News Releases and Op-Eds
Latest Releases >>
BCBC Acknowledges Government’s Commitment to Fiscal Prudence in 2013 Budget
-Province must renew focus on competitiveness to attract investment and create jobs as priority in post-HST context-
The Business Council's complete budget analysis is available here
February 19, 2012 (Victoria, BC) - The Business Council acknowledges the province’s disciplined management of expenditures in the years leading up to the 2013 Budget and as projected in the new three year plan, and endorses the government’s efforts to maintain fiscal responsibility through challenging economic times.
“BC’s current fiscal situation is comparatively good – better than most other provinces like Alberta and Ontario, where governments have been less successful in controlling spending growth,” said Jock Finlayson, Executive Vice President and Chief Policy Officer, Business Council of British Columbia. “However, our support for this Budget is tempered by the government’s decision to hike taxes and fees in a number of areas. This is an inopportune time to be adding to the tax burden facing business and industry in British Columbia. We are concerned that this negative signal could become a trend. Further erosion of the province’s overall competitiveness will have negative longer-term implications for jobs and the economy.”
“The impending return to the PST is a major blow to the province’s competitiveness and makes BC a less attractive place to invest,” said Greg D’Avignon, President and CEO, Business Council of British Columbia. “These incremental increases to taxes and fees, combined with rising process-related project development costs, a strong Canadian dollar and skilled labour shortages, pose a risk to our attractiveness to investors and to companies considering business expansion.”
Moving forward, the Business Council maintains a broad support for the goal of balancing the budget. However, given the volatility in key revenue streams, the Council believes it makes sense to develop a medium-term fiscal plan that is based on a commitment to manage and cap the government’s net debt-to-GDP ratio, which stands at 17% and is projected to rise to a little over 18% in the coming years. With this kind of fiscal policy anchor, revenue volatility would not result in a ratcheting up of taxes and fees or sudden spending cuts to meet the government’s short-term budget goals.
The Business Council offered the following additional comments on Budget 2013:
The Budget’s economic and revenue projections are appropriate. “We find the economic assumptions underpinning the Budget consistent with recent private sector forecasts,” stated Mr. Finlayson. “While there are uncertainties around some of the revenue projections, on the whole we share the conclusion of Dr. Tim O’Neill that the Budget’s revenue forecasts are reasonable and credible.”
In the wider Canadian context, BC has a good record of managing expenditure growth. “The government deserves credit for disciplined spending management – a key step in enabling the province to return to a balanced budget at a time when many other provinces are facing much larger fiscal shortfalls,” commented Mr. Finlayson.
With the return of the PST on April 1, 2013, the tax-inclusive cost of producing goods and services for BC businesses will jump by $1.5 billion per year, with additional sales tax compliance costs on top of that amount. “Restoration of the PST represents the biggest business tax increase in the province’s history and will necessitate future measures to offset the negative impact of shifting from an efficient and harmonized value-added tax to an antiquated and cumbersome retail sales tax,” commented Mr. D’Avignon. “We were expecting the Budget to make reference to the work done by the Expert Panel on Business Tax Competitiveness, but the Panel’s report appears to have dropped from sight.”
Founded in 1966, the Business Council of British Columbia represents 260 of BC’s leading companies and institutions in every key sector of the provincial economy. Combined, the Business Council members provide a quarter of all jobs in the province.