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Budget as a milestone

Gas tax controversial, but budget is hailed as a turning point for the province

People who follow provincial politics know that it was no ordinary throne speech and budget handed down by Premier Gordon Campbell’s government.

In her speech announcing the new budget, finance minister Carole Taylor called it a “turning point” for the province and one that “overturns the notion that you have to choose either a healthy environment or a strong economy.”

One of the most significant components in the budget is a revenue-neutral carbon tax of 2.41 cents per litre that will be applied to gasoline purchases, increasing to 7.24 cents per litre in 2012. That is the equivalent of a carbon tax rate of $10 per tonne of emissions, increasing to $30 per tonne in four years in $5 annual increments. A provincial cap and trade emissions program will also be introduced this spring.

This is the first carbon tax levied in North America, and has been strongly supported by groups like the David Suzuki Foundation.

To help offset the cost of the new tax, all B.C. residents will receive a one-time $100 Climate Action Credit in June, while lower income individuals and families will continue to receive an annual credit of $100, plus $30 per child.

As well, British Columbians will see their personal income tax rates reduced by two per cent in 2008, and five per cent in 2009 on their first $70,000 in earnings.

According to Joan McIntyre, the MLA for West Vancouver-Garibaldi, that will save families roughly $2,000 a year. In addition, small business tax rates will be cut by one percentage point, while corporate tax rates have been lowered an additional one per cent to match Alberta.

While she has received some negative feedback on the gas tax from her constituents, she says she has received at least as much positive encouragement. McIntyre said the same is true for, Finance Minister Taylor, who estimates that she gets at least seven positive letters for every negative response.

“The (finance) minister referred to this budget as a turning point in our history, and I really agree with that,” said McIntyre. “Especially while we’re celebrating our 150 th year it’s appropriate to be proud of our past history, but also to look at where we’re heading. We know we have to head in a different direction, and I think the public is maybe a little ahead of government in recognizing that.

“The budget has been received very well. I was at the West Vancouver Chamber of Commerce meeting on Friday morning, and the response there was very positive. We used to get letters asking us to put in a carbon tax, and now people are thanking us for having the courage to do it.”

While some have suggested that the money collected from the gas tax should go towards technology and research to address climate change instead of rebates and tax cuts, McIntyre believes that it will be effective in influencing our decisions and encouraging investment in green technologies.

“What it is really about is attracting investments in new technology, and getting a critical mass for alternative energy sources and technology,” said McIntyre. “Dr. Mark Jaccard, who addressed the Chamber meeting (and who sits on the Premier’s climate change panel), said that people will continue to drive but will be driving different types of vehicles.”

But while people have keyed on the gas tax, McIntyre says it’s just a small part of a budget. Other initiatives she pointed to were a decision to share a greater amount of hotel room taxes with Tourism B.C. to promote tourism. While Whistler already gets a greater share of the tax as a designated resort municipality, McIntyre says that some of the money will increase marketing for the province as a whole and will be good for Whistler.

Funding for education and health care has also been increased, with funding for post secondary education up about 30 per cent from 2004, and health care funding doubling from roughly $8 billion in 2001 to $15 billion in 2010.

There are literally hundreds of other line items from throne speech that were included in the budget. “I think it’s good, now that we’re moving to the end of our second term, to still have new ideas and be out there staking new ground,” said McIntyre.

When asked how the budget took into account the threat of a recession, McIntyre said that the finance minister was mindful of the economy from the beginning of the budget process.

“We can do this (cut taxes and increase spending) because quite simply the economy has expanded,” said McIntyre. “While we’re still borrowing money, mostly for big infrastructure projects, the economy has continued to expand so our debt to GDP (gross domestic product) ratio is actually going down. I think when we took over debt was close to 20 per cent (of GDP), and now it’s down to around 14 per cent.

“(Minister Taylor) was very prudent in making this budget. We’re very wary that U.S. housing stats are down, and that there’s a downturn in forestry. But we also have a booming domestic economy…at the same time our exports are suffering. It’s an unusual situation, but we’re very mindful of the impact of external situations and the world we’re living in.”

McIntyre believes that the government’s new philosophy, that you don’t have to decide between the environment and the economy, will be good for the economic situation.

“We’re trying to ensure a healthier environment and move in that direction, and at the same time realizing that we need a strong economy to do that, that everything we’re trying to do is predicated on a strong economy,” she said. “That means attracting investment, investing in green technologies and alternative energy sources, and making B.C. the capital of research and commercialization of these technologies.”

The official opposition was critical of the budget and gas tax, suggesting that it placed hardship on rural British Columbians that don’t have access to public transportation, and who will pay more for goods and services because of the higher cost of fuel.

They also suggested that the budget ignores student debt burden, that the dividend and tax cuts won’t benefit low and middle-income earners, and that banks and oil and gas companies will be the biggest beneficiary of tax cuts.

As well, they said the budget did not address child poverty or crime, and would create shortfalls for B.C.’s health authorities.

McIntyre says those criticisms are false, but acknowledged that both parties have different philosophies. She says the NDP would rather keep taxes high and funnel the money into social programs, while the Liberals believe people should be able to keep more of the money they earn and be trusted to spend it appropriately.




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