B.C.’s budget cools the economic climate
The fact that the first full budget from B.C.’s new government includes major tax increases will likely go unnoticed by many – unfortunately.
Instead, many economic commentators will focus on the government’s aim to balance the operating budget every year. A fiscal framework that avoids the deficit-financed spending that plagued the NDP in the 1990s is a good thing. But, in reality, the $5.4 billion in new spending over the next three years will be financed by a series of new tax increases (on housing, payrolls and carbon).
And clearly, the budget fails to address a major issue: the economic headwinds from the United States.
For nearly a generation, business investment in B.C. has been anemic, with the province falling behind the rest of Canada. For example, from 2014 to 2016 (the latest year of available data), non-residential business investment declined 19 per cent after accounting for inflation.