Chapter 4 – Government in Canada

“B.C. offers tax cut in provincial budget”
Source: ctv.ca

British Columbia reported huge plans in improving housing, cutting tax and cleaning up the environment. Finance Minister, Carole Taylor promises housing improvements worth $2 billion over the next for years for everybody from homeless to homeowners. For the first time in 15 years, welfare rates will increase. Shelters rates for people on welfare will increase by $50 per month and the same for single parents. Nine hundred shelter beds will be added to BC’s drop-in shelters. Most of the budget focuses on “helping people of British Columbia meet their housing commitments,” says Taylor. First time home buyers will have an increased threshold of $375, 000. Additionally, BC taxpayers earning up to $108, 000 a year will get a 10% personal income tax cut. This 10% tax cut combined with the 25% personal income tax cut introduced by the Liberals in 2001 makes British Columbia the lowest provincial income taxes in Canada. It is expected that the provincial government will have a $3.2 billion surplus for next year’s budget and an economic growth of 3.1%. Major funding will be allocated next year in effort to reduce greenhouse emissions. The government is planning to implement a surcharge on hydro rates this year as part of the energy plan.

Relation to Chapter 4 – growth of government spending, net debt

Personally, I am pleased to hear that the majority people of British Columbia will benefit from the 10% personal income tax cut since an enormous percentage of people earn less than $108, 000 in BC. In addition, the increase of spending in welfare programs to the already 17% of government spending will contribute greatly to low-income families or individuals. British Columbia receives 70% of their revenue from taxes, mainly from personal income taxes. How will British Columbia gain any revenue if their main source is cut substantially by 10%? Ultimately, British Columbia is increasing their government spending while decreasing their revenue. This occurrence will contribute greatly in adding to the province’s net debt, which is already $37 million, which forecasts to rise to $40 billion by 2010. In my opinion, I think the provincial government should have used 50% of its surplus towards debt reduction. Although this proposal benefits me, I thought the government should have raised their welfare rates a lot more and spend more money to house the poor rather than tax cutting high-income earners. This system would involve more spending towards welfare programs, however on the other hand; the government’s main revenue (income tax) will not be altered.