Jock Finlayson, Executive Vice President and Chief Policy Officer of the Business Council of British Columbia (submitted)

FINLAYSON: Next 6-12 months not the time for government to hike taxes

From following health advice and ‘doing no harm,’ to not hiking fees – one business expert has a number of suggestions

Statistics Canada’s July Labour Force Survey contained mostly good news for nervous British Columbians trying to adjust to life in the strange world of COVID-19.

Employment jumped by 70,000 for the month, meaning B.C. has recouped about 60 per cent of the 400,000 jobs lost between February and April. However, that still leaves us with 165,000 fewer jobs than six months ago, equivalent to three years of employment growth in normal economic circumstances. And most of the jobs added since April are part-time positions, which suggests a high level of “underemployment” in the province.

Other data also points to a challenging economic environment. The tourism industry is on life support amid the worst business conditions on record. British Columbia’s merchandise exports have been falling over the course of 2020; in June, for example, they were 16 per cent lower than a year ago. The Canada-U.S. border remains shut with no sign it will be opening again anytime soon. And business insolvencies are mounting.

All of this underscores the risk that B.C.’s nascent economic recovery could stall in the coming months. Against this backdrop, what can the provincial government do to put the economy on a solid growth footing?

Several suggestions come to mind.

The first is to follow the physician’s advice and “do no harm.” In particular, the next 6-12 months is not a time for governments to be hiking taxes or fees or adding to the heavy regulatory burdens that companies doing business in B.C. already face.

Second, the province should consider cutting the provincial sales tax (PST) to assist in bolstering the consumer spending that drives much of our economy.

Reducing the PST from 7 per cent to 3.5 per cent for two years would boost consumer outlays, notably on durable and semi-durable goods. It would also lower costs for businesses, which pay roughly 40 per cent of the PST taxes collected by the provincial government, thereby encouraging more companies to invest and expand in B.C. Meanwhile, over the next two years the province can explore options for long-term sales tax reform with a view to introducing a modernized, made-in-B.C. consumption tax in January 2023.

Another suggestion is to extend the provincial tax deferrals for businesses – covering the PST and the Employer Health Tax — announced in late March until the end of the year, instead of ending the deferrals on September 30. The government could also look at allowing companies that owe taxes to pay the monies owed over a 12 month period rather than all at once. These steps would give companies more time to strengthen liquidity and rebuild cash balances, thus reducing the number of firms that end up closing their doors for good.

The province can also support economic recovery by increasing its own $10 billion annual capital budget. Proceeding immediately with badly needed major projects — like the George Massey Tunnel replacement — makes sense.

So does a program to speed up the repair and refurbishment of existing public sector assets like buildings, highways, and post-secondary education facilities. Small-scale capital spending projects can be advanced more quickly than large projects because they don’t usually require permits or extensive up-front planning and engineering work.

B.C. policymakers should also be looking to fast-track private sector investments wherever possible to help kick-start the economy and restore the 30,000 construction jobs lost since February. Many B.C. companies are willing and able to spend their own money on everything from pipelines and industrial plants to mines and research labs. In addition, there are dozens of multi-family residential development projects in the queue in municipalities across the lower mainland, Greater Victoria and the Okanagan. Now would be an excellent time for the province to work with and if necessary compel local governments to proceed with these projects with no or minimal delays.

The NDP government undoubtedly has other ideas for moving the economy forward. We’ll learn more when Finance Minister Carole James delivers her next economic and fiscal update in September.

Jock Finlayson is executive vice president and chief policy officer of the Business Council of British Columbia

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

“We have to make a call out to address this now so our people don’t have to feel fearful,” said Tribal Chief Mina Holmes. (Carrier Sekani Tribal Council Facebook photo)
Carrier Sekani Tribal Council seeks Indigenous-led task force in northern B.C. hospitals

Request made in an open letter to federal minister Carolyn Bennett

NDP headquarters on election night, Oct. 24, 2020. (Katya Slepian/Black Press Media)
ELECTION 2020: Live blog from B.C. party headquarters

BC NDP projected to win majority government – but celebrations will look different this election

B.C. Green Party leader Sonia Furstenau outlines her party's climate action platform at Nanaimo's Vancouver Island Conference Centre earlier this month. (News Bulletin file photo)
Green leader Furstenau declared victor in her home riding on Vancouver Island

Cowichan Valley voters elect freshly minted party leader for her second term

Submitted
BC VOTES 2020: John Rustad re-elected in Nechako Lakes riding

The result is based on preliminary vote count and the final results will be available after Nov.6

John Horgan has been re-elected the MLA for Langford-Juan de Fuca. (File-Black Press)
Horgan trounces challengers to be re-elected in his Vancouver Island riding

MLA has represented constituency of Langford-Juan de Fuca and its predecessors since 2005

FILE – Provincial Health Officer Dr. Bonnie Henry provides the latest update on the COVID-19 pandemic in the province during a press conference in the press theatre at Legislature in Victoria, B.C., on Thursday, October 22, 2020. THE CANADIAN PRESS/Chad Hipolito
B.C. shatters COVID-19 records with 817 weekend cases; masks now expected indoors

Three people have died over the past three reporting periods

The ‘new normal’ for hockey parents in Chilliwack and elsewhere in B.C., watching their kids from outside of the arena due to COVID-19 protocols. (Submitted photo)
Chilliwack hockey parents petition to be let back in the arena

Refused access due to pandemic protocols, parents are now applying pressure to loosen the rules

Aaliyah Rosa. File photo
Crown says murder of B.C. girl, 7, by accused mother was planned, deliberate

The trial of KerryAnn Lewis began Monday in New Westminster

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Commissioner Austin Cullen listens to introductions before opening statements at the Cullen Commission of Inquiry into Money Laundering in British Columbia, in Vancouver, on February 24, 2020. THE CANADIAN PRESS/Darryl Dyck
B.C. money laundering inquiry hears of $800,000 and more in bags, luggage, backpacks

The lottery corporation has said it consistently reported suspicious transactions to Fintrac

Some of the characters in the League of Legends video game. (Photo: na.leagueoflegends.com)
E-sports trial at B.C. high schools to start with ‘League of Legends’ team game

For fall launch, Vancouver’s GameSeta company partners with BC School Sports

Most Read