Last week, the new NDP government brought forth its first mini-budget. As this is only an interim budget, next year’s budget will be the real test. My assessment is it is okay, with a few redeeming aspects, and a fair bit of negative ones.
I believe we have an obligation as a society, and as a province to look after the most vulnerable, so I agree with the decision to raise welfare and disability rates despite being a strong fiscal conservative. The corporate tax increase from 11% to 12% is not something I would advocate, but since it simply brings our corporate tax rate up to match Alberta’s and Manitoba’s, and only a fraction of a percent above Ontario, Quebec, and Saskatchewan. In other words, it’s not something worth spending too much time fighting over. I don’t agree with the increase of the top rate, but it’s not as bad as I feared, increasing by 2.1%. The combined top rate will be 49.8% next year in BC, which will still be the third- lowest in Canada, after Alberta and Saskatchewan, hovering only a few percentage points above the G7 average. Had the NDP won federally, or Trudeau left the top rate alone, the top combined rate would only be 45.8%, which is quite competitive with the OECD; I put more of the blame here on Trudeau than Horgan, even if I disagree with the tax hike. My worry is more with their big spending down the road, which could continue to climb.
My two biggest beefs with this budget are dropping the rule that carbon tax must be revenue neutral, and reducing the surplus from $2.7 billion to $250 million. With economic growth estimated to be around 3.6% this year, this will mean a deficit if growth returns to the regular rate of 2%. I believe when economic growth is above average, we should have a healthy surplus to save for bad times.
Trudeau seems to be digging in hard on the business tax changes and is coming across as increasingly arrogant. Whether one agrees or disagrees with the tax changes, the job of the government is to listen to all sides, and not simply push through what they want. I suspect Trudeau is doing this with the belief it will win votes, since only a minority of Canadians are business owners, so pitting employees against employers, at least electorally, seems like a winning proposition. But arrogance is what gets governments defeated – just ask Harper, and it can also lead to bad policies that hurt our country. Trudeau needs to realize that he, like all PMs before him, is on borrowed time and if he pushes things too far, we as voters have every right to defeat him.
Scheer may seem like a weak opponent who can be easily beat, but that’s what people said about Trump, about Corbyn in the UK (who almost won), about the NDP in Alberta, and what the Tories said about Trudeau, and the Liberals about Harper in 2006; in all cases, they were proven wrong. And even if correct, being Prime Minister is about moving the country forward, not winning the next election. The new tax changes are very complicated, so I would urge the government to extend the deadline as well as drop the class warfare rhetoric, because there is nothing immoral or wrong about being successful. We should help those who are struggling, but trying to play off people’s envies of those who are doing better sends the wrong message to future entrepreneurs: that we have a government that thinks it’s wrong to try and work beyond the middle class, when in fact we should be encouraging everyone to do their best. Very few businesses make it big, but some do, and we should applaud those who take the risk, which means ensuring there is a strong reward for the minority who do succeed.
South of the border, Bernie Sanders is introducing Medicare for All, which would bring a single- payer system to the US if passed. While I support universal health care here in Canada, my main goal south of the border is to see Trump defeated in 2020, and I fear such a radical overhaul could help re-elect him if the Democrats make this a party policy. Much smaller health care changes under Bill Clinton and Barack Obama led to massive midterm losses in 1994 and 2010; likewise, referendums on single- payer in Oregon in 2002 and Colorado in 2016 (both states that voted for Hillary Clinton) were soundly defeated. I feel the resulting tax increases and huge spending costs will make Medicare for All politically toxic, and could mean losing many fights that could otherwise be won. A better solution would be to improve Obamacare, and perhaps extend Medicaid to more people, as this healthcare plan already exists and would be less costly both monetarily and politically.