.
And while the budget announces $564 million in “extra funding” for education over three years, that amount is to meet the terms of the collective agreement won on the picket lines last year by the B.C. Teachers’ Federation. Overall, spending on education (and health care) is falling behind inflation and population growth. School boards across the province face an additional $29 million in underfunding for the next fiscal year, and the government is also downloading the MSP increase onto the boards. The result will be more school closures and staff cuts, just as projections indicate future enrolment increases. Even as they refuse to admit the underfunding crisis, the Liberals have introduced a so-called “coaching tax credit” worth a tiny $25.30 per individual teacher.
Premier Clark regularly puts on a hard hat to pose as a defender of working people, but jobs and incomes are falling fast as British Columbia continues to face the fallout of the global capitalist economic crisis. Statistics Canada data analyzed by the Canadian Centre for Policy Alternatives recently showed that the labour market participation rate in British Columba was 74% prior to the 2008 crisis, and is now around 71%. This means that about 93,000 jobs have effectively disappeared here. B.C. is one of only three Canadian provinces where the total number of hours worked per year has actually declined since 2008, despite the growing population. Median employment income in B.C. went from $29,833 in 2008, to $29,200 in 2012 (the latest available numbers), a drop of $633 or 2.1%, the worst decline in the country.
As progressive economists have warned, the budget surplus (created in part by disguising provincial debts) does not mean “prosperity” for British Columbia, where the housing price bubble in the Vancouver region gives a false picture of the true economic situation. Less British Columbians are employed, one in five children live in poverty, and students are sinking deeper into debt. Despite some growth in the forestry sector, there is no genuine economic revival on the horizon, now that falling energy prices have popped the fantasy of enormous foreign investments in the LNG industry. Natural resource revenues are projected to fall by 7% in 2015/16. Revenue from resource royalties is at a near record low, even as natural gas production is at an all-time high. In fact, the province collects more money from post-secondary tuition fees ($1.6 billion annually) and MSP premiums (over $2 billion) than from natural gas royalties and Crown land tenures combined ($1.1 billion). Under the Clark Liberals, British Columbia remains largely an exporter of unprocessed raw materials, at the expense of value-added jobs.
Even so, there would be considerable funds to invest in secondary industry or to raise spending on health, education and social programs, if the policy of slashing taxes for the rich and the corporations was reversed. Implemented when Gordon Campbell came to power, these massive tax breaks cost the provincial treasury over $2 billion every fiscal year – enough to pay for better health care and public schools, adequate funding for public transit (instead of the province abrogating its responsibilities by forcing municipal governments to hold a difficult and expensive referendum), ferry rate cuts, the proposed $10/day public child care plan, major expansion of low-income housing, and more.
Instead, the Liberals are tinkering with tax gimmicks which get big media coverage while providing no real economic relief to working class families. Some analysts have called this a “short-sighted budget that lacks vision and leadership.” That is far too kind. This budget proves that even though British Columbia remains mired in economic recession, the government keeps forcing the working class pay for new tax breaks for millionaires. Nothing ever truly changes under the B.C. Liberals, who remain a government of the rich, by the rich, for the rich.