Commissioned Paper: Fiscal Options for Building a Prosperous British Columbia - By Kevin Milligan
Update - July 21: Professor Milligan joined Kirk LaPointe on Roundhouse Radio to discuss the BC tax system and recommendations included in his paper. Click HERE to listen.
Will BC’s model of taxation stand up for the long haul?
Business Council of British Columbia releases academic review of province’s tax system
July 19, 2016 - The Business Council of British Columbia (BCBC) is pleased to release the commissioned paper, Fiscal Options for Building a Prosperous British Columbia, authored by Kevin Milligan, Professor of Economics at the Vancouver School of Economics with the University of British Columbia. Professor Milligan’s paper offers an analysis of the province’s tax system and a series of recommendations on how it can support a prosperous economy and provide sustained revenue growth for government.
The global economy is shifting, becoming more competitive and complex; these realities are impacting the province’s tax base and adding to cost pressures on employers and governments across Canada. British Columbia is competing in a world where capital is fleeting, consumer purchases are being facilitated through technology and data, health care costs and social services expectations are rising and the provincial economy is tilting in favor of the services sector.
In this context, the BCBC commissioned an independent review of the efficiency, effectiveness and fairness of British Columbia’s current tax system, and potential policy approaches to modernize the system in the context of the aforementioned economic realities. The paper notes that BC faces two key fiscal challenges: generating the government revenues needed to fund public programs and services going forward, and ensuring a healthy level of investment and business growth to sustain a strong economy.
To help shed further light on these twin challenges, Professor Milligan reviews several elements of the provincial tax system, including personal income tax, business income tax, sales tax and the carbon tax. He also highlights the trade-offs that inevitably arise in tax policy decisions. The paper’s analysis indicates that the most pronounced weaknesses in the overall BC tax system lie in the design and impact of the Provincial Sales Tax (PST). To improve upon the existing PST regime, the paper outlines a number of options for reform – none of which envisage returning to the Harmonized Sales Tax system rejected by BC voters a few years ago.
The Business Council of British Columbia thanks Professor Milligan for his work which is being shared directly with the Commission on Tax Competitiveness. In the coming weeks, the Business Council will also provide the Commission with a series of recommendations based on their own work and research.
About Professor Kevin Milligan
Kevin Milligan is a Professor of Economics in the Vancouver School of Economics at the University of British Columbia, and is also affiliated with the C.D. Howe Institute and the National Bureau of Economic Research. Since 2011, he has served as Co-Editor of the Canadian Tax Journal. He studied at Queen’s University and the University of Toronto, receiving his Ph.D. in 2001. His thesis was awarded the 2002 National Tax Association dissertation award. His research spans the fields of public and labour economics, with a focus on the economics of children and the elderly, as well as other tax and labour market policy topics.
About the Business Council of British Columbia
The Business Council of British Columbia, now in its 50th year as the premier business organization in British Columbia, is a non-partisan organization made up of 250 leading companies, post-secondary institutions and organizations from across BC’s diverse economy which support hundreds of thousands of jobs across the province. The Council provides timely and exceptional public-policy research and advice on issues to enhance BC’s competitiveness and prosperity.
Cheryl Maitland Muir
Cheryl.Muir [at] bcbc.com