Surplus should be reinvested in people and communities

CCPA outlines budget choices in 2005 BC Solutions Budget
February 7, 2005

(Vancouver) The Canadian Centre for Policy Alternatives says the priority for this year’s provincial budget should be reinvestment in people and communities. “The government is set to finish the year with a record surplus of over $2 billion, and a projected surplus in 2005/06 of $1.4 billion,” says Seth Klein, Director of the CCPA’s BC Office. “Our number one priority should be to undo the damage from deep spending cuts. We should not lock them in place with further tax cuts or make payments on the provincial debt.”

“The surplus clearly shows that none of the spending cuts had to happen,” says Klein. “If the government now chooses further tax cuts, the price is even less money available now and in future years for health care, education, environmental protection, and supports for BC’s more vulnerable citizens. If we choose to invest in good public services, we need the revenues to pay for them. That’s the real bottom line.”

Klein says there is no compelling reason to spend the surplus on tax cuts or debt reduction. “BC’s fiscal situation is healthy. Our debt-to-GDP ratio is the second lowest in Canada after oil-rich Alberta, and we have the lowest taxes in Canada for most income groups.”

The CCPA outlines a series of possible budget choices in its 2005 BC Solutions Budget, released today. “BC needs more fiscal options on the table. Even if we reinvest the full surplus, pressing needs will go unmet.” The Solutions Budget options are:

  • Option 1: Uses the entire surplus to begin restoring capacity in areas hardest hit by cuts, with social services and environmental protection as priorities, and to invest in BC’s children by enhancing funding for early childhood education and care and K-12 education.

  • Option 2: Accelerates the implementation of a provincial early childhood program. It also reverses the 2001 tax cuts for the top two income brackets (affecting the top 5% of taxpayers with incomes over $76,000) to pay for a targeted anti-poverty strategy.

  • Option 3: Invests in an advanced education strategy that would support BC’s transition to a high-knowledge, service-based economy, and ease the looming skills shortage (as recommended by both business and labour leaders). These investments are financed by reversing the tax cut in the third income bracket (which would affect those with incomes above $66,000) and by creating a new corporate training and education payroll tax.

Under all three options, all BC individuals and businesses would still pay less in taxes than they did in 2000 (in options two and three, upper income earners still benefit from tax cuts in the lower brackets). All three options also see a declining debt-to-GDP ratio from current levels.


To arrange an interview, call Shannon Daub at 604-801-5121 ext 226.

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