Tuesday, February 19, 2008

The five-point B.C. budget guide

OK, here's the five things you need to know about the budget in about 700 words.
First, you're going to get a cheque in June for $100 per person in your household. It's called the "Climate Action Dividend" to try and link it to the budget's green theme. The government hopes you'll use the money to buy a bicycle or a more efficient fridge.
Really it just reflects the fact the government - once again - wildly underestimated revenues in last year's budget. It was on track to a $3-billion surplus this year, and to facing tough questions about why people were waiting for knee surgery or paying such high taxes with all that cash piling up in the government accounts.
So you get a cheque. The measure will cost government $440 million.
Second, you're also going to pay more for gas, oil and other carbon fuels. A new carbon tax will be based on the amount of greenhouse gases the fuel produces, starting at $10 per tonne this year and rising to $30 a tonne by 2012.
Beginning July 1, you'll pay 2.41 cents a litre in a carbon tax on gas - something like $50 a year for a typical family. It will go up 1.2 cents a year. All fuels will be taxed. Figure $35 extra this year if you heat with natural gas, $50 if you heat with oil.
The tax will bring in $338 million this year, rising to $880 million within two years.
The government wants the tax to be revenue neutral -any new money taken in is to be offset by other tax cuts.
So it's made several other tax reductions. A carbon tax tends to hurt low-income families, grabbing a larger share of their limited income. People eligible for the federal GST credit - about 25 per cent of British Columbians - will get $100 per adult and $30 per child. (A carbon tax also hits rural residents harder, but there is no special aid for them.)
Personal income tax reductions will be worth $215 million. For a family of four with household income of $70,000, the savings will be about $200 a year. For a family with an income of $120,000, about $360.
Corporations will get $170 million in tax cuts this year.
Third, this carbon tax is a leap into the unknown. No province or state has a similar tax. The business reps in the budget lockup appeared unsure how much the tax would affect them.
For some industries, like money-losing pulp mills, it's clearly bad news. They'll pay more for fuel and, since they aren't profitable and paying taxes, they won't benefit from the tax cuts.
Broadly, it looks resource industries - which generally use a lot of energy and can't pass increased costs onto their customers - are most worried.
Fourth, beyond the carbon tax, this is largely a status quo budget, for better and worse. Spending leaps a bit this year, thanks to some one-time initiatives, but is forecast to increase less than three per cent in each of the next two years.
So health spending, for example, will rise about six per cent a year for each of the next three years. Not enough to actually allow the health authorities to deliver needed care, but not the noose some had feared.
It showed that the public's message in the conversation on health - that people would to preserve decent care - got through.
It's also status quo in terms of government neglect of some critical areas. The funding to deal with homelessness is almost non-existent. There is a token commitment, for example, to help 1,065 families with rent subsidies of about $80 each, a tiny step. More outreach workers will be hired and shelters will stay open in the daytime.
At a time when some 10,000 to 15,000 British Columbians are homeless and communities across the province are being damaged, the inaction is baffling.
Fifth, there was a broad sense that this government sees the province's future in the Lower Mainland. There was money for mining exploration and incentives to encourage movie-making in the North and Interior.
But the focus was on tech and Asia-Pacific opportunities and financial institutions.
And that, in about 700 words, is what you need to know from this year's 10-inch stack of budget documents.
I hope.

6 comments:

Gazetteer said...

So, in this 'revenue neutral' scenario nothing proactive is going to be done with the carbon tax monies to actually facilitate technical innovation or decreased consumption (other than the disincentive of increased cost)?

If that's true, especially for folks that have to drive their cars and/or heat their homes regardless, what the heck is the point?

paul said...

They were keen to stick to the revenue-neutral model, so there are a few tax breaks that relate to the issue - no PST on electric bikes or fairings for transport trucks and the like - there isn't any big spending commitment on greenhouse-gas reductions.
There is spending, but it's not linked to the carbon tax. Research, measures to cut waits at ports, transit. I haven't sorted it out.

Anonymous said...

PW wrote: "At a time when some 10,000 to 15,000 British Columbians are homeless and communities across the province are being damaged, the inaction is baffling."

Not so "baffling"... The homeless have never voted for the BC Liberals (and never will).

Anonymous said...

anytime a government gives a one time cheque you know that they are close to an election and that cabinet and caucus discussions must have been heated. This is not a case of full support.

Anyone living outside the lower mainland is SOL.

hafiz said...

Thanks for all the info. More people need to be made aware of this lovely information.The information is very
meaningful to whom needed. Interesting!!

Anonymous said...

This is not a well thought out plan . Once again we get to see that this Tsar rules only for the lower mainland and business. As I said before the accountant we fired could have budgeted as well as Ms.Taylor if he had 4 billion rxtra to play with. Not a great Finance Minister