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B.C. budget cuts are a strategic 'bang for the buck,' Clark

FILE PHOTO - B.C. Premier Christy Clark arrives to take part in the Meeting of First Ministers in Ottawa on December 9, 2016. Clark says her government considered cutting the provincial sales tax, but decided slashing B.C.'s medical service premiums would keep more money in taxpayers' pockets.
Image Credit: THE CANADIAN PRESS/Sean Kilpatrick
February 22, 2017 - 11:36 AM

BURNABY, B.C. - Premier Christy Clark says her government considered cutting the provincial sales tax, but decided slashing British Columbia's medical service premiums would keep more money in taxpayers' pockets.

Clark said a one-per-cent cut in the PST would have saved middle-class taxpayers $200 a year, while a planned 50-per-cent cut to medical premiums announced in Tuesday's budget will save them up to $900 a year.

She said at a news conference Wednesday that a sales tax cut would have benefited wealthier people the most because they spend more money on purchased goods. The PST does not apply to many basic goods and services or housing.

"What I was looking for was a way to deliver a billion dollars in tax relief that would be focused squarely on people who are in the middle class. This is the one that had by far the biggest bang for the buck," she said.

Clark's government has promised to eventually eliminate the medical premium, a fee that no other government in Canada imposes and which brings in $2.4 billion to the B.C. government every year.

The planned 50-per-cent cut affects households with an annual net income of up to $120,000. It will take effect in January 2018 and reduce the government's income by $1 billion.

While Clark called the unpopular premium "outdated, unprogressive and unfair," she wouldn't provide a timeline for its elimination, saying it will depend on how quickly the B.C. economy grows.

"We have the fastest growing economy in Canada and that's meant that we've ended up with more revenue than we've predicted over the years," she said. "The faster we can continue to do that, the faster we will eliminate the MSP altogether."

The budget provides information on how much families spend on different taxes and fees. For a two-income family of four earning $90,000 a year, the MSP is about $1,800 while the PST is about $1,564.

"If you were to cut the PST one percentage point, you're not going to be halving their overall tax burden," said Bryan Yu, a senior economist at Central 1 Credit Union.

The income threshold for people who do not pay the MSP was also raised on Tuesday, from $24,000 to $26,000.

Clark was also asked Wednesday about the province's decade-long freeze on social assistance rates. At $610 a month, the rates are among the lowest in the country.

The premier said the province raised rates for people on disability by $600 a year, but when it comes to those on social assistance, her government is focused on getting them back to work.

She touted an initiative for single parents on welfare in which the government will pay for the individual's tuition, books and child care while they advance their education.

Clark added there were 70,000 jobs created in the province last year.

"There are lots of jobs out there. We want to support people who are currently on welfare finding their way into a job."

— Follow @ellekane on Twitter.

News from © The Canadian Press, 2017
The Canadian Press

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