Friday, March 19, 2010

'Rural' tax break for Whistler chalet owner; not for PG renter

There's a certain late-1990s NDP quality in the budget's $200 tax break for "northern and rural homeowners."
By any rational economic or public policy test, the move makes no sense.
The government is collecting $80 million from all taxpayers and then redistributing the money to some people, without any consideration of need or public benefit.
Poor people, who have it really tough, will pay taxes that will be redistributed to multimillionaires who need no help at all.
But the ploy scores political points and spins well - both important to the NDP government of the late-'90s and, apparently, the Campbell government.
Finance Minister Colin Hansen said the tax credit - an add-on to the homeowner grant - would provide "breathing room" for people in communities hit hardest by the economic downturn.
It does no such thing.
The government decided to give $200 to every homeowner living outside the Lower Mainland and Victoria. (More specifically, outside the Greater Vancouver, Fraser Valley and Capital Regional Districts.)
About 70 per cent of British Columbians live in those three excluded areas. No matter how tough time are for their families, no money for them. They're paying taxes to help other people.
Which, given competent government, could be OK. We accept the notion that those who are doing well will help those who aren't.
We grumble. We certainly worry about waste. But when government can show that our taxes help a sick person get care or a child get a fair chance at life, most of us are willing to write the cheques.
But not so much if we're giving money to people who are already financially better we off than we are.
Which is what the government is doing.
Kelowna is, according to the government, a northern or rural community. People who own houses there will get the $200 from other taxpayers.
The unemployment rate in Kelowna is about six per cent.
In Prince George, unemployment is 12.9 per cent, more than twice the level in Kelowna.
Kelowna's population includes many people who are doing just fine, to their credit. But why would we send money to someone doing well? Especially when the money was being, in part, from people who were doing very poorly, while still paying taxes?
A laid-off forest worker in Sooke won't get the grant because he lives in the CRD; instead, he will pay taxes in part so a person living in a $2-million house in Whistler will get the $200 as a "rural and northern resident."
And the grants only go to homeowners. That would be fine if the goal was to provide a little extra income to people who owned homes.
But Hansen said it was to all help provide "breathing room" for all people in hardhit communities. A lot of the people suffering through this recession are renters, many of them in the middle-income brackets. They get nothing; in fact a portion of their taxes will go to providing a $200 cheque to the neighbour on the next block with a mortgage-free houses.
There is a vaguely sensible public policy buried deeply beneath all the political calculations. The recession's impact has fallen particularly heavily on people in specific communities. And within the community, the blows have fallen hardest on a specific group. People who were really poor before the recession still are; people who were relatively comfortable have some cushion.
But people working for modest wages, with narrow skills and living from pay cheque to pay cheque, have had a tough time. You could argue for targeted aid in some form.
Just tossing out $80 million and hoping for the best doesn't really qualify as targeted aid.
The money could fund career training each year for 8,000 people displaced from their jobs by the recession. It could increase income assistance benefits for families for a time after they employment insurance benefits expired.
There are lots of options. Instead, a single mom working for $14 an hour is going to pay taxes to provide $200 to a millionaire vineyard owner in Oliver.
Footnote: The rural and northern homeowners grant was part of the Liberal government's pre-election budget last year, the one that projected a deficit of $495 million, one-fifth the size of the real shortfall. Despite other cuts, the program is going ahead next year.


Brenton said...

Great policy analysis, Paul. Have a great break; we'll miss your voice.


Don Quixote said...

This is a targeted response. When I compared this response to the one in which lower mainlanders property owners were relieved of paying for the Capital costs of new Hospitals the Minister quite correctly pointed out that that decision only exempted the Greater Vancouver area and not Fraser Valley and Capital regional Districts.)

Orginal e-mail confirmation re hospital taxes at