British Columbia is officially in election mode and the parties are rolling out their campaign promises. When it comes to the tax promises of the two mainstream parties, British Columbians are confronted with a choice, as it were, between higher taxes or even higher taxes. So pick your poison.
To see how they stack up, lets look at each plan for the most important types of taxes. Its not a pretty picture.
Milton Friedman was famous for his one-liners. One of his most repeated lines was: I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible. Friedman believed government was too large and intrusive, and that by cutting taxes, the size of government would be reduced.
Last weeks provincial budget was a heap of bad news for New Brunswickers. First they learned that they will continue to be burdened by a government with shaky finances driven by annual deficits and mushrooming debt. Topping that off, Progressive Conservative Finance Minister Blaine Higgs proposed a series of highly damaging tax increases as a way out of New Brunswicks deep fiscal hole. Unfortunately, these tax hikes will cast a dark cloud over New Brunswicks economic prospects and likely bring little revenue in return.
With economic growth slowing and a goal of balancing the budget by 2015, Finance Minister Jim Flaherty will have little fiscal room for major new initiatives in Thursday's federal budget. The risk is that the Conservatives continue with their fondness for new and/or expanded tax credits which have been sprinkled through federal budgets over much of the past five or six years (i.e Working Income Tax Credit, and tax credits for family caregivers, children's arts and fitness, and volunteer firefighters to name but a few).
The uncertainty that continues to impede the U.S. recovery coupled with political gridlock in Washington poses significant economic threats to not only the United States but also countries like Canada that trade with the U.S. However, imbedded within the many layers of risks lies a significant, long-term opportunity for Canada.
Shortly before unveiling the provincial budget in March, Quebec Finance Minister Raymond Bachand told reporters that the average family pays enough taxes in Quebec. We couldnt agree more. This year Quebecers have to wait until June 17 (nearly six months) to celebrate Tax Freedom Day. That is, if the average family in Quebec had to pay all the taxes it owed to all levels of government in advance, they would have to hand-over every single dollar they earned up to June 17Tax Freedom Day.
If youve ever tried to calculate all the taxes you pay in a year to all levels of government, youve probably given up somewhere along the way. While most of us can easily decipher how much income tax we pay its right there on our tax returns its a lot more difficult to gauge how much we pay in not-so-obvious taxes.
The 1990s was an economically dismal decade for British Columbia. The province effectively missed the prosperity party enjoyed by the rest of Canada due largely to poor economic policies. As a result, the province actually became a have-not province and a recipient of federal equalization payments.
We witnessed young, educated and skilled British Columbians leave the province for opportunities elsewhere and BC had the lowest per person GDP growth among the provinces between 1990 and 2000.