BC Budget more poison pill than tough medicine, says Canadian Centre for Policy Alternatives

Budget shifts revenues from progressive income tax to regressive MSP and sales taxes
February 19, 2002

(Vancouver) "The government says it is giving us tough medicine for the economy, but this budget plan is more like a poison pill," says the Canadian Centre for Policy Alternatives. "This plan means unnecessary pain for thousands of individuals."

"The government has clearly confessed that tax cuts will not be paying for themselves," says Seth Klein, Director of the CCPA's BC Office. "There is no evidence that the tax cuts are resulting in improved GDP growth over the next three years. And yet the government has stated once again that they have no alternative but to maintain the tax cut bonanza for corporations and upper-income earners."

"Today's budget outlines a major shift in the tax burden from corporations to individuals, and from progressive income taxes to regressive taxes like MSP premiums and sales taxes," says Klein. "The government is paying for the fee increase for doctors by increasing the provincial sales tax by 0.5% to 7.5%, and increasing MSP premiums by 50%. These methods of raising revenue hit lower- and modest-income people harder."

"This budget shows that what most British Columbians saved in taxes last summer, they are now having to spend in higher premiums, taxes, fees and tuition." says Klein. "The government has shifted costs onto individuals and employers, in the form of higher MSP premiums, higher provincial sales taxes, higher tuition fees, higher Pharmacare and drug costs, and increased alternative therapy costs. Most people's tax cuts are evaporating. Half hearted measures such as the $25 increase in the provincial sales tax credit for low income earners will be of little help."

"The most disturbing piece of this budget is the welfare cuts," says Klein. "They are budgeting for a decline in welfare spending and caseloads, even though the economy is in a downturn, unemployment is up, and in resource communities across the province laid-off workers are exhausting their EI coverage. That means poor people are going to be denied help, and local economies are going to have less cash circulating at a time when they desperately need a fiscal boost."

"The government claims that they have no choice. We reject this view," says Klein. "There is nothing inevitable about the government's direction. Just last week, the Auditor-General confirmed that BC has the ability to sustain its program spending. We also believe that the government's deficit forecast is greatly exaggerated. They are using this inflated figure of $4.4 billion to justify their reckless spending cuts. The real deficit will likely be much lower. Such political games aren't surprising, but many people are going to pay a steep price for this choice."