Home > BC Liberals, British Columbia Politics > BC Budget Update 2009: First Impressions

BC Budget Update 2009: First Impressions

September 1, 2009

BCLFacepalmToday, the BC Liberal Government has released its second budget of 2009. Let’s have a look at the decisions that have been made for the purpose of guiding British Columbia through tough economic times.

Deficit

This year deficit is $2.77 billion, $2.28 billion more than the $495 million maximum promised by the BC Liberals in the election.

The projection for 2010/11 is a $1.73 billion deficit, 2011/12 $945 million deficit, 2012/13 $140 million deficit, and 2013/14 a $500 surplus. One should look out for the possibility that these projections might be overstating the deficit situation over the next few years, therefore giving the BC Liberals something to brag about if, lo and behold, the deficits of the next few years are not as bad as projected. However, if the projections are understating the deficit situation, then, well things would get politically interesting.

Reform of the Tax System

In this budget, the BC Liberals are continuing their shift from progressive income taxes, which are more easily adjusted to protect lower and middle income individuals, to regressive consumption taxes. As well, the tax burden of business is continued to be reduced.

First of all, the regressive Medical Service Plan (MSP) Premiums, which are a fee charged to individual British Columbians, are being raised by 6%. To help counteract the effect on lower-income people, the government is expanding the MSP Premium exception plan. However, this won’t help the middle class, who will be paying the brunt of this fee.

The HST, is unsurprisingly, still going ahead. To try to sweeten the deal for the average British Columbian, the budget announced a HST rebate program for lower-income people, a partial rebate of up to $20,000 when purchasing a new house, and a rebate for residential energy used to heat homes. As well, municipalities and charities are to receive HST rebates. Interestingly enough, boards of education (unless they are classified as municipal governments) were not mentioned in any HST rebate plan. Despite some of these goodies, the middle class is still going to be hit hard by the HST.

The small business threshold is to be raised from $400,000 to $500,000, and small business income tax is to, at some point over the next few years, be removed entirely.

The basic personal amount for income taxes is to be raised by 17% to $11,000, giving a unfocused income tax cut to everybody.

Spending Cuts

Less of a focus for this budget, but mentioned as something that was going to happen, are the spending cuts.

The spending cuts that were focused on by the BC Liberals were ones that reduced office expenditures, such as travel, contracting out professional, and advertising.

Not highlighted as much were the cuts to the civil service, where 430 Full-Time equivalents are to be cut. From where they are cut is unspecified.

Health is supposedly going to be kept stable in it’s upward spending trend. Not included, however, was a discussion about increases to health care authorities, which are facing budget shortfalls and as cutting surgeries and beds.

The education system, for the most part, is to remain relatively stable, with a few reductions in spending. However, I do wonder about the effects of inflation.

The bulk of the savings are supposed to come from grants from “other ministries.” However, for the most part, what is to be cut is unspecified.

Balanced Budget Legislation

The balanced budget legislation is to be amended to allow for 4 years of deficits instead of 2, which begs the question: why have such legislation if it can be changed so easily? Seriously, legislation which demands balanced budgets in good economic times and allows for possible deficit stimulus in bad economic times should be really looked into. i’d think that would be more useful than the current legislation.

Conclusion

My overall first impression: it seems as this budget is the fulfillment of the idea that one doesn’t waste a crisis in order to make changes. This is a budget that is going to hurt the middle class of BC by slapping on new taxes for them, while rewarding those that tend to vote BC Liberal by reducing taxes for them. Considering that cuts are supposedly supposed to be made, what these cuts are actually going to be is very unspecific, making me rather nervous as to the future.

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  1. Al
    September 1, 2009 at 7:52 pm

    How’s this: after lamenting that the fire season has blown the fire budget by 600 per cent, and after worrying that climate change will lead to more extreme fire seasons, there’s less money in the budget to fight fires than they budgetted last year. How’s that work?

  1. September 1, 2009 at 10:52 pm
  2. September 2, 2009 at 11:16 am
  3. September 2, 2009 at 1:20 pm
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